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Entries in Retail Sales (88)

Friday
Apr252014

Safeway Sees Uptick In Sales In First Quarter

April 24, 2014

Safeway posted sales of $8.3 billion in the first quarter of 2014, representing an increase of 1%.  The slight uptick in sales was primarily attributed to an identical-store sales (excluding fuel) increase of 1.8%, partly offset by lower fuel sales in 2014.

This increase of 1.8% consists of a 1% increase in price per item and a 0.8% increase in volume.  Safeway's share of sales in all outlet channels increased slightly, and sales to its most loyal households improved during the quarter.

"We are working diligently to close the merger with Albertsons by the fourth quarter," stated Robert Edwards, Safeway president & CEO.  "While sales met plan in the first quarter, income was slightly below plan, in part as a result of inflation in produce, meat and pharmacy that was not fully passed along for competitive reasons.  In the second quarter of 2014, identical-store sales are currently running well above 2%, and we expect to pass along most of the inflation we ar experiencing.  In addition, the direct and indirect cost initiatives we are implementing are expected to improve profitability in the second half of 2014."

Safeway continues to drive sales momentum through its center of store remodels, as well as merchandising premium, Hispanic and Asian products to meet local demographic needs, Edwards reported.  "In addition, our sales of organic and natural products continue to grow at a rapid pace, with our private label brands O Organics and Open Nature growing approximately two times faster than the rest of the market."

Source: Retailing Today 

Friday
Apr252014

Supervalu CEO Pleased With Fourth-Quarter Results

April 23, 2014

Things are looking good for Supervalu, which reported fourth quarter fiscal 2014 net sales of $4 billion, up 1.4%, and net earnings of $26 million, or $0.10 per diluted share.

"Fiscal 2014 was an important transition year for Supervalu as we stabilized the organization and set the foundation for our future," stated Sam Duncan, Supervalu president and CEO.  "I am pleased with the direction of our business segments and look forward to the new fiscal year where we can focus our attention on driving sales growth across the organization."

Identical store sales in the retail food segment were positive 0.2%.  Identical store sales in the Save-A-Lot network were positive 2.1%.  Identical store sales for corporate stores within the Save-A-Lot network were positive 3.5%.

Total sales within the independent business segment decreased 0.6% primarily due to the continued impact of losing two large customers and lower military sales partially offset by net new business.

Source: Retailing Today

Tuesday
Apr152014

So Long Winter. Retail Sales Spring Up In March

April 14, 2014

Warmer spring weather spurred continued consumer spending and activity this March.  According to the National Retail Federation, March retail sales, which exclude automobiles, gas stations and restaurants, increased 0.8% adjusted month-to-month and 1.6% unadjusted year-over-year.

"Consumers shed their winter coats last month for fresh, spring merchandise," NRF president and CEO Matthew Shay said.  "Retail sales increased in most categories and sectors as consumers took to stores to purchase new spring attire and home furnishings in hopeful expectation of warmer weather.  Sales should continue to remain positive this spring with the approach of Easter and expected tax refunds."

Earlier this month, NRF's Easter Spending Survey reported that the average American consumer will spend $137.46 this Easter holiday on clothing, candy, gifts and more, with total spending reaching $15.9 billion.

March retail sales, released today by the U.S. Census Bureau, which include categories such as automobiles, gasoline stations, and restaurants, increased 1.1% seasonally adjusted month-to-month ($433.9 billion).  The Census also reported that retail sales increased 2.8% adjusted year-over-year.

"Improving economic conditions and consumer confidence should push consumers to return to spending habits this spring," NRF chief economist Jack Kleinhenz said.  "Consumers released some pent-up demand in March after two consecutive months of harsh winter weather that not only hampered employment opportunities but also retail sales.  We remain optimistic that retail sales will continue their positive march this spring."

Additional findings from NRF's retail sales report include:

  • Building material and garden equipment and supplies dealers stores' sales increased 1.8% seasonally-adjusted month-to-month and 6.2% unadjusted year-over-year.
  • Clothing and clothing accessories stores' sales increased 1.0% seasonally-adjusted month-to-month yet decreased 2.3% unadjusted year-over-year.
  • Electronics and appliance stores' sales decreased 1.6% seasonally-adjusted month-to-month and 2% unadjusted year-over-year.
  • Furniture and home furnishing stores' sales increased 1% seasonally-adjusted month-to-month and 1% unadjusted year-over-year.
  • General merchandise stores' sales increased 1.9% seasonally-adjusted month-to-month yet decreased 0.2% unadjusted year-over-year.
  • Health and personal care stores' sales increased 0.3% seasonally-adjusted month-to-month and 4% unadjusted year-over-year.
  • Nonstore retailers' sales increased 1.7% seasonally-adjusted month-to-month and 8% unadjusted year-over-year.
  • Sporting goods, hobby, book and music stores' sales increased 0.3% seasonally-adjusted month-to-month yet decreased 5.5% unadjusted year-over-year.

Source: Retailing Today

Tuesday
Mar182014

Shopping Paused This Winter, Will Pick Up This Spring

March 13, 2014

Consumer spending on retail sales rose a healthy 0.3 percent in February, despite widespread inclement weather.  This good result essentially offsets the declines registered in January.  The core retail sales measure that excludes autos, building materials and gasoline also advanced a solid 0.3 percent supporting consumer spending in Q1.  Online store sales rose a robust 1.2 percent, as shoppers turned to the internet given the inclement weather in the month.  Although there is some lingering uncertainty about the strength of the labor market going forward - delivering more jobs and perhaps higher wages.  There could be a further bounce this spring as some shoppers finally get out as warmer weather arrives.  Still, the direction of the consumer market for the remainder of the year is more dependent on the strength of the labor market.  The upscale market is and will continue to do fine.  For the mid to lower-scale retail market, better weather could mean a little better sales record but sales are likely still to be constrained on the upside by sluggish wage gains.

