ULTA SHOWS HOW ATTRACTIVE THE BEAUTY MARKET CAN BE

Ulta Salon, a specialty beauty retailer, is expanding its store count across the U.S. while reporting a 12.5% same-store sales increase during the fourth quarter. There were several factors attributed to their performance. Ulta’s gross margins got a lift by their shift from coupons to more targeted offers. They also managed to boost traffic into the stores. They added 100 new stores in 2015, seeing net revenues increase 21% to reach $1.27 billion. With its plans to add 100 more stores in 2016, taking them to over 1,000 stores total, it will build on its success in small markets and downtown/urban locations.

The beauty segment is attractive to department store retailers, because shoppers make frequent repeat visits when they run out of a certain product. Several retailers, such as Kohl’s and Sephora-Inside-JC Penney’s, have specific plans to expand their beauty departments.

Accelerated Analytics’ has a broad base of beauty vendor customers, such as L’Oreal, LVMH, Parlux Fragrances, Anastasia Beverly Hills, Chanel, Coty, Estee Lauder and more. Learn about our beauty industry reporting solutions at http://www.acceleratedanalytics.com/beauty/

Source: CNBC

J.C. Penney Reports Strong Q4 Sales and Reveals “Penney Days” Promotion

Last Thursday, J.C. Penney announced impressive increases in same-store sales and earnings, as well as a new marketing campaign called Penney Days.

For the fourth quarter ending on January 30th, the retailer announced that same store sales grew 4.1% . “We are very pleased with our performance for the fourth quarter and full year. Our focus on private brands, omni-channel and revenue per customer is clearly resonating as we continue to win market share in a competitive environment," said Marvin R. Ellison, CEO. "We are also pleased that we delivered strong fourth quarter results while effectively managing our inventory, which finished the year up 2.6 %. I would like to thank our over 100,000 associates who embrace our strategy and come to work each day focused on driving sales and providing excellent customer service.”

They also announced a new promotional event called Penney Days. At different times throughout the year they will make limited number of some of their highest rated private brand items available for one cent. The new campaign will give J.C. Penney the opportunity to showcase the company’s assortment of private brands and it will give customers the opportunity to try them for just a penny.  J.C. Penney will promote Penney Days through television spots, weekly sales circulars and digital marketing. They will also launch a social media campaign reminding users of the power of a penny and will promote the hashtag "#SoWorthIt" with all elements of the campaign.

Costco Comps Surge 8% In U.S.

January 8, 2015

Costco showed again in December why it's the cream of the crop among warehouse club stores.

The Washington based retailer reported an increase of 8% in same store sales in the United States, excluding gasoline sales and foreign exchange.  Same-store sales at international stores rose by 1%.

Net sales for the retailer rose 5% to $12.2 billion in December from $11.53 billion a year earlier.

For the 18 weeks ended January 4, sales at stores open at least a year rose 4%.  They climbed 6% in the United States, but were flat overseas.  Total revenue for the 18-week period climbed 7 percent to $40.85 billion.

Costco Wholesale Corp., based in Issaquah, Washington, runs 671 warehouses, including 474 in the U.S. and Puerto Rico, 88 in Canada, 34 in Mexico, 26 in the U.K., 20 in Japan, 11 in Korea, 10 in Taiwan, seven in Australia and one in Spain.

Source: Retailing Today

Rite Aid Sales Surge 5.3%

January 5, 2015

Rite Aid Corp. says sales at stores open at least a year grew 5.3% in December, boosted again by strengthening pharmacy sales.

Same-store sales at the Camp Hill, Pennsylvania-based retailer grew 5.3% to $2.2 billion, beating analyst consensus of 4.5% and reflecting a 1.7% increase in front-end same-store sales and a 7.3% increase in pharmacy same-store sales.

