Walgreens And Rite Aid Looking Good In June

July 3, 2014

June was a good month for two of the nation's largest drugstore operators.  Walgreens reported sales of $6.3 billion for the month, an increase of 8.9% as compared to the same month in fiscal 2013, while Rite Aid realized a 3.9% same-store sales increase for the four weeks ended June 28.

Total front-end sales at Walgreens increased 1.6% in June compared with the same month in fiscal 2013, while comparable store front-end sales increased 1.3%.  Customer traffic in comparable stores decreased 2% while basket size increased 3.3%.

Prescriptions filled at comparable stores increased by 7.3% in June and increased 4.7% on a calendar day-shift adjusted basis.  June 2014 had one additional Monday and one fewer Saturday compared with June 2013.  These calendar shifts positively impacted prescriptions filled at comparable stores by 260 basis points.

June pharmacy sales increased by 13.4%.  Comparable store pharmacy sales increased 11.3% and increased by a calendar day-shift adjusted 6.7%.  Calendar day-shift adjusted comparable store pharmacy sales were negatively impacted by 140 basis points due to generic drug introductions in the last 12 months.  Pharmacy sales accounted for 65.2% of total sales for the month.

Sales in comparable stores increased by 7.5% in June.  Calendar day shifts positively impacted total comparable sales by 170 basis points.  Generic drug introductions in the last 12 months negatively impacted total comparable sales by 90 basis points.

Calendar 2014 year-to-date sales for the first six months were $38.1 billion, an increase of 5.9%.  Fiscal 2014 year-to-date sales for the first 10 months were $63.7 billion, an increase of 6%.

Walgreens opened 15 stores during June, including three relocations and closed 13.  Nearly all of the June store closings were part of the company's previously announced efforts to optimize its asset base by closing a total of 76 drug stores.

Meanwhile, Rite Aid saw June front-end same-store sales increase 0.9%.  Pharmacy same-store sales, which included an approximate 169 basis points negative impact from new generic introductions, increased 5.4%.  Prescription count at comparable stores increased 3.5% over the prior-year period.

Total drug store sales for the four-week period increased 3.5% to $2 billion.  Prescription sales accounted for 68.4% of drug store sales, and third party prescription sales represented 97.5% of pharmacy sales.

Same-store sales for the 17-week period ended June 28 increased 3.3% over the prior-year period.  Front-end same store sales increased 0.2% while pharmacy same store sales increased 4.6%.  Prescripion count at comparable stores increased 2.6% over the prior-year period. 

Total drug store sales for the 17 weeks ended June 28, 2014 increased 2.8% with sales of $8.4 billion.  Prescription sales represented 68.4% of total drug store sales and third party prescription sales represented 97.4% of pharmacy sales.

Source: Retailing Today 

Walgreens' Profits Miss Street Expectations

Walgreens reported a 16% year-over-year jump in third quarter profit, but was forced to withdraw its previously issued fiscal 2016 guidance because it missed Wall Street estimates.

The company's net earnings for the quarter were $722 million compared to $624 million in the prior-year period.  Net sales increased 6% to $19.4 billion from $18.3 billion, while same-store sales increased 4.8%.

Lower taxes also boosted the company's profits, but pressure on pharmacy gross profit margins and a 0.7% decrease in same-store traffic kept them from hitting Wall Street's expectations.

Despite withdrawing its guidance for fiscal 2016, Walgreens confirmed that it plans to move forward with its purchase of U.K. drugstore retailer Alliance Boots, which it currently holds a 45% stake in, by the end of 2015.  The company will issue an update on the acquisition as well as its revised guidance in July or August.

"We continued to see improving top-line growth in the third quarter driven by increased daily living sales and strong increases in both prescriptions filled and our pharmacy market share," said Walgreens president and CEO Greg Wasson.  "At the same time, we are experiencing increased pressure on pharmacy gross profit margins.  We maintained solid expense control in the third quarter to offset some of this pressure while understanding that there is more to be done.  We will be accelerating our optimization efforts, including taking additional steps to lower expenses companywide.  In addition, our joint venture with Alliance Boots continues to generate significant benefits."