Source: The Conference Board

Monday
Mar172014

NRF Weighs In On February Retail Sales

March 13, 2014

Many retailers have pointed to a persistent and severe winter for weak holiday and fourth-quarter sales.  But according to the National Retail Federation (NRF), retail sales rebounded in February.

The NRF said that February retail sales, excluding automobiles, gas stations and restaurants, increased 0.2% adjusted month-to-month and 2.3% year-over-year.

"Today's positive retail sales report indicates that the economy is primed for growth," said president and CEO Matthew Shay.  "Retailers and consumers endured the harsh winter and they're hoping both the natural and man-made obstacles to growth will leave with the snow."

Shay went on to say that retailers are facing "serious" headwinds placed on them by policymakers in Washington who are pushing for new overtime mandates and a higher minimum wage.  According to Shay, for the economy to fully recover, the administration and Congress neet to "quit politicking and focus on growth and job creation."

"Despite a long and cold winter, consumers continued to persevere and spend in February," added chief economist Jack Kleinhenz.  "This month's retail sales data is encouraging and above expectations.  However neither the jobs nor retail data reflect the fundamental health of the economy.  While the weather continues to play tricks on economic forecasts and figures, we expect much-needed clarity come spring as consumers release pent-up demand."

Additional NRF findings from the February retail sales report include the following:

  • Building material and garden equipment and supplies dealers stores sales increased 0.3% seasonally-adjusted month-to-month and 3.2% year-over year.
  • Clothing and clothing accessories stores sales increased 0.4% seasonally-adjusted month-to-month and 2.4% unadjusted year-over-year.
  • Electronics and appliance stores sales decreased 0.2% seasonally-adjusted month-to-month and 2.3% unadjusted year-over-year.
  • Furniture and home furnishing stores sales increased 0.4% seasonally-adjusted month-to-month and remained unchanged unadjusted year-over-year.
  • General merchandise stores sales decreased 0.3% seasonally-adjusted month-to-month and 0.9% unadjusted year-over-year.
  • Health and personal care stores sales increased 1.2% seasonally-adjusted month-to-month and 5.6% unadjusted year-over-year.
  • Nonstore retailers sales increased 1.2% seasonally-adjusted month-to-month and 6.8% unadjusted year-over-year.
  • Sporting goods, hobby, book and music stores sales increased 2.5% seasonally-adjusted month-to-month yet decreased 5.3% year-over-year.

Source: Retailing Today

Friday
Mar142014

Bad Weather Not Slowing Dollar General Growth

March 13, 2014

An unrelenting Dollar General continues to push forward with plans to open 700 stores this year despite reporting weak financial results and a 1.3% same-store sales increase for the fourth quarter.

Sales during Dollar General's fourth quarter ended December 31, increased 6.8% to nearly $4.5 billion and were driven mainly by the addition of new locations as same-store sales increased just 1.3%.  The comp increase was due to growth in customer traffic and average transaction amount with tobacco and perishables singled out as key contributors, according to the company.  However, growth in those categories negatively affected the company's gross margins as did an increase in the shrink rate, which caused gross margins to decline to 31.9% from 32.5%.  Expenses were essentially flat with the prior year at 20% of sales.

Profits in the fourth quarter increased 1.6% to $322 million or $1.01 a share, compared to a profit of $317 million, or 97 cents a share, in the fourth quarter the prior year.

"Sales in the fourth quarter were impacted by severe winter weather, including many days with significant store closures, an aggressive competitive retail landscape and our customers' uncertainty about spending in the current economic environment," Dollar General chairman and CEO Rick Dreiling said.  "In spite of these headwinds, both customer traffic and average ticket increased in our same-stores in the fourth quarter.  In addition, we controlled our expenses well and successfully managed the business to deliver a gross margin rate that was better than we anticipated.  Although some of the severe weather impact has continued into the first quarter, we are pleased with our sales performance on days when weather is more normalized."

The impact of weather can be seen in Dollar General's expectation for a first quarter same-store sales increase in the range of 2% to 3%, compared to a 2.6% comp increase in the first quarter of 2013.  For the full year, the company expects sales to increase in the range of 8% to 9% and same store sales to rise between 3% and 4%, which implies an acceleration of comp growth later in the year.  Earnings per share are expected to range from $3.45 a share to $3.55.

The key contributor to those results will be the company's breakneck pace of expansion which calls for 700 new stores as part of a $450 million to $500 million capital expenditure program.  The new store construction program, the most ambitious in the retail industry, follows a record year of square footage expansion in 2013.

"Among our other many accomplishments for the year, we successfully opened 650 new stores, ending the year with 11,132 stores serving customers in 40 states," Dreiling said.  "Dollar General is a strong and growing business with high return store growth opportunities that we intend to capture.  While we remain cautious on the current operating environment and the many challenges our customer is facing in 2014, we have a business model that generates significant cash flow, putting us in a position to invest in these growth opportunities, while continuing to return cash to shareholders through share repurchases."