"The front-end comp of 1.7% outpaced consensus of 1.2% and represents the strongest two-year trend since last January," noted Ed Kelly, Credit Suisse research analyst.  "Flu-related OTC helped and Wellness remodels are likely a tailwind impact could ramp over time as a higher proportion of the store base is remodeled.  The pharmacy comp beat as wellk, as sales rose 7.3% vs. consensus of 6.3%, although generic impact markedly decelerated sequentially due to the lapping of Cymbalta."

Prescription count at comparable stores increased 5.1% over the prior year period.  Prescription sales accounted for 64.8% of drug store sales, and third party prescription sales represented 97.6% of pharmacy sales.

Same-store sales for the 43 week period ended December 27, 2014 increased 4.3% over the prior-year period.  Front-end same-store sales increased 1% while pharmacy same-store sales increased 5.9%.  Prescription count at comparable stores increased 3.6% over the prior-year period.

Total drug store sales for the 43 week period increased 3.9% with sales of $21.8 billion.  Prescription sales represented 68.6% of total drug store sales, and third party prescription sales represented 97.5% of pharmacy sales.

Source: Retailing Today 

Lowe's CEO: Our Transformation Is Gaining Momentum

December 11, 2014

Lowe's CEO Robert Niblock cited the recovering U.S. economy as among the reasons why the company plans to focus more on market differentiation and omnichannel retailing.

The company said it will outline these and other strategic priorities in a meeting with investors on December 11 in North Carolina.

"We're at a great point in our company's evolution.  The housing market and broader economy are recovering just as our transformation is gaining momentum," Niblock said.  "We're building on our past success and finding new ways to serve and connect with customers."

Although the company shared few specifics, the company announced that it plans to increase its focus on:

• Enhancing its relevance to customers through omnichannel retailing
• Differentiating itself through better customer experiences
• Adapting to a changing home improvement landscape
• And delivering long-term profitable growth and substantial returns for shareholders

"We continue to generate solid cash flow and have exciting opportunities ahead of us," said Robert F. Hull, Jr., Lowe's CRO.  "Return on invested capital is expected to reach approximately 19 percent by 2017, an increase of almost 500 basis points over the next three years."

Lowe's also reiterated its sales and earnings guidance for the 2014 fiscal year:

• Total sales are expected to increase 4.5% to 5%.
• Same store sales are expected to increase 3.5% to 4%.
• The company expects to open six home improvement and four hardware stores.
• Diluted earnings per share of approximately $2.68 are expected for the fiscal year ending January 30.
• Lowe's currently operates more than 1,835 home improvement and hardware stores and has more than 260,000 employees.

Source: Retailing Today

Costco Off To Great Start With Q1 Beat

December 10, 2014

The holiday season started strong at Costco where U.S. same store sales advanced 7 percent during the company's first quarter ended November 23.

Total company sales during the period increased 7 percent to nearly $26.3 billion from $24.5 billion.  Membership income grew slightly slower, advancing 6 percent to $582 million.  Same store sales excluding the effects of the strengthening U.S. dollar and fuel price deflation were 7 percent at U.S. and international locations.

Profits during the period increased to $496 million, or $1.12 per share, three cents better than analysts' consensus forecast, compared to $425 million, or 96 cents a share the prior year.

Costco ended the quarter with a total of 671 warehouses, including 474 in the United States and Puerto Rico, 88 in Canada, 34 in Mexico, 26 in the United Kingdom, 20 in Japan, 11 in Korea, 10 in Taiwan, seven in Australia and one in Spain.

Source: Retailing Today

Saks Boosts Profits At Hudson's Bay Co. In Q3

December 9, 2014

Higher same store sales and its purchase of Saks Inc. last year helped Hudson's Bay Co. post a smaller quarterly loss in the third quarter.

The company had a $13 million net loss and profits of $116 million, both improvements from the same time last year.  Same-store sales rose 1.7% in the third quarter.

"We are pleased with our third quarter financial performance," stated Richard Baker, HBC's governor and CEO.  "We remain on track with our integration of Saks and continue to gain traction on our strategic growth initiatives, especially at HBC Digital where we experienced substantial sales growth.  We are well-positioned for the holiday shopping season with a value proposition underpinned by differentiated merchandising and superior customer service initiatives across all our banners.  We remain confident in achieving our financial performance targets for fiscal 2014."

