Friday Tipsheet: Costco: Call Highlights & Kale | Target: Canada Web SOS | Amazon SKU Limits

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“Costco’s ‘giant packs of kale’ help draw in younger shoppers” by Angel Gonzalez at Seattle Times.  “Richard Galanti said on Thursday’s earnings call that organic beef and “giant packs of kale” help drive in younger customers. Costco can offer big savings on these relatively bigger ticket items and get better profit margins as well, Galanti said.”  Read more

 

“Why Target Corp’s online strategy is missing the mark in Canada” by Hollie Shaw at Financial Post.  “I guess if a company can’t spend the money for a website that gives a strong impression of the products they carry, well we shouldn’t be surprised that we’re disappointed when we get into the store,” read a recent comment from customer Judy Danelley on Target’s Canadian Facebook page.”  Read more

 

“Kroger stock hits new high on $1.5B profit report; Comp sales up 3.6% for year” by Alexander Coolidge at Cincy Enquirer. “Kroger’s portfolio of goods sold under Kroger, Simple Truth, Private Selection and other names accounted for 24.4 percent of sales in the latest quarter, excluding pharmacy and fuel. The company said Simple Truth is on track to become a $1 billion brand by the end of 2014.”  Read more

 

“Kroger’s Q4 / Full Year Earnings” Read the release

 

“Cerberus Buys Safeway (#2 grocer), Merges with Albertson’s (#5 grocer)” by Brian Solomon at Fortune.  “After a long courtship, private equity giant Cerberus Capital Management agreed to buy Safeway for over $9 billion on Thursday afternoon.  Safeway, the 2nd-largest grocer in the US, will merge with Albertson’s, the 5th-largest grocer.”  Read more

 

“Amazon SKU Limits On Novelty Items Devastate Some Longtime Sellers” by Christopher Zara at Int’l Business Times.  “Last month, the Seattle-based retail giant began informing some merchants that SKU caps are being imposed on “novelty” items, a broad category that can include anything from T-shirts to gag toys. In some cases, sellers say they are being limited to 100,000 items; in other cases the limit is said to be as low as 25,000 items.”  Read more

 

“Rite Aid’s Feb. Same-Store Sales Up 1.5% (Down 1.8% in front-end)”  “February front-end same store sales decreased 1.8 percent, of which 0.5 percent was attributable to a decrease in sales of flu-related over-the-counter products.” Read the release

 

“Fred’s Feb. Same-Store Sales Down 2.2%”  “Fred’s total sales for the month were $157.5 million compared with $159.0 million in February 2013.”  Read the release

 

“More men in retail grocery aisles” by Kim Souza at The City Wire.  ““About 35% of men don’t have a significant other, many are marrying later,” Long said. “They routinely shop for what they need and that continues even after they get married.”  The average age of a marrying male today is 29, versus 25 in the 1980s. About 43% of the men between the ages 18 to 49 live with a spouse, and 22% live with parents. That leaves 35% of men flying solo when it comes to making brand decisions and filling up the shopping cart.”  Read more

 

 “Heard on the Call” – Highlights from Costco’s Q2 Earnings Call

Richard Galanti, CFO:

While earnings results for the first four weeks of Q2 were very weak, our earnings in the subsequent eight weeks of the second quarter showed improvement.

We opened three new locations in the second quarter, two in the U.S., one each in Illinois and Texas and one also in Ontario, Canada.

We would expect to end the year with 30 new openings for the year.

Q2 category comps:

Food and sundries: low single digits.

Hardlines: mid-single digits.

Electronics: slightly positive for the quarter overall.

Softlines:  Within the mid-single-digit comp range.

Fresh foods: up in the mid high single digits, overall, with produce being strongest.

February category comps:

Food and sundries: low single digit range

Hardlines: slightly negative

Electronics: down in the mid-single-digit range

Softlines: was the strongest area in the mid to high single-digit range

Fresh foods: mid-single-digit range overall. Again, produce being typically strong.

For February traffic was up just under 3% shopping frequency. Again the reported average transaction was down about a little over 1%.

New membership signups in the second quarter company wide were up 13% year-over-year, again, mostly reflective of very strong signups some of our international openings.