Dollar General will come close to surpassing $20 billion in annual sales this year if its same-store sales and expansion goals are realized.  Last year, the company's sales increased 9.2% to $17.5 billion from $16 billion and full-year same-store sales increased 3.3%.  As in the fourth quarter, those results were driven by an increase in customer traffic and average transaction size and strength in categories such as tobacco, perishables, candy and snacks.

Source: Retailing Today

Thursday
Mar132014

Digging Out Of One Of The Longest Winters Ever: The Good, The Bad And The Ugly

March 10, 2014

For meteorologists, scientists, weathermen and millions of others, this winter has been absolutely dreadful.  And, although spring is on the horizon, much of the country is still covered in snow.  In fact, the nation's 21st winter storm just wrapped up this past weekend.

When it comes to the impact weather has on businesses, most industries, including retail, manufacturing, construction and auto, recognize the ebb and flow of weather as a significant part of their plans.  For retailers, weather forecasting models can impact everything from merchandising decisions to shipping and receiving, and even sales and staffing.

Looking back on the past few months, it's evident the 2013-2014 winter season has been a serious thorn in the side for the nation's largest industries.  In the Federal Reserve's recently released "Beige Book," a summary of commentary on current economic conditions, "weather" was mentioned 119 separate times to describe November and December alone.

Just how severe was this winter?

  • Ohio had used almost a million tons of salt for its roadways as of late February, compared with 630,000 tons used on average each winter
  • Erie, Pennsylvania became America's snowiest city with a population over 100,000, recording a whopping 123.9 inches of snow
  • According to the National Oceanic and Atmospheric Administration, December and January averaged over the contiguous 48 states were the third-coldest months in the last 30 years
  • As of January 31, there were 1,073 different snowfall records set across the country at various times
  • The meteorological winter, beginning December 1 and ending March 1, marked Chicago's coldest winter in 30 years

As for the latest results from retail, industry sales in January fell 0.4 percent from December 2013, according to the Department of Commerce, led by a drop in auto sales and in categories like clothing, furniture stores and restaurants, sectors largely depending on foot traffic.  Seasonal hiring in February showed retailers took a more cautious approach to staffing their stores during the brutally cold month.

But for some retailers it hasn't been bad news:

  • Ace Hardware has reported it is having its best winter in more than a decade thanks to increased sales of snowblowers and shovels
  • Maine-based retailer L.L. Bean has sold out of its famous waterproof boots
  • Sales for company Delivery.com are up 30 percent compared with last year as more people looked for ways to get their laundry, dry cleaning and grocery shopping done without leaving home
  • Carmex, maker of their namesake cult-favorite lip balm, says its sales are up 9 percent over the past eight to ten weeks
  • Pawz Dog Boots, which makes fun, colorful booties for dogs that protect them from salt and snow, says sales have more than doubled

Looking ahead, it's too soon to say if NRF's outlook for 2014 needs to be adjusted based on recent sales reports; the impact from the severe weather could have just been a blip on the radar, so to speak.  When the ground finally thaws and consumers can start enjoying spring-like weather, we will re-evaluate consumer spending.  Until then, we can only hope that winter is done having its fun with us.

Source: National Retail Federation

Wednesday
Mar122014

Severe Weather Affects Gap's February Sales

March 7, 2014

Severe weather that persisted during the year's shortest month affected Gap's February sales results.

The company reported net sales for the four-week period ended March 1 of $929 million, compared with net sales of $966 million for the four-week period ended March 2, 2013.  Comparable-store sales for the month declined 7%, versus last year's 3% increase.

"While February was clearly a difficult month, we remain focused on executing our global priorities," said chairman and CEO Glenn Murphy.

Comparable sales by global brand for the month were as follows:

  • Gap: down 10% versus last year's 2% increase
  • Banana Republic: down 7% versus last year's 5% decrease
  • Old Navy: down 6% versus last year's 6% increase

The company said that more than 450 stores had to close during February due to weather.

In line with its strategic priorities, the company is preparing to open its first Gap store in Taiwan.  The brand expects to end fiscal year 2014 with more than 100 Gap stores across the Greater China region.

Gap will report March sales April 10.

Source: Retailing Today

 

Wednesday
Mar122014

Ascena Reduces Outlook Further

March 3, 2014

Ascena Retail Group, the operator of Lane Bryant, Justice and Dress Barn stores, cited increased spending on growth initiatives and a challenging sales climate for a second quarter profit decline and its second full year earnings guidance reduction in two months.

Sales for the company's second quarter ended January 26 increased 2% to $1.3 billion, while consolidated same-store sales were essentially flat.  A 3% comp decline at physical stores was offset by 28% e-commerce growth to achieve the overall flat comp increase.  Net income fell to $31.9 million, or 19 cents a share, from $47 million, or 29 cents a share last year.

The decrease was due primarily to profit declines at Justice stores and increased operating expenses from growth-related investments in new stores, merchandising and design resources and e-commerce capabilities, according to the company.

"Second quarter net income was slightly above our revised expectations, despite softer than expected sales in January driven primarily by challenging weather that continued to negatively impact sales into early March," said Ascena president and CEO David Jaffe.  "However, in warmer regions sales have been in line with expectations.  We are implementing promotional strategies and receipt flow adjustments to bring inventory balances back to targeted levels."

Jaffe remained optimistic about the company outlook, citing very good progress on long range strategic priorities related to synergy initiatives and recently completed construction of a new national retail distribution center and a new e-commerce fulfillment center that becomes operational in the spring.