Source: Retailing Today

Unseasonably Cold Weather Delivers Challenging Q1 To Sears Hometown

June 6, 2014

Sears Hometown and Outlet Stores CEO and president Bruce Johnson cited weather and promotions as factors affecting the retailer's first quarter results.

Net sales in the quarter decreased 1.9% to $589.9 million from $601.1 million in the first quarter of 2013, driven primarily by a 6.2% decrease in same-store sales.  Lower initial franchise revenues and lower liquidation revenues on end-of-season mark-out apparel merchandise received from Sears Holdings also negatively impacted net sales.

"First quarter results were affected by three main factors: weather," said Johnson.  "For the second year in a row, lawn and garden sales were negatively impacted by an unseasonably cold spring in many of our trade areas that dampened sales in March and April, following a very cold February that reduced overall store traffic and sales; continued lower margins in Outlet due to insufficient quantities of higher-margin, 'as-is' appliances; and a heavily promotional appliance retail environment where appliance retailers layered free delivery on top of discounted pricing."

Repeat visits decreased 1% year-over-year but bounced back from a low in April.  Analysis indicates this rebound is another positive sign for sales.  The best day of the month was Thursday, May 29, with outperformance across all metrics.  The worst day of the month was Sunday, May 4, which saw significant underperformance in traffic.  In addition, fewer than expected repeat shoppers were seen on this day.

Source: Retailing Today

Fred's Optimistic About New Marketing Program

June 5, 2014

Although comparable-store sales at Fred's declined slightly in May, the company said sales strengthened in the last week of the month thanks to the first ad in its new marketing and branding program, designed to increase traffic and heighten customer awareness of category diversity.

The company's total sales for the month stayed flat at $151.9 million, compared with $152.3 million in May last year.  Comparable-store sales for the month declined 0.4% compared with a 0.5% decrease in the same period last year.

Fred's total sales for the first four months of fiscal 2014 decreased 0.6% to $650.2 million compared with $653.8 million for the same period last year.  On a comparable store basis, year-to-date sales declined 1.5% versus a 1.1% decrease for the year-earlier period.

"The initial results (of the marketing and branding program) were encouraging," said CEO Bruce A. Efird, "and we think this new program will be effective in driving traffic and sales growth as we work toward full implementation of the marketing program by mid-July.  Together with the updating of our store layout to emphasize the convenience advantages of our 15,000 sq. ft. store, it will better position Fred's to serve more of the need-based categories and provide customers with faster and easier shopping experiences."

Fred's operates 704 discount general merchandise stores, including 21 franchised Fred's stores, in the southeastern United States.

Source: Retailing Today

Ascena Retail Group's Profit Climbs Despite Challenging Q3

June 4, 2014

Ascena Retail Group president and CEO David Jaffe said sales in the third quarter were challenging, and despite comparable sales declines at Justice and Dressbarn, new store growth at Justice and Maurices, along with higher comparable sales at Lane Bryant, Maurices and Catherines bolstered the company's overall results.

The company's third quarter profit rose to $33.2 million, from $31.2 million in the year ago period.  Revenue inched up 0.3% to $1.145 billion, compared to $1.142 billion a year earlier.  Total same store sales rose 1%.

"Q3 sales were challenging, and that trend continued into the start of Q4," said Jaffe.  "As a result, we are implementing promotional strategies and receipt flow adjustments to ensure our inventories are conservatively positioned for the fall season."

Source: Retailing Today

Hudson's Bay Company's Saks Acquisition Pays Off In First Quarter

June 3, 2014

Hudson's Bay Company more than doubled sales in the first quarter driven primarily by its acquisition of Saks last year.

Retail sales were $1.9 billion, an increase of $971 million from $884 million for the prior year.  Consolidated same-store sales increased by 2.8%, with increases of 2.5% at DSG, 2.6% at Saks Fifth Avenue and 15.1% at Off 5th.  Digital commerce sales totaled $207 million, reflecting both the inclusion of Hudson's Bay and Lord & Taylor (which together are referred to as "Department Store Group" or DSG) and Saks.