We began e-commerce operations in Mexico a few months ago.

E-commerce tests:  We are testing in the Bay area one of several retailers with the Google Express, and we are also testing a few other things that we will let you know more about as we do it.

Q&A with Richard Galanti

Q: Where are margin pressures in fresh food?  A: It’s particularly in the proteins. We talked about chickens before. We have held the price on that chicken. Those 65 or 70 million rotisserie chickens…It is also frozen and fresh.

Gasoline sales as a percent of our company total sales is 11% or 12%.

Our hearing aid business although small is very strong.

Q: Has Costco done market research looking at the number of your members that also have an Amazon Prime membership and do your merchants have any sense for how much this might be impacting spending at Costco?  A: …the answer is no. There is not a lot of discernible concern at this point of that.

One of the first systems going in our modernization effort is that a new membership system which we will start rolling out in the U.S., I believe in June, July.

Goal to open 30 to 35 years new stores/year for the next five years.

Read the full earnings call transcript via Seeking Alpha

 

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Thursday Tipsheet: Costco Comp +5% | Target CIO Out | Staples Shutters 225

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“Costco Same-Store Sales +5% in Q2”  “Net sales for the quarter increased six percent, to $25.76 billion, from $24.34 billion last year. Net sales for the first half increased six percent, to $50.22 billion, from $47.55 billion last year.”  Read the release

 

“Costco Quarterly Profit Falls 15%” by Anna Prior & Josee Rose at WSJ.  “For the quarter ended February 16, Costco reported a profit of $463 million, or $1.05 a share, compared with $547 million, or $1.24 a share, a year earlier  Read more

 

“Kroger Reports Q4 Earnings This Morning”  Listen to Webcast at 10 am ET

 

“Target’s CIO resigns amid breach investigations” by Jennifer Bjorhus at Star-Tribune.  “Brian Yarbrough, a consumer analyst at Edward Jones & Co., said Target is making a statement that it needs to take its technology game “to the next level.”  “I’m sure for somebody this will be a great role,” Yarbrough said. “You can come in and look like a hero.”  Read more

 

“Where will Target find new CIO? Not at Target” by John Vomhof Jr. at Minn/St.Paul’s Bus. Journal.  “Target CEO Gregg Steinhafel announced that the company will seek an interim CIO, someone to fill the newly elevated role of chief information security officer and a chief compliance officer. And he emphasized that all three of those positions will be filled from outside the company, using the word “external” or “externally” three times in the two-paragraph statement.”  Read more

 

“Home Depot CFO Carol Tome Sells Outsized Stock Position (Unhappy over succession planning?)” at WSJ.  “Carol Tomé made her largest-ever sale of Home Depot Inc. stock on Monday, days after the company signaled that its finance chief isn’t in line to become its next CEO.  Ms. Tomé, Home Depot’s CFO for the past 13 years and once presumed to be on a short list of candidates to replace Chief Executive Frank Blake when he retires, sold 326,610 shares. That’s more than triple her next-largest previously reported sale of 100,000 shares”  Read more

 

Tempkin 2014 Experience Rankings:  Top Retailers Ranked (HEB #1, Sam’s #8, Costco/BJ’s #22) by Michael Johnsen at Drug Store News.  “Based on a study of 10,000 U.S consumers, H-E-B, Trader Joe’s, Chick-fil-A and Publix earned the highest scores in the 2014 Temkin Experience Ratings.”  See the top 29 list / Read more

 

“Walmart to expand in e-retailing in India, planning marketplace model akin to Amazon, eBay” at Economic Times.  “Sources familiar with the world’s biggest retailer’s plans told ET that a team of 15-17 people under Walmart India’s COO Arvind Mediratta and including global veteran and V-P for operations in the India office, Steve Rodrigues, have been working on developing an electronic platform that is expected to go live in the next three to four months.”  Read more

 

“7 Weird Things An Ikea Survey Found Out About Americans” by Dan Nosowitz at Fast Company.  “Fact 1. Only 1% [of those surveyed] want their home to reflect how successful they have been.  Analysis: This may seem surprising, but in fact Americans often choose to lie to surveys to make themselves appear more humble.”  Read more