Ascena's profits were expected to be under pressure following a January 13 announcement regarding holiday sales during November and December.  At the time, Jaffe noted that "a challenging holiday selling season resulted in increased promotional activity.  We successfully cleared excess inventory and have taken the necessary markdowns in the second quarter to transition cleanly into the spring season."

As a result, the company shaved as much as 20 cents of its full year profit forecast, reducing the range of earnings possibilities to $1.10 to $1.15 from earlier guidance of $1.25 to $1.30 for its fiscal year ending in July.  However, late Monday, the company further reduced its full year estimate to a range of $1 to $1.05.

The soft holiday sales and expense pressure followed a respectable showing in the company's first quarter ended October 26 in which each of its formats posted positive same store sales growth.

Source: Retailing Today

Wednesday
Mar122014

Sales Solid, But Holidays Pressured Profits At Costco

March 6, 2014

In the sales versus margins battle at Costco, sales got the upper hand during the holiday season and the company's second quarter, ended February 16.

Costco managed to grow sales by 5.8% to $25.76 billion and same-store sales, excluding fuel, at U.S. clubs rose a healthy 5%.  However, in a shortened and intensely priced competitive holiday season impacted by severe winter weather, Costco sacrificed margin to maintain member satisfaction, which was evident in membership free income that grew 4.2% to $550 million.  The tradeoff between sales and margins was evident in the company's bottom line as net income declined to $463 million, or $1.05 a share, compared to $547 million, or $1.24 a share, during the second quarter the prior year.  Comparisons to the prior year were made more difficult because the period included a 14-cents-a-share one time tax benefit related to a portion of a special cash dividend the company paid in December 2012 to 401k plan participants.

"Even with that distinction, however, the year-over-year comparison was unfavorable," said Costco CFO Richard Galanti.  "Despite satisfactory sales results during the second fiscal quarter, several other factors led to lower earnings.  The first four-week period of the fourth quarter represented the majority of earnings underperformance in the quarter," Galanti said.

Costco's second quarter began November 25, 2013 and encompassed the Thanksgiving weekend, which fell late last year and compressed the holiday season.

Total company same-store sales during the quarter, excluding fuel and the effects of foreign currency, increased 5% and consisted of a 7% gain internationally and a 5% domestic increase.

Costco ended the period with 649 stores, consisting of 462 locations in the U.S. and Puerto Rico, 87 in Canada, 33 in Mexico, 25 in the United Kingdom, 18 in Japan, 10 in Taiwan, 9 in Korea and 5 in Australia.  The company plans to open as many as 14 new stores before the end of its fiscal year August 31, 2014.

Source: Retailing Today

Tuesday
Mar112014

Staples Digital Reinvention Results In 225 Store Closures

March 6, 2014

Ongoing weakness at Staples' North American retail division has resulted in the planned closure of 225 units as part of a larger expense savings program and increased emphasis on digital initiatives.

The store closure announcement, part of a larger plan expected to save $500 million by the end of 2015, was announced in conjunction with the release of fourth-quarter results and new insights regarding the company's online business.

Profits during the 13-week fourth quarter ended February 1 increased to $212 million, or  33 cents a share, compared to the prior year's 14-week fourth quarter, which saw profits of $78 million, or 12 cents a share.  Despite the profit improvement, the sales picture at Staples remained challenging during the fourth quarter.  During the period, total sales declined 3.8% to nearly $5.9 billion while sales at the North American Retail division declined 5.7% to $2.9 billion, excluding an extra week from the prior year reporting period.  Same-store sales declined 7% and operating profits for the division fell to $176 billion from $317 million.

According to the company, sales declines in business machines and technology accessories, office supplies and computers, were partially offset by growth in facilities and breakroom supplies, paper and copy and print.

The newly announced closures follow a net store count reduction of 34 units last year which left Staples with a total of 1,846 stores in the U.S. and Canada at year end.  Even with the elimination of 225 stores this year, Staples will continue to have a sizable retail footprint it can leverage to offer shoppers an omnichannel experience.

"A year ago, we announced a plan to fundamentally reinvent our company," said Ron Sargent, Staples' chairman and CEO. "With nearly half of our sales generated online today, we're meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency."

Sales at Staples.com increased by 10% during the fourth quarter as the retailer offered a dramatically expanded online assortment which increased to 500,000 products at the end of 2013 compared to 100,000 at the beginning of the year.

Sargent's assertion that half the company's total sales are generated online, while technically accurate, tends to overstate the situation with its physical stores.  That's because the company's digital penetration rate is skewed by the dynamics of its nearly $2 billion North American commercial division, which focuses on large corporate clients whose interactions with the company are virtually all online.

In addition to saving related to store closures, Staples said additional savings would come from unspecified initiatives in the areas of supply chain, labor optimization, non-product related costs, IT hardware and services, marketing, sales force and customer service.

Source: Retailing Today

Monday
Mar102014

Winter No March For Walgreens In Second Quarter

March 5, 2014

Severe winter weather was unable to put a damper on Walgreen's February sales and overall second-quarter results for the period ended February 28. 

The company reported February sales of $6.1 billion, an increase of 5% compared to the same month in fiscal 2013.  Total sales for the quarter were $19.6 billion, up 5.2%.

February pharmacy sales increased by 6.7%, while comparable store pharmacy sales increased 6.1%.  Comparable store pharmacy sales were negatively impacted by 1.4 percentage points due to generic drug introductions in the last 12 months, and were positively impacted by 0.1 percentage point due to more flu shots in February versus last year.  The lower incidence of flu negatively impacted pharmacy sales by 0.7 percentage point.  Pharmacy sales accounted for 62.9% of total sales for the month.