Sales growth at DSG was driven by menswear and beauty.  Sales growth at Saks Fifth Avenue was driven by menswear and accessories.  Sales growth at Off 5th was strong across all categories.

Two Off 5th stores opened in Palm Beach, Florida, and Milwaukee, Wisconsin, and two Saks Fifth Avenue locations closed in Orlando, Florida, and Stamford, Connecticut.

HBC also completed the sale and leaseback of its Queen Street flagship store and Simpson Tower office complex in Toronto for a purchase price of $650 million.

"Overall first quarter performance was in the range of our expectations," said governor and CEO Richard Baker.  "We are encouraged by the business trends witnessed through the quarter, which bode well for the balance of this year.  Furthermore, we are pleased by the progress of our integration of Saks, which is on-track to achieve approximately $50 million in HBC synergies targeted for this year.  As a result, we ar reaffirming our outlook for fiscal 2014 as provided in April."

Baker said that his confidence in HBC's future is based upon its core sales growth strategies: driving digital sales across all its banners, growing Off 5th through a modified and more productive format as well as new stores in the U.S. and Canada, bringing Saks Fifth Avenue to Canada and driving outsized growth at the top doors of each of its banners.

Hudson's Bay will also have a new financial chief step into that role June 9.  Paul Beesley most recently served in a number of executive roles with Empire Company Limited, a corporation with annual sales in excess of $19 billion and operations in retailing and related real estate, from 2000 to 2014, including as chief corporate development officer of it Sobeys unit and as CFO of Empire.  While at Empire, Beesley developed strategies resulting in the acquisitions of Canada Safeway and the remaining stake in Sobeys, led the creation of an Empire-related REIT and facilitated numerous financing transactions.

Source: Retailing Today

Big Lots First Quarter Same Store Sales Increase

May 30, 2014

Exiting Canada may have taken a bite out of Big Lots' profits in the first quarter, but the company still saw net and comparable store sales increase.

Net sales for the quarter increased 1.1% to $1.28 billion, compared to net sales from continuing U.S. operations of $1.26 billion for the same period last year.  Comparable-store sales for stores open at least 15 months increased 0.9% for the quarter.

Net loss from discontinued Canadian operations for the quarter totaled $25.2 million, or $0.44 per diluted share, compared to the company's guidance of a net loss of $37 to $41 million, or $0.64 to $0.71 per diluted share.  The lower-than-expected loss resulted from incremental deferred tax benefits and favorable settlements on lease terminations associated with store and distribution center operating leases.

Looking ahead to the second quarter, the company estimates that income from continuing operations will be in the range of $0.24 to $0.30 per diluted share, compared to adjusted income from continuing U.S. operations of $0.37 per diluted share the second quarter last year.  This guidance is based on an estimated comparable-store sales increase of between 1% and 3%.

Big Lots operates 1,496 Big Lots stores in 48 states.

Source: Retailing Today 

Dollar General Doesn't Blink

June 3, 2014

Undeterred by bad weather and competitive pressures that took a toll on its first quarter performance, Dollar General is pressing ahead with plans for 700 new stores, recently opened its 12th distribution center and believes its full year profit forecast is attainable.

The company said sales during its 13 week quarter ended May 2 increased 6.8% to $4.52 billion, while same store sales increased 1.5%.  Although the comp figure was below the company's expectations for an increase in the range of 2% to 3%, customer traffic and average transaction size still grew, according to the company.  Driving the gain were consumable category sales which were said to have significantly outpaced non-consumable categories.  Tobacco products, perishables and candy and snacks were top performers, according to the company.

"Dollar General's first quarter same-store sales improvement of 1.5% was driven by growth in our consumables business and, overall, reflected the challenges of unfavorable winter weather, heightened competition and the current economic environment," said Rick Dreiling, Dollar General's chairman and CEO.  "Even as these factors weighed on our sales results, we saw trends improve as we moved through the quarter and we delivered (earnings per share) 72 cents, which was in line with our guidance."