Total sales at HBC nearly doubled to $1.913 billion, from $984 million a year earlier.  The increased sales was mostly a result of the Saks Fifth Avenue acquisition, although e-commerce sales also grew.  Hudson's Bay said it is on track to meet its 2014 guidance, which calls for sales of between $7.8 billion and $8.1 billion and normalized earnings of between $580 million and $620 million.

The company also announced it has appointed Ian Putnam to the position of EVP-chief corporate development officer.  Putnam has advised HBC since 2008 and has acted on the company's behalf in all of its major  corporate transactions since that time.  Last month the company outlined a $1.25 billion refinancing plan to reduce interest payments on debt it took on after buying Saks.  Hudson's Bay bought Saks for $2.4 billion and assumed $500 million of the U.S. company's debt.

"We continue to progress on the five core strategies of our long-term plan to grow our sales.  We remain committed to driving digital sales across all our banners, growing OFF 5th, bringing Saks Fifth Avenue and OFF 5th to Canada, driving outsized growth at our top doors and driving synergies and efficiencies across our business.  In addition, our recently completed US $1.25 billion, 20-year mortgage on the ground portion of our Saks Fifth Avenue flagship in New York City has strengthened our financial position by providing long-term, fixed-rate capital on highly attractive terms," Baker said.

Hudson's Bay Co. operates 170 Lord & Taylor, Saks Fifth Avenue and Saks Fifth Avenue OFF 5th stores in the United States.

Source: Retailing Today

Kroger Extends Comp Streak With 5.6% Gain

December 4, 2014

Momentum continues to build at Kroger where the company elevated expectations for its fourth quarter performance after a better than expected showing in the third quarter.

The company reported a 5.6 percent increase in identical store sales, extending to 44 the number of quarters in which it has posted a positive number.  It also said fourth quarter identical stores sales would increase from 4 percent to 5 percent and shared favorable 2015 preliminary guidance that implies the trend of improved productivity at existing stores isn't about to end.  Based on the better than expected third quarter performance, Kroger raised and narrowed its current full year adjusted earnings per share guidance to a range of $3.32 to $3.36 from $3.22 to $3.28.

"Kroger continues to deliver consistently remarkable results.  We expect to exceed our long-term earnings per share growth rate for fiscal 2014," said Kroger CEO Rodney McMullen.  "Our associates shine brightest during the holiday season and we intend to continue our positive momentum through the fourth quarter."

In the third quarter period ended November 8, total sales increased 11.2 percent to $25 billion compared to $22.5 billion for the same period last year.  Total sales, excluding fuel, increased 13.7%.

Profits during the period totaled $362 million, or 73 cents a share, compared to $229 million, or 57 cents a share, the prior year.

Source: Retailing Today

Dollar General Reveals 2015 Growth Strategy As Q4 Comps To Grow 5%

December 4, 2014

Even if Dollar General is unsuccessful in acquiring Family Dollar, the company plans to get bigger faster in 2015 by opening two stores every day and enhancing the productivity of an already expansive footprint.

Dollar General said Thursday it will open 730 new stores in 2015 and enter new states such as Maine, Rhode Island and Oregon.  Combined with the remodel or relocation of another 875 stores, the investment in physical stores will see Dollar General expand selling space by 6 percent on top of its existing store base of 11,715 locations.  The 2015 growth targets compare to this year's expansion program which will see the company open roughly 700 stores and relocate or remodel another 900 locations by the time its fiscal year ends in January.

The update on growth was made in conjunction with the release of solid third quarter results in which the company tempered fourth quarter profits expectations and reaffirmed its commitment to acquiring Family Dollar, a company which has already reached a merger agreement with Dollar Tree.