Prescriptions filled at comparable stores increased by 2.2% in February.  Prescriptions filled at comparable stores were positively impacted by 0.1 percentage point due to more flu shots in the month versus last year but were negatively impacted by 1 percentage point due to the lower incidence of flu in February 2014.  Flu shots administered at pharmacies and clinics season to date were 7.7 million versus nearly 7 million last year.

Total front-end sales increased 3% compared with the same month in fiscal 2013, while comparable store front-end sales increased 2%.  Customer traffic in comparable stores decreased 0.7% while basket size increased 2.7%.

Sales in comparable stores increased by 4.5% in February.  Generic drug introductions in the last 12 months negatively impacted total comparable sales by 0.9 percentage point, while the lower incidence of flu negatively impacted total comparable sales by 0.4 percentage point.

Comparable store sales for the second quarter of fiscal 2014 increased 4.5%, while front-end comparable store sales for the quarter increased 2%.  Prescriptions filled at comparable stores increased 2.4% in the second quarter and comparable pharmacy sales increased 6.1%.

Severe winter weahter is estimated to have negatively impacted second quarter comparable store front-end sales by 0.6 percentage point and negatively impacted the quarter's prescriptions filled comparable stores by 0.8 percentage point.  Additionally, the company incurred incremental selling, general and administrative expenses throughout the quarter from the severe weather.

Walgreens opened eight stores during February, including five relocatons.

On February 28, Walgreens operated 8,681 locations in all 50 states, the District of Columbia, Puerto Rico, Guam and the U.S. Virgin Islands.  That includes 8,209 drugstores, 138 more than a year ago, including 60 net stores acquired over the last 12 months.

Source: Retailing Today

Saturday
Feb222014

Walmart Thinking Big With Small Formats Amid Soft Sales

February 20, 2014

Walmart knew fourth quarter results announced Thursday morning were going to be bad and its outlook weak, so it gave investors something more substantial to digest by announcing plans to double the number of small format stores it will open this year and an increased omnichannel focus.

Just four months after announcing plans to open between 120 and 150 small format stores under the banners of Walmart Neighborhood Market and Walmart Express, the company upped its growth target to a range of 270 to 300 units.  Walmart currently operates 346 Neighborhood Market stores and 20 Walmart Express stores, which it said continue to deliver positive same store sales and traffic each quarter.  Last year, comps for the Neighborhood Market format rose 4% and were driven by fresh food and pharmacy, according to the company.

The greater than expected expansion of the small formats - Walmart maintained its forecast of 115 new supercenters in 2014 - required the company to increase its capital expenditure budget for the Walmart U.S. division by $600 million to a range of $6.4 billion to $6.9 billion from a forecast provided last October that called for spending between $5.8 billion and $6.3 billion on U.S. growth.

"Customers' needs and expectatons are changing.  They want to shop when they want and how they want, and we are transforming our business to meet their expectations," said Walmart U.S. president and CEO Bill Simon.  "Customers appreciate the broad assortment of our supercenters for their stock-up trips as well as our small store formats for fill-in trips.  By unlocking this growth opportunity and further combining our supercenters and small store formats with an unlimited selection available through ecommerce, we provide our customers with anytime, anywhere access to our brand."

Walmart has been methodical, to put it mildly in its approach to small format expansion, considering the first Neighborhood Market stores opened in the late 90s.  However, Thursday's announcement marks the beginning of an era of accelerated growth for a format viewed as a key element in Walmart's omnichannel approach to serving shoppers whose expectations are evolving rapidly.

"Our small store expansion, in addition to providing customers access to a wide variety of products, including fresh, pharmacy and fuel, will help us usher in the next generation of retail.  This will combine thousands of points of physical access with digital retail experiences that include initiatives such as Site to Store and Pay with Cash," Simon Said.  "In addition to providing best-in-class one-stop shopping at supercenters, we believe that accelerating our small store expansion will also strengthen our market share and create greater effieiencies in our supply chain through a tethered approach that uses supercenters as a supply chain base, links our resources and provides a unique and connected customer experience."

News of the small format expansion helped soften the blow of Walmart's worst financial performance in recent memory and an inauspicious beginning to Doug McMillon's tenure as president and CEO of Wal-Mart Stores.  McMillon assumed his current responsibilities on February 1 after former president and CEO Mike Duke stepped down and McMillon was elevated from his role as president and CEO of Walmart International.

Total company sales during the fourth quarter increased 1.4% to $128.8 billion, including a $1.8 billion negative impact related to foreign currency translation.  Net income fell 21% to $4.4 billion while earnings per share fell 19.8% to $1.34 from $1.67 in the fourth quarter the prior year.

For the full year, Walmart's sales increased $1.6 billion to $473.1 billion, including a $5.1 billion negative impact from foreign currency translation.  Net income declined 5.7% to $16 billion and earnings per share fell 3.2% to $4.85 from $5.01 the prior year.

Those numbers, while bad, had been previously announced several weeks ago when a portion of the weakness was legitimately attributed to terrible winter weather and a greater than anticipated sales impact resulting from a reduction in the federal government's Supplemental Nutrition Assistance Program.  That left McMillon free to look forward and offer a more positive view of the future and initiatives to drive growth.