The company aided its EPS cause through aggressive share repurchase activity which made it possible to hit the low end of its targeted profit range of 72 cents to 74 cents.  Analysts had expected the company to report earnings per share of 73 cents.  Dollar General said it spent $800 million during the first quarter to repurchase 14.1 million shares, an amount that is roughly one third of the total 44.5 million shares repurchased for $2.3 billion since the program was authorized in December 2011.  The big reduction in shares helped boost earnings per share by two cents.  First quarter net income of $222 was essentially flat with the prior year profit of $220 million.

While Dollar General was able to hit its profit target, the lack of top line growth caused gross margin and expense leverage challenges.  Gross margins declined 57 basis points to 30% of sales which the company said was attributable to lower margin consumables comprising a larger portion of sales and higher markdowns related to promotional activity.  Meanwhile, expenses increased to 21.6% of sales from 21.3% of sales as moderate comp store growth caused the company to lose leverage while it also faced increased rent and utility costs.

Despite these challenges, Dollar General maintained its breakneck pace of growth during the quarter, opening 214 stores and a 930,000 sq. ft. distribution center in Bethel, Pennsylvania.  The company also confirmed its full year profit forecast and plans to open 700 new stores and remodel 500 others.  The company ended the first quarter with 11,338 stores throughout the U.S.

"We continue to grow both our customer traffic and average transaction amount as our merchandising initiatives reinforce our affordability and value messaging," Drelling said.  "Sales trends began to improve in April and have continued to gain momentum.  We are pleased to see that our merchandising strategies are gaining traction with a strengthening of sales in both consumables and non-consumables in our second quarter to date."

Dollar General, like many other retailers, is beginning 2014 in somewhat of a hole after reporting weaker than expected sales and profits aided by share-repurchase activity.  Going forward, the company is going to need a heightened level of spending among its cash-strapped core customers to achieve a full year profit target which was left intact.

Total sales this year are expected to rise between 8% and 9% with same store sales expected to grow between 3% and 4%, according to the company.  Full year profits are expected to range from $3.45 to $3.55 which is the same forecast the company shared when it reported fourth quarter results earlier this year.

Source: Retailing Today

Costco Beats Expectations In May

June 5, 2014

Warmer weather in May meant an uptick in store traffic for a few retailers, including Costco.  But the wholesale retailer's same-store sales for the month - which increased 6%, with a 6% rise in U.S. sales and a 4% increase in international sales -  were better than analysts had expected and bolstered by higher fuel prices.

The company reported net sales of $8.78 billion for the month, an increase of 8% from $8.13 billion during the similar four-week period last year.

In the United States, same-store sales increased 6%.  Total company same-store sales also increased 6%.

For the 39 weeks ended June 1, the company reported net sales of $81.99 billion, an increase of 6% from $77.13 billion during the similar period last year.

Source: Retailing Today

Fred's New Convenience Strategy Shuns Digital

May 29, 2014

Fred's wants to be what it calls "the convenient small box store of choice" and to achieve that goal, it has embarked on a two-pronged strategy focused on general merchandise and pharmacy.

Neither business is new for Fred's, an operator of 704 stores throughout the Southeast, but the need for a new approach to serving shoppers in the digital age was heightened after the company reported weak sales and profits for the first quarter ended May 3.  Sales declined to $498.3 million from $501.5 million and same store sales dropped 1.9% on top of a prior year decline of 1.3%.  The company's first quarter profits of $6.1 million, or 17 cents a share, were roughly half the $11.4 million, or 31 cents a share, profit the company earned the prior year.

There were some legitimate reasons for the weakness, as have been cited by numerous other retailers, but Fred's reasons went beyond the unusually cold weather and a tepid economy to include competitive promotions, issues related to the timing of tax credits and what it referred to as extraordinary inflationary pressures on generic drugs combined with third-party payers reluctant to increase reimbursement rates.