"Our affordability-focused initiatives continued to gain traction with our customers in the third quarter, and our same-store sales growth of 2.8 percent reflected increases in both customer traffic and average ticket for the 27th consecutive quarter," said Rick Dreiling, Dollar General's chairman and CEO.  "We continued to grow our market share in consumables, and we are very pleased with the performance of our home and apparel categories.  Importantly, we are seeing a significant step up as we start the holiday season, and we expect to achieve same-store sales growth of approximately 5 percent for the fourth quarter."

The top line sales growth is expected to help the company achieve the middle of a previously provided full year profits forecast which calls for earnings per share of $3.45 to $3.55.

"We have continued confidence that we are well-positioned for sustainable growth and creation of shareholder value," Dreiling said.  "Finally, we remain committed to acquiring Family Dollar.  We expect to provide an update on our offer in time for Family Dollar shareholders to review such information prior to the Family Dollar shareholders' meeting scheduled for December 23, 2014."

Source: Retailing Today

Dollar Tree Q3 Sales Lift Holiday Outlook

November 20, 2014

As Dollar Tree moves forward with its acquisition of Family Dollar, the company reported an increase in same-store sales and expressed a favorable holiday outlook.

Dollar Tree's earnings per share increased 19% to $0.69 and its revenue increased 11.2% to $2.1 billion compared to the third quarter of fiscal 2013; these results were driven by comparable store sales increasing 5.9% during the quarter compared to an increase of 3.1% in the prior-year period.

"These results validate our value enhancement initiatives targeted to attract new, and retain current, customers.  Our store teams are well-prepared and our shelves are well-stocked with incredible values for the upcoming holiday season," said Bob Sasser, Dollar Tree CEO.

Dollar Tree opened 117 net new stores during the quarter, bringing its total store count to 5,282.  The company has opened 291 net new stores year-to-date, putting it on pace to reach its goal of opening 375 net new stores in fiscal 2014.

Dollar Tree has agreed to buy Family Dollar Inc. but the deal is facing a challenge from Dollar General Corporation over antitrust concerns.

Dollar Tree, which like other discounters is facing competition from small-format stores opened by big retailers such as Walmart, will become the largest dollar store chain if it pulls off its deal with Family Dollar.

In its outlook statement, Dollar Tree estimated fourth-quarter sales in the range of $2.39 billion to $2.46 billion and EPS in the range of $1.07 to $1.14.  Consensus estimates call for EPS of $1.13 on revenues of $2.45 billion.

Source: Retailing Today

Nordstrom Rolls On, Loyalty Expands

November 14, 2014

New stores, 3.9% same store sales growth and increased loyalty propelled Nordstrom to record third quarter sales.

The company's total sales increased 8.9% to $3 billion thanks to the addition of new stores and a 3.9% same store sales increase that was driven by online growth.  Profits increased 3.6% to $142 million compared to $137 million while earnings per share increased 5.8% to 73 cents from 69 cents.

The company said sales at full line stores increased 0.5%, reflecting the addition of three new stores during the quarter and flat same store sales.  Nordstrom Rack sales increased 15% thanks to the opening of 16 stores and a 1.7% comp increase.  The greatest growth came from the company's direct business which increased 22% as assortments were expanded.

The Nordstrom Rewards loyalty program continues to contribute to the company's overall results as well.  Members shopped more frequently and spent more on average than non-members.  The company opened approximately 275,000 new accounts in the third quarter, an increase of 18% compared with the prior year.  With 4.2 million active members, sales from members increased 13% in the third quarter and represented 38% of sales compared to 37% the prior year.

The company ended the quarter with 118 full line stores and 167 Rack stores.

Source: Retailing Today.

Home Improvement Surging Ahead Of Holidays

November 19, 2014

Lowe's said its third quarter same store sales spiked 5.1% a day after Home Depot reported an even stronger increase.

Total company sales increased 5.6% to $13.7 billion driven by increased productivity of existing stores as evidenced by a 5.1% comp increase.  Home Depot said its third quarter same store sales increased 5.8%.  Lowe's profits increased 17.3% to $585 million while earnings per share increased 25.5% to 59 cents and were aided by $900 million in share repurchase activity.