"Comp sales improvement is a key priority, and we'll focus on being even stronger item and category merchants, delivering value and improving our service level.  We'll remain focused on our expense structure, and innovate to improve productivity and aid our ability to deliver every day low prices.  Our EDLP approach earns trust with customers and helps us keep our cost structure low," McMillon said.  "We'll invest aggressively in e-commerce and increase our small store rollout in the U.S., as we've done in several other countries, to deliver value and convenience.  The combination of supercenters and smaller formats closer to customers' homes, along with e-commerce and mobile commerce, will enable us to increase our relevance for the Walmart brand around the world."

In the meantime, Walmart anticipates challenging market conditions in the first quarter and year ahead, which could cause profits to fall below prior year levels.  Same store sales at the Walmart's U.S. stores and Sam's Club are expected to be flat as the new fiscal year got off to a rocky start with more bad weather.

"We expect economic factors to continue to weigh on our outlook," said Walmart CFO Charles Holley.  "Some of the factors affecting our consumers include reductions in government benefits, higher taxes and tighter credit.  Further, we have higher group health care costs in the U.S.  These concerns, combined with investments in e-commerce, will make it difficult to achieve the goal we have of growing operating income at the same or faster rate than sales."

He indicated a 3% to 5% increase in sales during the current fiscal year that was forecast last fall now looks overly optimistic and said the company expects to be toward the lower end of that forecast.

Source: Retailing Today

Thursday
Feb202014

Ace Enjoys Record Year

February 19, 2014

Ace Hardware's unique value proposition allowed it to withstand strong competition from Home Depot and Lowe's in 2013 and grow annual sales by 8.2% to a record $4.2 billion.

"We outperformed our operating plan, exceeding $4 billion in consolidated revenues and $100 million in net income for the first time in our history," said president and CEO John Venhuizen.

Net income was $104.5 million for fiscal 2013, an increase of $22.7 million, or 27.8%, compared with $81.8 million in fiscal 2012.

The results for fiscal 2013 included a charge of $6.2 million related to the estimated costs to close the Toledo, Ohio Retail Support Center, while fiscal 2012 included a charge for the loss on the early extinguishment of debt of $19.9 million.

The results for fiscal 2012 also included a $7.0 million gain on the sale of paint assets, net of acquisition and disposition costs.

Total revenues for the fourth quarter of 2013 were $1.0 billion, an ancrease of 12.1%.  Net income was $23.4 million for the fourth quarter of 2013, an increase of 4.5% from the $22.4 million earned in 2012.

"Ace retailers also had a very good year," continued Venhuizen.  "Comparable-store retail sales were up 3.5% in the fourth quarter and up 4.3% for the year, with 75% of retailers surveyed reporting record net profits."

The December 2012 acquisition by Ace of WHI Holdings Corporation, the indirect owner of the 85 store Westlake Ace Hardware retail chain, resulted in the consolidation of WHI's financial statements into Ace's financial statements for 2013.  This affects the comparability of the 2013 and 2012 financial statements and results in a reduction of reported wholesale revenues, as wholesale revenues from Ace to WHI are now eliminated.  This elimination totaled $83.7 million in wholesale revenues for all of 2013 and $21.6 million for the fourth quarter of 2013.

Ace added 152 new domestic stores and canceled 85 domestic stores in fiscal 2013 for a net increase in store count of 67.  This brought the company's total domestic store count to 4,171 at the end of 2013.

Source: Retailing Today

Friday
Feb142014

January Retail Sales Take A Hit From Mother Nature

February 13, 2014

Consumers leveled off post-holiday shopping ans spending in the beginning of the year due in part to severe winter weather in much of the country.  According to the National Retail Federation, January 2014 retail sales, excluding automobiles, gas stations and restaurants, were flat seasonally adjusted month-to-month, yet increased 3% unadjusted year-over-year.

January retail sales released by the U.S. Census Bureau, which include categories such as automobiles, gas stations, and restaurants, decreased 0.4% seasonally adjusted month-to-month, yet increased 2.6% year-over-year.

Other findings from the January retail sales report include:

  • Building material and garden equipment and supplies dealers stores' sales increased 1.4% seasonally-adjusted month-to-month and 3.3% unadjusted year-over-year.
  • Clothing and clothing accessories stores' sales decreased 0.9% seasonally-adjusted month-to-month, yet increased 1.4% unadjusted year-over-year.
  • Electronics and appliance stores' sales increased 0.4% seasonally-adjusted month-to-month, yet decreased 4.9% unadjusted year-over-year.
  • Furniture and home furnishings stores' sales decreased 0.6% seasonally-adjusted month-to-month, and 2.1% unadjusted year-over-year.
  • General merchandise stores' sales decreased 0.1% seasonally-adjusted month-to-month, yet increased 1.4% unadjusted year-over-year.
  • Health and personal care stores' sales decreased 0.6% seasonally-adjusted month-to-month, yet increased 3.1% unadjusted year-over-year.
  • Non-store retailers' sales decreased 0.6% seasonally-adjusted month-to-month, yet increased 6.5% unadjusted year-over-year.
  • Sporting goods, hobby, book and music stores' sales decreased 1.4% seasonally-adjusted month-to-month and 1.5% unadjusted year-over-year.

"Following a solid holiday sales season, it seems that many consumers decided to take a break from the stores and shopping malls this January in an attempt to avoid the winter weather," NRF president and CEO Matthew Shay said.  "While the dip in retail sales was somewhat anticipated, it is concerning that both jobless claims came in above projections and that consumer spending was flat in January; it's not the way to kick off a new year."

Source: Retailing Today

Thursday
Feb132014

Record Year For CVS

February 11, 2014

CVS Caremark's fourth-quarter results came in at the high end of expectations and helped produce a record year; however, one of the key topics analysts discussed was the company's recent decision to stop selling tobacco products in all its stores by October 1.