 

“Staples Q4 Same-Store Sales Down 7%; Will Close 225 Stores”  Read the release

 

“Porch.com remodels, eyes big expansion after Lowe’s deal” by Brier Dudley at Seattle Times.  “Ehrlichman wouldn’t share sales but said they’ve accelerated since the Lowe’s deals. Its services are now highlighted in 139 stores, mostly in the South, but will be extended nationally later this year”  Read more

 

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Wednesday Tipsheet: Wmart Express: 1st ‘Tethered’ Store in May | Lowe’s New Chief Cust. Officer

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“Wal-Mart’s new store ‘tethering’ concept is “Sonic-like” by Kim Souza at The City Wire.  “This notion of drive-in has prompted Wal-Mart to explore and test the drive-in depots that are not attached to a supercenter. Simon described the drive-in modular as a “Sonic-like.” Simon did not give specifics about the timeframe for the depot concept, but said it is part of the retailer’s tethering efforts to fully connect its digital orders with its massive physical infrastructure.”  Read more

 

“Excitement at P&G HQ:  Greenpeace Activists Get Past Security, Rappel Down Building, Hang 60 Foot Banner Protesting Head & Shoulders” at Cincy Enquirer.  “A helicopter…was involved, but police are still trying to determine how.  At about 1 p.m., activists climbed out and used the cords set up for window washers to rappel down the building and unfurl 60-foot banners. One female in the group wore a tiger suit.  One banner read: “Head & Shoulders: Stop Putting Tiger Survival on the Line,” the other, “Head & Shoulders: Wipes out Dandruff & Rainforests.”  See the video / Read more

 

“The Surprising First Jobs of 10 Famous CEOs (McMillon – Warehouse, Jelinek – Box Boy, Bezos – Camp Leader)” by Stephanie Vozza at Fast Company.  “From the time they were young, successful CEOs clocked in hours at jobs that were a far cry from the boardrooms they govern today. From oyster shucker to vacuum salesman, we discovered some of the surprising first jobs held by 10 famous CEOs.”  See the list of 10

 

“Lowe’s Names Michael Jones New Chief Customer Officer” at WSJ.  “Mr. Jones, currently the hardware retailer’s merchandising chief, will take over responsibility for customer-engagement initiatives, including merchandising, marketing and communications. He will assume his new post April 30, the company said.”  Read the release

 

“J.D. Power Announces 2014 Customer Service Champions (Amazon, Publix…)”  See the Full List

 

“Happening Tomorrow:  Costco Q2 Earnings Call at 8am PT”  Listen to Webcast

 

“Heard on the Call”, Walmart President & CEO, Bill Simon, Presents at Raymond James Conference (more detail on Express Stores, Grocery pickup & more) at Seeking Alpha.

Where we’ve been challenged, is in the fill-in trip. The — in between shopping trip, midweek shopping trip and this growth and quick trips about $415 billion in sales has interrupted our supercenter growth.

When you compare sales per square foot of (Neighborhood Market) stores to the major leading grocery chains,  we top the major grocery chains in sales per square foot.

You can put a neighborhood market in close proximity to a supercenter and we see an additional $300 a year from customer spent based on traceable tenders.

On testing Walmart Express stores:

* We have the best results in rural and the likes of suburban with pharmacy and with gas, and that’s exciting for us, a very nice model there.

*  We built a bench group of them in eastern part of North Carolina…we like the profitability, so we are pleased with that. And by the way in the second year, they did really nice in comp sales.

* This is a full capability store, has fuel and pharmacy and fresh and 10,000 SKUs right in your neighborhood…and fundamentally different and differentiated from the other formats that would compete in that space because of the breadth of the offering and the connectivity that we have through walmart.com.

* If you are on your way home today…you know you need to stop for gas, you can place your grocery order to be picked up when you get your gas. And if you want to shovel or to shovel your way out of the driveway when you get home…you can also order that and it will be available for you. We can do that by May. We will have one market up later in the year. We will have two other markets up.

*  We are going to add about 300 or so Small Stores next year that consists of about 200 Neighborhood Markets and about 100 more Express stores.