"Realizing that customers' shopping habits are changing faster than ever, we recognize that we need to adapt to these changes and meet customers' needs on their terms," said Fred's CEO Bruce Efird.  "Fred's new strategy takes into consideration the ongoing emergence of internet shopping.  This trend continues to reduce trips to conventinal brick-and-mortar stores, but, at the same time, potentially expands the number of convenience, need-based shopping trips.  We will be marketing the diverse categories we carry compared with other small box competitors to emphasize convenience, using a new marketing and signage strategy."

Rather than add e-commerce capabilities to its website, Efird said the front end of Fred's stores will be re-merchandised with power displays and pallets, along with a faster checkout configuration, all focused on ease of shopping and designed to emphasize the advantages of shopping at Fred's 15,000 sq. ft. stores.  The changes are meant to better position Fred's to serve more of the need-based categories and provide customers with an easier and more convenient shopping experience.

"We are now engaged in a robust reworking of our current pharmacy distribution agreement, with benefits expected to begin in the second half of 2014 and with the full impact anticipated in 2015," Efird said.  "We will be making the general merchandising changes over the balance of this year, which include cleaning out unproductive SKUs and exiting categories that do not align with Fred's enlarged convenience model.  The costs of these branding, marketing and merchandising strategies will be finalized by the end of the second quarter."

The company expects to fully implement a new marketing campaign by mid-July with further plans calling for the new front end, adjacencies and fixtures to be substantially completed early in the fourth quarter.

Source: Retailing Today

Costco Misses Estimates Although Sales Solid

May 29, 2014

Solid sales growth at Costco during the second quarter and a 6% same store sales increase at U.S. clubs did not translate into strong profits for the warehouse club operator whose earnings fell shy of analysts' estimates.

Costco's worldwide revenues for the 12 week period ended May 11 increased 7.1% to nearly $25.8 billion and consisted of product sales that increased 7.1% to slightly more than $25.2 billion and membership revenue which rose 5.6% to $561 million.  Total company same store sales increased 4% and consisted of a 5% U.S. comp increase and a 3% international increase.  Both figures were negatively affected by lower gasoline prices and foreign exchange.  U.S. comps increased 6% excluding the negative effects of gas prices and international comps increased 8% on a constant currency basis.

Costco saw its profits increase 3% to $473 million, or $1.07 a share, from $459 million, or $1.04 a share.  The consensus among analysts was that Costco would earn $1.09 a share.

Costco ended its second quarter with a total of 655 warehouses worldwide, including 464 locations in the United States and Puerto Rico, 87 in Canada, 33 in Mexico, 25 in the United Kingdom, 19 in Japan, 10 in Taiwan, 10 in Korea, six in Australia, and one in Spain.  The company plans to open as many as eight new warehouses during the second half of its fiscal year.

Source: Retailing Today

Sears To Close 80 Stores After Loss Widens In First Quarter

May 22, 2014

Sears plans to close at least 80 stores this year after widening its loss in the first quarter of fiscal 2014.

Although same-store sales increased 0.2% for the quarter, the company's net loss climbed to $402 million from $279 million in the prior-year quarter.  Revenues declined 7% to $7.9 billion, from $8.5 billion in the prior-year quarter.

Sears attributed its continued decline in revenue to the closure of Kmart and Sears full-line stores, as well as the divestiture of its Lands' End business.  But according to a Reuters report, analysts pointed to the effect of promotional transactions on gross margin, with one analyst going so far as suggesting that the company's new business model - namely Shop Your Way - may be doing more harm than good since the company offered deep discounts on "already promoted, low-margin items."

"Sears is undergoing a significant transformation, and we fundamentally are changing the way we do business," said chairman and CEO Edward L. Lampert.  "Our performance in the first quarter highlights the challenges we are facing as well as the progress we are making in this transformation.  We are moving away from a company that was heavily based on selling products solely through a store-based network to a member-centric business model focused on providing benefits to our members anytime and anyplace.  We are seeing progress in our transformation to a member-centric, integrated retailer, as we continue to invest heavily in driving our Shop Your Way program."

Source: Retailing Today

Record First Quarter For Dollar Tree

May 22, 2014

Increases in traffic and average ticket resulted in record first quarter sales growth at Dollar Tree.