"Last week we announced our decision to exit the tobacco category, a category that we believe is inconsistent with our growing role in the changing healthcare marketplace," Larry Merlo, president and CEO, told analysts.  "Simply put, this was the right decision at the right time.  There is a far greater focus emerging on health outcomes, managing chronic disease and reducing costs, and exiting the tobacco category more closely aligns us with the goals of patients, clients and providers, positioning our company for future growth."

Merlo made note of the overwhelmingly positive response across an array of key constituents, including customers, prospective and current clients, benefit consultants, legislators and policymakers, and public health and Medicaid officials.  "All of whom see the health benefits, as well as the role that pharmacy can play in advancing smoking cessation and better managing chronic disease," Merlo said.

As reported, the move is expected to result in a loss of approximately $2 billion in revenues on an annual basis from the tobacco shopper.  The $2 billion represents about 3% of earnings.

"When you look at that eight feet to ten feet that tobacco commands today, there will be something replacing that space, and to be clear, it is not going to make up $2 billion in revenues, but it will be something.  And there are some things that are being tested as we speak," Merlo said when asked about its plans at retail and the steps it would take to help offset some of the loss.

"We are seeing this tobacco decision as an opportunity to connect even more consumers as an expert in health and beauty and to build our loyalty with them.  As we focus specifically on the front store, it is really around driving what we will call 'smart growth' and I think ther it has three elements: taking ExtraCare to the next level, the second is focusing on our core strength in health and beauty, and the third is driving our store brand penetration," added Helena Foulkes, president of CVS/pharmacy.

During the quarterly call with analysts, Merlo also provided analysts with a broad-reaching business update including:

  • The impact of the Affordable Care Act and the role CVS Caremark can play in serving new customers and supporting health plans.
  • Its joint venture with Cardinal Health to form the largest generic sourcing entity in the United States.  The venture will help spur innovative purchasing strategies with generic manufacturers and is expected to be operational by July.
  • The 2014 selling season, which has resulted in net-new wins of about $2 billion, excluding attrition in the Med D business.  Merlo said that while it is too early to provide an update on the 2015 selling season, the company is "well-positioned" to both retain business and gain share.
  • The specialty pharmacy business, which posted a revenue increase of about 22% year over year.

Merlo added that the company expects to see significant growth in the specialty space and is well-positioned to capitalize on the opportunity.  Enter its acquisition in January of Coram, the specialty infusion services and enteral nutrition business unit of Apria Healthcare Group.

"This provides us with a new set of capabilities to manage not just the cost of infused drugs, but also to reduce the length of hospital stays and to help patients move from higher cost sites of service, like hospital outpatient centers, to more cost-effective locatons, such as the patient's home or a physician's office," Merlo said.

Furthermore, its new Specialty Connect offering is on schedule to roll out in 2014.  Analogous to the Maintenance Choice program, Specialty Connect integrates mail and retail capabilities to provide both greater choice and convenience for members.

CVS Caremark's MinuteClinic business posted a revenue increase of more than 10% during the quarter and reached a milestone with 800 total clinics in 28 states and Washington, D.C.

Net revenues for the three months ended December 31 increased 4.6%, or $1.4 billion to $32.8 billion, up from $31.4 billion the year-ago period.  For the year, total revenue rose 3% to $126.8 billion compared with $123.1 billion last year.

Revenues in the retail pharmacy segment increased 5.6% to $17.2 billion during the quarter.  Same-store sales rose 4%, with pharmacy same-store sales up 6.8%.  Front-end same-store sales decreased 1.9% due to softer traffic, which was partially offset by an increase in basket size, the company stated.  For the year, total revenue in the retail pharmacy segment rose 3.1% to $65.6 billion.  Same-store sales increased 1.7% for the year, with pharmacy same-store sales up 2.6% and front-end, same-store sales down 0.5%.

Income from continuing operations attributable to CVS Caremark for the three months increased 12.4% to $1.3 billion, compared with $1.1 billion in the year-ago period.  Adjusted earnings per share from continuing operations attributable to CVS Caremark for the three months ended December 31, 2013 and 2012 was $1.12 and $0.96 respectively, at the high end of guidance.

Income from continuing operations attributable to CVS Caremark for the year increased 18.8% to $4.6 billion.  Excluding a gain from a legal settlement and the loss on early extinguishment of debt, adjusted EPS increased 15.7% in 2013 to $3.96, at the high end of guidance.

"I'm very pleased with our fourth-quarter results, with adjusted earnings per share coming in at the high end of our guidance at $1.12 per share, capping off a terrific year," Merlo said.  "For full year 2013, we delivered strong growth in revenues, gross margins, operating margins and earnings across the CVS Caremark enterprise."

Source: Retailing Today

Saturday
Feb082014

Bad Weather Affects Fred's January Sales

February 6, 2014

The weather posed a significant challenge for Fred's in January.  According to CEO Bruce A Efird, Mother Nature not only disrupted consumer shopping patterns, but also resulted in more than 120 store closings during the final week of the month.

"Prior to the last week of January, sales were running in the mid-range of our forecast, with reconfiguration departments leading the way," Efird explained.

Fred's total sales for January were $134.8 million compared with $173 million for the five-week year-earlier period.

Adjusting to make January sales results comparable with those of the prior year, the company eliminated the first week of the month.  On this adjusted basis, total sales in January decreased 1.1%.  Comparable-store sales for the month decreased 1.8% versus flat comparable store sales in the year-earlier period.