"We are pleased with our performance, and continue to be cautiously optimistic about the home improvement landscape," said Lowe's chairman, president and CEO Robert Niblock.

Looking ahead, the company said it expects full year sales to increase 4.5% and same store sales to increase 3.5% to 4%.  The company plans to open six home improvement stores and four hardware stores this year.  Lowe's currently operates 1,836 home improvement and hardware stores.

Source: Retailing Today

JCP Turnaround In Holiday Homestretch

November 13, 2014

J.C. Penney is in the final phase of its turnaround and the company's stores are customers' preferred destination for great style, quality and value, according to company CEO Mike Ullman.

Those comments came after J.C. Penney said its third quarter same store sales were flat and it forecast a fourth quarter comp increase of 2% to 4%.  Total sales in the quarter ended November 1 declined slightly to $2.76 billion from $2.78 billion.

The company reported an operating loss of $54 million, but that was a massive improvement from the prior year when the company reported a staggering operating loss of $401 million.  Other positives from the quarter were gross margins which expanded to 36.6% of sales, compared to 29.5% in the same quarter last year, thanks to strength in the home and fine jewelry categories.  The company also reduced expenses and reduced inventories by 10.4%.

"This quarter shows the progress we are making in the final phase of J.C. Penney's turnaround.  We continued to significantly improve the profitability of our business with gross margin expansion of 710 basis points, a $342 million improvement in EBITDA and bottom-line financial results that exceeded even our own expectations," Ullman said.  "Like most retailers, following a strong start to the back-to-school season, sales did slow in September and October as unseasonably warm weather hindered the sale of fall goods."

Ullman's observation on the third quarter was that during what he called "appointment shopping periods" such as back to school and holidays, J.C. Penney is the customers' preferred destination for discovering great style, quality and value.

"This year, we are confident customers will once again choose J.C. Penney for meaningful holiday gifts that fit their family budget.  We are well positioned to complete this holiday season and I would like to thank our associates for their hard work, warrior spirit and commitment to delivering an exceptional customer experience every day," Ullman said.

Source: Retailing Today

Kohl's Misses Earnings Estimates

November 13, 2014

Kohl's is heading into the holidays with a loss of momentum after third quarter same store sales declined 1.8% and the company missed analysts' earnings estimate by four cents.

The third quarter comp decrease of 1.8% was on top of a prior year decline of 1.6%.  Total sales at the operator of 1,163 stores declined slightly to $4.37 billion from $4.44 billion.  Net income declined to $142 million, or 70 cents a share, from $177 million, or 81 cents a share.

The 1,163 stores Kohl's operated at the end of the quarter was five more units than the company had in operation at the end of the third quarter the prior year.

Source: Retailing Today

Dillard's Well Positioned For Holidays

November 13, 2014

A third quarter same store sales decline of 1% at Dillard's wasn't enough to dissuade CEO William Dillard, II from declaring the company is very well positioned for the holidays.

Total merchandise sales also declined 1% to $1.42 billion while net incomes increased to $55.2 million, or $1.30 a share, compared to $50.9 million, or $1.13 a share.  The third qurater earnings per share benefited from a one time gain of $3.8 million, or nine cents a share, related to the sale of a store location.

"Returning cash to shareholders was a high priority during the quarter, and we completed the remaining $224 million of share repurchase authorization," Dillard said.  "Although comparable sales declined 1%, we were pleased with a 69 basis point merchandise gross margin improvement, with our inventory control and with our strong operating cash flow.  We believe we are positioned very well for the holiday season, and we look forward to providing premium Dillard's service to our customers."

The company said its sales trends were strongest in juniors' and children's apparel followed by men's apparel and accessories.  Sales were weakest in the home and furniture category.  Sales trends were strongest in the central region, followed by the eastern and western regions, respectively.