Consolidated net sales for the quarter were a record $2 billion, a 7.2% increase compared to $1.87 billion reported for last year's first quarter.  Consolidated comparable store sales increased 2% on a constant currency basis.  Adjusted for the impact of Canadian currency fluctuations, the comparable-store sales increase was 1.9%.

Earnings per diluted share for the first quarter were $0.67, a 13.6% increase compared to earnings per diluted share of $0.59 reported for last year's quarter.

Discretionary business grew slightly faster than consumables and leading categories for the quarter included candy, check-out products, stationery and seasonal merchandise for Valentine's Day and Easter.

"Our stores are currently filled with a balanced mix of consumable products and exciting variety merchandise for Summer Fun.  Inventory is clean and fresh and our associates are focused on providing a great shopping experience for every customer, at every store, every day," said CEO Bob Sasser.

The company continues to expand.  During the first quarter, Dollar Tree opened 94 stores, closed six stores and expanded or relocated 28 stores.  Retail selling square footage increased 6.8% compared to a year ago, to 44.0 million sq. ft.

Looking ahead, the company estimates sales for the second quarter to be in the range of $1.97 billion to $2.02 billion, based on low-single digit positive comparable-store sales.  Diluted earnings per share are estimated to be in the range of $0.58 to $0.64.

Full year sales are now estimated to be in the range of $8.37 billion to $8.54 billion.  This estimate is likewise based on a range of low-single digit positive comparable-store sales.  Fiscal year 2014 diluted earnings per share are expected to be $2.94 to $3.12.  These estimates assume no impact from potential additional share repurchase activity in 2014.

Dollar Tree operated 5,080 stores in 48 states and five Canadian Provinces as of May 3.

Source: Retailing Today

Target Shows Early Signs Of Improvement In First Quarter

May 21, 2014

Despite the massive data breach that hurt Target's fourth quarter, people are not staying away from the retailer.  According to a Reuter's report, the company saw a dramatic improvement in traffic in the first quarter compared to its late fourth quarter trends.

The company's first quarter financial performance in its U.S. and Canadian segments was in line with expectations, and according to interim president and CEO John Mulligan, reflects not only its continued recovery from the data breach but also early signs of improvement in its Canadian operations.

"While we are pleased with this momentum, we need to move more quickly," said a cautiously optimistic Mulligan, who is also the company's CFO and is temporarily filling in as chief executive while the company seeks a replacement for the ousted Gregg Steinhafel.  "As a result, we have made changes to our management team and are investing additional resources to drive U.S. traffic and sales, improve our Canadian operations and advance our ongoing digital transformation.  We have updated our 2014 earnings expectations to reflect the impact of these investments and believe that they position Target for accelerated profitable growth as a leading omnichannel retailer."

U.S. sales for the quarter increased 0.2% to $16.7 billion last year, reflecting the contribution from new stores partially offset by a 0.3% decrease in comparable sales.  First quarter gross margin rate was 29.5% compared with 30.7% in 2013, driven primarily by additional promotional markdowns this year.

The company's Canadian segment generated sales of $393 million, compared with $86 million in first quarter 2013 when Target opened its first 24 Canadian stores.  The first quarter 2014 gross margin rate of 18.7% reflects the continued impact of efforts to clear excess inventory, including long lead-time receipts.  This compares to first quarter 2013 gross margin rate of 38.4%, which benefitted from a lack of clearance markdowns due to the short time stores had been open.

Heading Canadian operations now is company veteran Mark Schindele.  He replaces Tony Fisher, whom the company terminated this week.

Target incurred $18 million of net expense in first quarter 2014 thanks to the data breach - during which an intruder gained unauthorized access to its network and stole payment card and other customer information - reflecting $26 million of total expenses partially offset by the recognition of an $8 million insurance receivable.

The expense does not include any accrual for the potential claims by the payment card networks for counterfeit fraud losses, the company said, adding that the amount accrued to date for probable losses on potential payment card network claims consists solely of operating expense reimbursement obligations.  Target also added that at this time, it is unable to reasonably estimate a range of possible losses on the payment card networks' potential claims in excess of the amount accrued.