No need to build the drug store, we have these. No need to build the dollar store, we have these. No need to build the grocery store, we have these.

Q&A:

Is the pricing the same between the large format and the small format or are you charging more for the convenience that you provide?

*  It starts out the same. Let me put it to you that way. The aim is for it to be the same and we don’t charge more for the convenience. Some times we actually charge less for the competitive nature.

We’re going to try at some point, the (grocery) pickup module without a supercenter, right just to drive through, like, I don’t know like, kind of like a sonic, right.

Read the Full Transcript

See the PowerPoint presentation

 

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Tuesday Tipsheet: Top Billionaires (Waltons vs. Bezos) | Rshack Closes 1,100 | Ace Loves Polar Vortex

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“Top Billionaires in the World (Walton’s are top family, Jeff Bezos #18, HEB family #121)” at Forbes.  See the List

 

“RadioShack to Close 1,100 Stores; Same-Store Sales Down 19% in Q4” “For full year: Total net sales and operating revenue were $3.43 billion, compared to $3.83 billion last year. Comparable store sales were down 8.8%.” Read the release

 

“Bold move:  Walmart to Allow Public Comments on Corporate Website Blog” by Kim Souza at The City Wire.  “The retailer plans to unveil a new blog on its corporate website sometime Monday (March 3), according to Chad Mitchell, senior director of digital communication at Wal-Mart.  In a bold move, Wal-Mart will allow public comments on the blog site, which the retailer plans as a discovery portal for its major platforms such as veterans hiring, empowering women, manufacturing jobs, healthy food and hunger, sustainability and global responsibility.”  Read more

 

“Kroger Said to Contact Safeway About Buying Some Assets” by David Welch at Bloomberg.  “Kroger also has contacted Cerberus Capital Management LP, the private-equity firm that is the lead bidder for Safeway, about buying some stores that Cerberus may not want, said one of the people, who asked not to be identified.”  Read more

 

“Ace Hardware Loves the Polar Vortex, Having Best Winter in More than a Decade” by AP via NPR.  “Sales of shovels and snow blowers have doubled at Oak Brook, Ill.-based Ace Hardware. The company is also shipping salt and other ice melters to southern regions such as Atlanta, which rarely have to deal with severe weather. Total sales are up 20 percent so far this year compared with a year ago.”  Read more

 

**A message from Pro-Chlor Septic Tabs. Use it, or be fined. Homeowners with Aerobic septic systems are required to use septic tabs to chlorinate their system or face fines upon mandated inspections. Talk about a retail traffic driver…and wait until you see the margins! Are you selling aerobic septic tablets? Get in on the action, contact Andy today at andyw@gwtcinc.com for product information. www.gwtcinc.com 

 

“Restoration Hardware CEO Gary Friedman’s Luxury Retail Ambitions” by Susan Berfield at Businessweek.  “Other stores will be even bigger, with wine bars and restaurants, performance spaces, courtyards, and rooftop gardens. All will have free valet parking. RH says average sales could be $30 million a year per store. “No one has ever built stores like this,” Friedman says. RH has opened five so far and will eventually open 60 to 70 in North America, replacing its 62 existing ones. Friedman calls them “design galleries.”  Read more

 

“Trader Joe’s opens in Boise; Shoppers Line Up to Get Their Hawaiian Lei” at Idaho Statesman.  See the 30 second video   17 Pics from Store Opening

 

“Supreme Court to hear Amazon warehouse-pay case” by Jay Greene at Seattle Times.  “The U.S. Supreme Court agreed Monday to hear a case in which Amazon.com warehouse workers are seeking compensation for the time they must wait to go through security screening at breaks or the end of shifts.  Those lines can stretch as long as a half-hour a day during peak holiday-shopping seasons, according to the workers’ lawyer.”  Read more

 

“Tractor Supply Presents at Raymond James Investor Conference”  See the Presentation / Listen to Webcast (replay)

 

Home Depot: “Heard on the Call” at Raymond James Investor Conference

Ted Decker, SVP U.S. Retail Finance:

Over 10% of our online orders are actually created in the store with the consumer or pro working side-by-side with one of our associates. In addition, over 30% of all online orders are picked up in the store and about 20% (of those) coming into the store to pick up their online order buy another item to their basket while they’re at the store.