Source: Retailing Today

Walmart Gives Gift Of Positive Comps

November 13, 2014

Walmart's same store sales turned positive during the third quarter, ending a two year drought, prompting the company to forecast a U.S. comp increase of as much as 1% during the fourth quarter.

Third quarter same store sales at U.S. stores increased 0.5% and were aided by inflation and the impact of a 5.5% comp increase at the company's Neighborhood Market locations.  Fourth quarter comps at U.S. stores are forecast to be flat or up 1%.  One percent may not sound like much, but if realized or possibly exceeded the additional sales volume would be substantial considering the U.S. stores division generated third quarter sales of $70 million, a 3.4% increase from the prior year.

Total company sales increased 2.8% to $118.1 billion, including a negative impact of nearly $400 million related to currency exchange fluctuations.  Profits declined 0.7% to $3.7 billion, but earnings per share increased by a penny from the prior year to $1.15, squarely in the middle of the company's guidance range of $1.10 to $1.15 and three cents better than analysts forecast.  Walmart's earning per share calculations benefited from the repurchase of 1.1 million shares during the quarter.

Despite the slight advance in earnings, Walmart Stores, Inc., president and CEO Doug McMillon called the profit performance "solid."  He singled out as positives the U.S. stores comp increase, a 21% increase in e-commerce sales and profitablility of the Sam's Club and Walmart International businesses.

"We're investing in key areas of our business, including wages in our U.S. stores and in e-commerce and mobile capabilities.  We continue to see opportunities to improve our business," McMillon said.  "Being the price leader is an ongoing priority for us and a commitment to customers.  As with every year, that is even more important during the holiday season.  We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we're set to deliver for customers during this time."

Same store sales at Sam's Club, excluding fuel, increased 0.4% and total sales, excluding fuel, increased 2.3% to $12.7 million.  Despite the modest top line growth, operating profits increased 12% to $493 million, the strongest improvement of Walmart's three divisions.

Walmart International sales increased 1.7% to $33.7 billion, but on a constant currency basis increased 2.9% to $34.1 billion.  Operating profits increased 3.7% to $1.43 billion.  Operating profits at U.S. stores declined 1.2% to $4.9 billion.

Looking forward, Walmart forecast fourth quarter earnings between $1.46 and $1.56 and full year earnings per share to range from $4.92 and $5.02, lower than the company's earlier guidance of $4.90 to $5.15.

"Our earnings per share guidance assumes several important factors, including the economic conditions in several of our largest markets, and a highly promotional holiday season," said Walmart CFO Charles Holley.  "As a reminder, our full year EPS guidance includes the four factors we discussed last quarter, which were higher U.S. health-care costs, incremental investments in e-commerce, ongoing investments in Sam's Club, and our effective tax rate."

Source: Retailing Today 

Macy's Views Omnichannel As Q4 Advantage

November 12, 2014

Macy's third quarter sales were lower than expected but the company still managed to grow profits by 30% and expressed optimism regarding the fourth quarter.

The department store retailer said same store sales declined 0.7% while total sales declined 1.3% to slightly less than $6.2 billion during the third quarter ended November 1.  Net income increased 22.5% to $217 million while earnings per share, aided by the repurchase of nine million shares, increased 30% to 61 cents a share.

"We knew we were up against very strong third quarter sales growth for our company last year, and thus we had anticipated that our year-over-year comparison would be lower in the third quarter than in the fourth quarter.  Even so, sales did not live up to our expectations in the quarter," Lundgren said.

Looking forward, the company said it expects same store sales to increase 2% to 3% in the fourth quarter, but also lowered its full year profit forecast to a range of $4.25 to $4.35 cents from a range of $4.40 to $4.50 cents.

Lundgren said he is optimistic about the fourth quarter for a variety of reasons, including strong digital capabilities.