Source: Retailing Today 

Winter Fails To Freeze Earnings At Lowe's In First Quarter

May 21, 2014

Bad weather for retail dampened sales at Lowe's, but earnings surged well into the double digits for the first quarter, the company announced Wednesday morning.

Lowe's sales increased 2.4% in the first quarter, rising to $13.4 billion.  Comparable-store sales increased 0.9%.

The Mooresville, North Carolina-based retail giant reported a net earnings surge of 15.6% to $624 million for the quarter ended May 2.

Lowe's quarterly earnings report followed by one day the report from Home Depot, which outperformed Lowe's in terms of sales.  Lowe's showed the higher percentage gain in net earnings - 15.6%, compared with Depot's 12.5%.

Both retail giants pointed to the challenges of operating through a season hampered by a late start to spring.

"We executed well during the quarter, despite an unexpectedly prolonged winter in many areas of the country," commented Robert A. Niblock, Lowe's chairman, president and CEO.  "While poor weather dampened traffic and negatively impacted performance of exterior categories, results for indoor categories were solid.  We effectively aligned inventory, staffing and marketing resources by climatic zone to best serve customers' needs."

As of May 2, 2014, Lowe's operated 1,836 home improvement and hardware stores in the United States, Canada and Mexico, representing 200.7 million sq. ft. of retail selling space.

For the full fiscal year, Lowe's said total sales are expected to increase approximately 5%, while comp-store sales are expected to increase about 4%.

Early second-quarter performance suggests Lowe's is on the right path, Niblock said.

"Performance has improved in May, which - together with our strengthening execution - gives us the confidence to reaffirm our sales and operating profit outlook for the year," he said.

In other news, Lowe's has a new SVP in Michael Tummillo, who is taking over the Building and Maintenance division as SVP and general merchandising manager.  He replaces Michael McDermott, who will now serve as CMO and direct supervisor to Tummillo.

"Mike has a deep understanding of the business and the challenges our professional and DIY customers face every day," said McDermott.  "During his time at Lowe's, Mike has demonstrated the kind of strategic thinking and leadership across functions which will position him for success as he takes on responsibility for the broader building and maintenance merchandising team.  I have great confidence that Mike will deliver our strategic goals in this important segment of the business."

Tummillo was most recently serving as merchandising VP, rough plumbing and electrical.  He joined Lowe's in 2004 as VP credit services, soon after acquiring additional responsibilities in credit, project and event sales.  His resume also includes stints at GE card services and GE financial assurance.

Source: Retailing Today 

Store Closures Hurt Staples In First Quarter

May 20, 2014

Store closures and weak demand for traditional office supplies and computers hurt Staples in the first quarter of fiscal 2014.

The company attributed a 44% drop in net earnings during the quarter to lower sales caused by store closures and a rise in the value of the dollar.  But according to reports, the office products company and second largest internet retailer in the United States is facing stiff competition from big box retailers such as Walmart and e-commerce giants such as Amazon.

Net earnings were $96 million for the quarter.  Net saes dropped 3% to $5.65 billion from $5.81 billion.

For the second quarter, the company anticipates further decreases in sales, which caused shares to drop 10%.

"We're making progress meeting the changing needs of our customers as we reinvent Staples," said chairman and CEO Ron Sargent.  "Despite a slow start to the first quarter, our results were in line with our expectations and we expect to build mementum throughout 2014."

Source: Retailing Today

Home Depot Overcomes Slow Start To Spring Selling Season In Q1

May 20, 2014

Despite getting a slow start to the year, The Home Depot rallied in the first quarter thanks to solid results in non-weather-impacted markets.

The home improvement retailer reported first quarter sales of $19.7 billion, up 2.9% from last year's first quarter.  Comparable store sales were up 2.6%.  Comp-store sales for U.S. stores were positive 3.3%.

The company also reported double-digit growth in net earnings - up 12.5% to $1.38 billion.