"In the final week of the month, comparable store sales dropped into the negative double digits, culminating in a weather effect on comparable store sales for all of January that is estimated at more than 300 basis points," added Efird.

Efird noted that lower-than-anticipated sales in the last week of January will reduce earnings for the final quarter by approximately $0.03 per share.  Fred's now expects to report fourth quarter earnings per diluted share in the range of $0.13 to $0.16 cents versus earnings of $0.15 per diluted share for the comparable 13-week period last year.

"With January closing out the fourth quarter, we had success in several areas, most notable in our reconfiguration departments that include pharmacy, pet, auto and hardware, which will carry forward in 2014.  We are also in the process of revamping our fourth quarter marketing, promotion and pricing strategies to respond to changing consumer buying habits, along with the increasing popularity of internet shopping.  We are confident that our strategies to build a strong presence in specialty pharmacy and clinical services, together with accelerating pharmacy acquisitions and new pricing, promotion and marketing programs, will lead to continued success in 2014."

During January, Fred's opened one new store and two Xpress pharmacies.  For the year, Fred's added a net total of 25 locations, consisting of 11 new stores and 14 new Xpress pharmacies, which was offset by the closing of 25 store locations and eight Xpress pharmacies.  The company also opened 26 new pharmacies in 2013 and closed 17, for a net addition of nine pharmacies during the year.

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

Source: Retailing Today

Friday
Feb072014

Kohl's Lowers Fourth-Quarter Guidance Following Weak January Sales

February 6, 2014

Kohl's January sales were significantly lower than planned as a result of lower traffic and low levels of clearance merchandise.  Comparable-store sales decreased 2%.  Combined November and December same-store sales increased 0.8%.

Unanticipated expenses in servicing its e-commerce business led to higher-than-expected costs for the quarter.  As a result of these expenses, the company is lowering its fourth quarter diluted earnings per share estimates from $1.59 to $1.74 to approximately $1.53.  Fiscal 2013 diluted earnings per share are now expected to be approximately $4.03, compared to previous guidance of $4.08 to $4.23.

The company will release its detailed report on the fourth quarter February 27.  Kohl's operates 1,158 stores in 49 states.

Source: Retailing Today

Friday
Feb072014

JCP Scores First Quarterly Gain Since 2011

February 4, 2014

J.C. Penney scored its first positive quarterly sales result since 2011, reporting a same store sales increase of 2% in the fourth quarter, which included the holiday season.

"While 2013 brought a lot of change and challenges to J.C. Penney, the steady improvements in our business show that the company's turnaround is on track.  In spite of the significant headwinds facing all retailers this season, including unprecedented harsh weather conditions in many parts of the country, we delivered on our promise to generate positive comparable store sales growth in the fourth quarter," said CEO Myron E. Ullman.

Same-store sales increased 3.1% in the nine weeks through November and December.  The increase was fueled by solid performances in beauty (Sephora), activewear, sweaters, outerwear, dresses, boots, men's clothing, luggage and housewares.

"As we look ahead to 2014, our associates are encouraged by the company's results and we remain steadfast in our focus to build on these achievements and return to profitable growth," Ullman added.

The company said it closed its 2013 fiscal year with total available liquidity in excess of $2 billion.

Source: Retailing Today

Thursday
Oct312013

NRF: Despite Drop in Auto, September Sales Up in Most Retail Sectors

Retail sales fell in September for the first time in six months, but the decline was credited to a drop-off in auto purchases.  Most U.S. retail sectors actually experienced broad sales gains during the month, according to the National Retail Federation, which reported that, excluding automobiles, gas stations and restaurants, retail sales grew a seasonally 0.6% compared to the previous month and 3.8% unadjusted compared to the prior year.

Results of specific sectors include:

  • Building material and garden equipment and supplies dealers stores' sales increased 0.1% seasonally adjusted and 8.0% unadjusted year-over-year.
  • Clothing and clothing accessories stores' sales decreased 0.5% seasonally adjusted month-to-month yet increased 0.7% year-over-year.
  • Electronics and appliance stores' sales increased 0.7% seasonally-adjusted month-to-month and 1.8% unadjusted year-over-year.
  • Furniture and home furnishing stores' sales increased 0.2% seasonally-adjusted month-to-month and 4.1% unadjusted year-over year.
  • General merchandise stores' sales increased 0.4% seasonally adjusted month-to-month yet decreased 0.2% unadjusted year-over-year.
  • Health and personal care stores' sales increased 0.4% seasonally adjusted month-to-month and 4.6% unadjusted year-over-year.
  • Sporting goods, hobby, book and music stores' sales increased 0.5% seasonally adjusted month-to-month and 0.9% unadjusted year-over-year.
  • Non-store retailers' sales increased 0.4% seasonally adjusted month-to-month and 12.0% unadjusted year-over-year.

"Falling gas prices combined with rising housing and stock prices continue to support consumer spending, and the broader economy," NRF chief economist Jack Kleinhenz said.  "While far from robust, consumers are shopping, but they are spending both discriminately and moderately.  Volatility still persists in various retail sectors but spending has somewhat stabilized heading into the all-important holiday shopping season."

September retail sales, released today by the U.S. Census Bureau, showed that total retail and food services sales, which include non-general merchandise categories such as automobiles, gasoline stations, and restaurants, decreased 0.1% seasonally adjusted month-to-month yet increased 3.2% adjusted year-over-year.

Source: www.retailingtoday.com, Dan Berthiaume