"First we have developed an outstanding merchandise assortment for holiday gift-giving and self-purchase rooted in great style, exclusive offerings and outstanding value during this key shopping period," Lundgren said.  "Second, we have enhanced our transition to fresh post-holiday vacation and resort assortments.  Third, we have new store, omnichannel and marketing strategies in place that we believe will drive incremental business throughout the fourth quarter."

For example, Macy's said its buy online pickup in store capability is now rolled out to full-line Macy's and Bloomingdale's locations and it has same day delivery pilots up and running in eight major Macy's markets and four Bloomingdale's markets.  The company said it also has improved functionality and usability in upgraded mobile apps.

Lundgren is also counting on the weather to lend a hand this holiday season.

"We are poised to capitalize on a return to more normalized weather patterns after the unusually severe snowstorms in the fourth quarter last year," Lundgren said.

Source: Retailing Today

Walgreens Posts 6.9% Sales Increase In October

November 5, 2014

Walgreens reported October sales of $6.8 billion, an increase of 6.9% from the comparable year-ago period.

Prescriptions filled at comparable stores increased by 3.6% in October and increased 4.1% on a calendar day-shift adjusted basis, meeting analyst expectations.  "Script growth for the chain drug stores likely grew in the low-to-mid-single-digit range again in October, but appears to have slowed vs. September," Ed Kelly, Credit Suisse research analyst, commented in a note last week.  "Average script growth through the first three weeks of October, as reported by IMS, grew approximately 3.2% on a year-over-year basis, below the (approximate) 3.9% level seen in September," he said.  "Flu activity is modestly higher than it was at this time last year and may provide a modest tailwind to comps."

Flu shots administered at Walgreens' pharmacies and clinics season to date were more than 5.7 million versus approximately 4.9 million last year.

October pharmacy sales increased by 9.9%.  Comparable store pharmacy sales increased 7.5% and increased by a calendar day-shift adjusted 8%.  Calendar day-shift adjusted comparable store pharmacy sales were negatively impacted by 190 basis points due to generic drug introductions in the last 12 months, and were positively impacted by 40 basis points due to more flu shots versus last year.  Pharmacy sales accounted for 67.3% of total sales for the month.

Total front-end sales increased 2.7% in October compared with the same month in fiscal 2014, while comparable store front-end sales increased 2%.  Customer traffic in comparable stores decreased 1.9% while basket size increased 3.9%.

Sales in comparable stores increased by 5.6% in October.  Calendar day shifts negatively impacted total comparable sales by 30 basis points, while more flu shots versus last year positively impacted total comparable sales by 30 basis points.  Generic drug introductions in the last 12 months negatively impacted total comparable sales by 130 basis points.

Calendar 2014 year-to-date sales for the first 10 months were $64.2 billion, an increase of 6.1%.  Fiscal 2015 year-to-date sales for the first two months were $13.2 billion, up 7.7%.

Walgreens opened 16 stores during October, including relocations, and closed one.

Source: Retailing Today

Generic Utilization Lifts CVS Health In Q3

November 4, 2014

Tailwinds from specialty pharmacy and increased generic utilization lifted CVS Health up on Tuesday, as the company posted net revenues of $35 billion, representing an increase of 9.7% for the three months ended September 30.

"I'm very pleased with our strong results in the third quarter, which reflect better than expected revenue growth across the enterprise and expanding retail gross margins," said Larry Merlo, CVS Health president and CEO.  "The 2015 PBM selling season continued to be highly successful with a significant number of new business wins across all lines of business.  We also continued to deliver substantial free cash flow, enabling us to return more than $3.7 billion to our shareholders year to date.  We are well on track to return more than $5 billion to our shareholders through dividends and share repurchases for the full year 2014.

Revenues in the Retail Pharmacy Segment increased 3.1%, or $501 million, to $16.7 billion in the period.  Same-store sales increased 2% versus the third quarter of last year, with pharmacy same store sales up 4.8% and front-end same-store sales down 4.5%.  Front store same store sales would have been approximately 480 basis points higher if tobacco and the estimated associated basket sales were excluded from the period.  Front store same store sales were negatively impacted by approximately 190 basis points from recent generic drug introductions and by approximately 190 basis points from the implementation of Specialty Connect.  Specialty Connect transitioned all specialty prescriptions to the Pharmacy Services Segment, as they are being processed through the Company's specialty mail order pharmacies.  The implementation of Specialty Connect had a greater effect on revenues than prescription volumes due to the higher dollar value of specialty products.