"The first quarter was impacted by a slow start to the spring selling season," said Frank Blake, chairman and CEO.  "But we had solid results in non-weather-impacted markets and expect our sales for the year to grow in line with guidance we previously provided."

That guidance calls for 2014 sales to increase about 4.8% from the previous year.

At the end of the first quarter, Home Depot operated a total of 2,263 stores.

Source: Retailing Today

Dillard's Sidesteps Stubborn Winter In First Quarter

May 16, 2014

While other retailers saw sales affected by a winter that overstayed its welcome, Dillard's marked its 15th consecutive quarter of positive sales.

Despite weak sales in home and furniture, Dillard's said sales trends in the first quarter were strongest in the men's apparel and accessories category and the junior's and children's apparel category, followed by ladies' accessories and lingerie.

The retailer reported total merchandise sales for the quarter of $1.539 billion, a 1% increase from $1.530 billion for the prior-year period.  Comparable-store sales increased 2%.

Sales trends were strongest in the Central region, followed by the Eastern and Western regions, respectively.

"We reported record earnings per share of $2.56 compared to $2.50.  Our 2% comparable store sales increase marks our 15th consecutive quarter of positive sales.  Additionally, we executed $65.9 million of share buyback as a result of our strong cash flow," said CEO William Dillard II.

Gross margin from retail operations decreased 14 basis points of sales for the quarter compared to the first quarter last year.  The decline resulted primarily from increased markdowns compared to the prior-year first quarter.

At May 3, the company operated 278 Dillard's locations and 18 clearance centers spanning 29 states, as well as its e-commerce site.

Source: Retailing Today 

Rack Rolling For Nordstrom

May 16, 2014

Nordstrom's full line stores saw first quarter same store sales decline but the department store operator's off price Rack division is doing just fine.

Total sales increased 6.8% to $2.8 billion with top-performing categories including accessories, women's shoes, and cosmetics.  A 3.9% overall same store sales increase was comprised of a 1.9% decline at full line stores and a 6.4% comp increase at the rapidly expanding Nordstrom Rack stores.  Nordstrom's direct (e-commerce) sales grew by 33% in the quarter on top of a 25% prior year increase and the company launched its Nordstromrack.com Web site.

Nordstrom said its profits declined to $140 million, or 72 cents a share, from $145 million, or 73 cents a share, due in large part to heavy investments in technology and supply chain to support omnichannel initiatives and entry into Canada.  Despite the decline, the company's earnings of 72 cents were four cents better than analysts expected and above the company's guidance range of 60 cents to 70 cents.

Nordstrom ended the quarter with 117 full line stores, the same as the prior year, while the number of Rack outlets increased to 150 locations from 128.  During the remainder of the year, three new full line stores are expected to open along with 17 Rack stores.

Source: Retailing Today

Kohl's Stays Firm On Outlook Despite Weak First Quarter Sales

May 15, 2014

Kohl's joins a growing list of retailers whose first quarter results took a hit from a severe and extended winter.  Despite missing estimates, the company is staying firm on its guidance for the full fiscal year.

The company reported net sales for the quarter of $4.07 billion, a 3.1% decrease from $4.2 billion for the prior-year quarter.  Comparable store sales decreased 3.4% in the quarter compared to a 1.9% decrease in the prior-year quarter.  Net income was $125 million for the quarter, a drop of 15% from $147 million in the prior-year quarter.  Diluted earnings per share fell 9% to $0.60 from $0.66 in the prior-year quarter.

"We did not achieve our first quarter sales goals, but we were encouraged by the improvement in sales as the quarter progressed," said chairman, president and CEO Kevin Mansell.  "Our teams managed our inventory levels appropriately and expenses were controlled throughout the organization during the quarter."

The company still anticipates diluted earnings per share of $4.05 to $4.45 for fiscal 2014, which is consistent with its previous guidance.

Kohl's ended the quarter with 1,160 stores in 49 states, compared with 1,155 stores at the same time last year.  The company opened four new store locations, relocated one existing store and permanently closed two stores during the quarter.

Source: Retailing Today