(Pros represent) about 3% of our customers, (but) over 35% of our sales.

The whole idea of a program like Pro Xtra is to build stickiness with all those customers, but most importantly those two lower groups of just under $10,000 and over $10,000. So it’s a loyalty program.

And one of the biggest things (Pros) want to know is are you in stock.

Read the Full Transcript

Listen to Webcast (replay)

 

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Monday Tipsheet: H.Depot’s Menear Groomed as CEO? | Sears Breach | Fred’s for Sale

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“Home Depot’s New President Craig Menear Said to Be Groomed as CEO” by Matt Townsend at Bloomberg.  “Home Depot Inc.’s promotion of Craig Menear to president of its U.S. retail division is part of a succession plan for Chief Executive Officer Frank Blake, according to a person with knowledge of the situation.  Menear, 56, is the leading candidate to become the next CEO of the largest U.S. home-improvement chain, said the person, who asked not to be named because the talks are private.”  Read more

 

“Home Depot Names Craig Menear President, U.S. Retail, Mark Holifield EVP, Supply Chain and Product Development”  “Menear will add responsibility for all U.S. store operations, with Marvin Ellison, executive vice president, U.S. stores, reporting to Menear.  …Mark Holifield, senior vice president, supply chain, has been named executive vice president, supply chain and product development, with responsibility for sourcing and proprietary brands. Holifield will continue reporting to Menear.”  Read the release

 

“Secret Service investigating possible data breach at Sears” at Chicago Tribune.  “The U.S. Secret Service is investigating a possible security breach at Sears Holdings Corp…The person, who asked not to be named because the matter is under investigation, didn’t disclose details about the scope or timing of the possible breach.”  Read more

 

“Report:  Fred’s Sale Pitched to Dollar General, Walgreens & CVS” by Jodi Xu & Laura Lorenzetti at Bloomberg.  ““The crown jewel of Fred’s is its pharmacy business,” Fox said in an interview. “It’s incredibly difficult to cold-start such a business.”  Fred’s, which operates more than 700 general merchandise stores in the Southeastern U.S., said in January it hired Bank of America Corp. and Peter J. Solomon Co. to explore strategic options and enhance shareholder value after holiday-season sales disappointed.” Read more

 

“Dick’s Sporting Goods: Rival CEO posed as exec to get secrets” at The Salt Lake Tribune.  “Dick’s alleges Modell told employees he was to meet the Dick’s CEO there and persuaded workers to show him the backroom of the store and to answer questions about the business. Modell gathered information about online sales, including a “ship from store” program that gets products to customers’ doors quickly, the lawsuit said.”  Read more

 

“Neiman Marcus Hones in on Australian Customers” by Campbell Phillips at Power Retail.  “Lindy Rawlinson, Senior Vice President of E-Commerce for Neiman Marcus Direct is currently in Australia meeting with marketing partners…“We started shipping to Australia just over a year ago in November 2012, but we’ve really started to put much more of a focus on it in the past six to eight months, both in terms of the marketing and PR efforts.”  Read more

 

“P&G smells success in high-end fragrances” by Alexander Coolidge at Cincy Enquirer.  “P&G’s “prestige fragrance” business now generates an estimated $2.5 billion in sales a year – accounting for more than 10 percent of the company’s total beauty unit revenue. Prestige brands, which also includes SK-II high-end skin care, have tripled sales and quadrupled profits since 2000.” Read more

 

“Happening Today:  Home Depot Presents at Raymond James Investor Conference at 8:05 am ET”  Listen to Webcast

 

“Mike Rowe responds to the never-ending backlash surrounding his Walmart commercial” at Glenn Beck.  “When people you’ve been trained to sort of despise – who are corporations in this case – suddenly do something that you actually really agree with, you’re put in a state of confusion,” Mike explained. “In this case we’re talking about Walmart pledging to put in $250 billion of U.S. manufacturing, basically promising to buy a quarter of a trillion dollars worth of U.S. products over the next 10 years. It’s a very simple promise, but it’s very counterintuitive in a lot of people’s minds to what Walmart has become.”  Read more

 

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