For the three months ended September 30, the generic dispensing rate increased approximately 180 basis points in both the Pharmacy Services segment and Retail Pharmacy segment, to 82.5% and 83.3%, respectively, compared to the prior year.

Revenues in the Pharmacy Services segment increased 15.7% - or $3.1 billion - to $22.5 billion.  The increase was driven by growth in specialty pharmacy including the acquisition of Coram and the impact of Specialty Connect, as well as increased volume in pharmacy network claims.  Pharmacy network claims processed during the period increased 4.3% to 209.6 million compared to 200.9 million in the prior year.  The increase in the pharmacy network claim volume was primarily due to net new business and growth in Managed Medicaid, partially offset by a decrease in Medicare Part D claims.  Mail choice claims processed during the period decreased 1.3% to 20.7 million, compared to 21 million in the prior year.  The decrease in mail choice claims was driven by a decline in traditional mail volumes, which was partially offset by growth in CVS Health's Maintenance Choice program.

The company narrowed its earnings guidance range for the full year 2014.  CVS Health now expects to deliver Adjusted EPS of $4.47 to $4.50, from $4.43 to $4.51, excluding the $0.27 per share loss on early extinguishment of debt.  GAAP diluted EPS from continuing operations is expected to be $3.93 to $3.96, including the loss on the early extinguishment of debt.  The company raised its 2014 free cash flow guidance range to $5.7 billion to $6 billion, from $5.5 billion to $5.8 billion, and raised the 2014 cash flow from operations range to $7.4 billion to $7.7 billion, from $7.2 billion to $7.5 billion.  The company expects to deliver Adjusted EPS of $1.18 to $1.21 and GAAP diluted EPS from continuing operations of $1.12 to $1.15 in the fourth quarter.

During the three months ended September 30, CVS Health opened 45 new and acquired 33 retail drugstores, and closed four retail drugstores.  In addition, the company relocated 13 retail drugstores.  As of September 30, the company operated 7,935 locations in 47 states, the District of Columbia, Puerto Rico and Brazil.  These locations included 7,779 retail drugstores, 936 health care clinics, 17 onsite pharmacies, 26 retail specialty pharmacy stores, 11 specialty mail order pharmacies, four mail service dispensing pharmacies, and 84 branches and six centers of excellence for infusion and enteral services.

Source: Retaililng Today 

Merger Magic Evident At Office Depot

November 4, 2014

Sales continued to decline at Office Depot in the third quarter, but CEO Roland Smith said excellent execution allowed operating profits to more than double.

Total company sales on a pro-forma basis to reflect the merger of Office Depot and Office Max declined 3% to $4.1 billion during the period ended September 27.  The top line decline was steeper at the company's 1,851 unit North American retail division where sales declined 7% to $1.7 billion due to store closures and a 3% same store sales decline driven by a reduced transaction volume.

Smith said challenging market trends and store closures would continue to negatively affect sales in the fourth quarter, but the executive noted merger related synergies are allowing the company to exceed profitability expectations.

"Our third quarter results reflect excellence in execution against our critical priorities and merger integration objectives, and we are very pleased to have more than doubled our adjusted operating income from last year's combined pro forma results," Smith said.  "We continue to make significant progress on merger integration and have exceeded our synergy targets for the quarter.  Accordingly, we are raising our 2014 outlook for adjusted operating income to a range of $255 million to $265 million, which is more than 150% higher than pro forma 2013.  Looking ahead, our preliminary estimate for 2015 adjusted operating income is approximately $475 million, which is an 80% increase from our 2014 outlook."

Source: Retailing Today