Tuesday Tipsheet: Lowe’s Q2 +4.3% | WMT/HD/DKS Call Highlights | ‘Sociopath’ Signs Target Amazon | Costco Pic Center Delayed Again
Lowe’s Q2 Comp +4.3% “Comparable sales for the U.S. home improvement business increased 4.6 percent for the second quarter and 4.9 percent for the six month period.” Read the release
Lowe’s posts earnings miss, revenue beat on big ticket sales by Reem Nasr at CNBC. “(Lowe’s) posted second-quarter earnings of $1.20 per share, up from $1.04 a share in the year-earlier period…Wall Street had expected Lowe’s to deliver quarterly earnings per share of $1.24.” Read more
Target to Webcast 2nd Quarter Earnings Conference Call at 9:30 am CST Listen here
Costco’s online photo center delayed again, may not return until September by Tricia Duryee at GeekWire. “We’ve made significant progress towards re-enabling the Photo Center site; however, there’s additional work to be done before it’s ready to go live…” the company said in a statement to customers. The situation is affecting multiple other online photo sites, including Rite Aid, CVS and Sam’s Club.” Read more
Target settles Visa card issuer claims in breach by Evan Ramstad at Star Tribune. “Target will pay up to $67 million to cover the costs that Visa Inc. and issuers of Visa cards incurred when cyberthieves broke into Target’s data system. The amount is more than three times larger than a $19 million settlement between Target and MasterCard Inc. that fell apart in May when banks and other issuers rejected the amount as too low.” Read more
***A message from Cutter Insect Repellents – For more than 50 years, Cutter (R) repellents have been fending off mosquitoes that can suck the fun out of summer. With insect repellents formulated for any occasion and area repellents designed to keep the backyard bite-free, we’re in the business of helping families have fun. Goodbye, mosquitoes. Hello, summer. See the video Visit us on Facebook
Fake ‘sociopath’ recruiting posters target Amazon in latest fallout from NYT article by Taylor Soper at GeekWire. “Are you a sociopath? Amazon wants you!” read the signs that are pasted to street poles and gym bulletin boards near Amazon’s South Lake Union headquarters. “Have a conscience? Don’t worry, our work environment will strip it from you in no time! Apply today! #AmazonJobs.” Read more / See the poster
Home Depot reports huge spike in rubber band sales around Burning Man by David Pescovitz at Boing Boing. “Home Depot stores located in the area of Reno, Carson City, and Nevada’s Black Rock Desert–where Burning Man takes place–create special Burning Man section…Dust masks see a 521% increase in sales during the two weeks prior to the event…In an average week, Nevada Home Depot stores sell around 450 packages of rubber bands. That number soars to 12,800 packages in the days leading up to the event.” Read more
Nike Air Jordan, Polo Sport stores-within-a-store coming to Dick’s Sporting Goods by Tim Schooley at Pittsburgh Business Times. “…there will be 10 Jordan stores surrounding the product line of NBA great Michael Jordan, open in the fall. Dick’s will roll out 75 Polo Sport stores, featuring a mix of shorts, tank tops, fleece and other athletic apparel, within Dick’s Sporting Goods locations next year.” Read more
Walgreens, Unilever campaign aims to bring clean water to Kenya by Robert Channick at Chicago Tribune. “Walgreens has assembled the Unilever products in prominent displays at each of its 8,200 stores in the U.S. with the banner “One Purchase Gives Five Gallons.”…The partnership is designed to “make it easier for customers to make a difference,” according to Mark Sciortino, vice president of digital and marketing strategy at Walgreens.” Read more
Home Depot Shoppers May Like Yuan Devaluation by Maxwell Murphy at WSJ. “Carol Tomé, its finance chief, told CFO Journal that consumers will be the biggest beneficiary of any Chinese goods whose wholesale price falls as a result, because the home-improvement retailer will lower its retail selling prices accordingly to stay competitive.” Read more
NY Post: Walmart blames theft for slow growth by Lisa Fickenscher. “Greg Foran is not taking the sticky-finger problem lying down — he has ordered the chain to beef up its “shrink training program.” It will hire more “asset protection associates” to be watchful for customers — and employees — pilfering such popular items as razor blades, consumer electronics and over-the-counter pharmaceuticals. Read more
Tipsheet Extra
Walmart’s CEO keeps this magazine article from 1996 in his office
Stylyze raises $890,000 to help you shop for matching home decor
What Jeff Bezos Really Told Princeton Grads About Kindness
Twin Cities: Costco-anchored Woodbury development moves forward
CVS completes Omnicare takeover
Quebec convenience store association says retailers under threat with menthol tobacco ban
Home Depot Q2 Earnings Call Highlights
Craig Menear, CEO
All three of our U.S. divisions exceeded their sales plan with mid to high-single digit comps.
All of our 19 regions and top 40 markets also posted positive comps in the quarter.
We had a record number of transactions this quarter and our highest quarterly average ticket going back to 2006.
Mexico: positive comps in local currency for the 47th consecutive quarter.
Canada: posted positive comps in local currency, making it 15 consecutive quarters of positive comps.
Dotcom sales (grew) approximately 25%.
Our online channel represented 5% of sales in the second quarter.
Q&A: I can tell you paint is a pretty competitive market. It’s probably as competitive as it has been. It seems like a lot of folks are focusing there.
Q&A: Our ad spend is pretty flat year over year…several years ago we had on average over 50 print pieces that hit the street in a year. I think this year we’ll do something like 11. So we’ve made a pretty hard shift to new platforms in the digital space.
Ted Decker, EVP Merchandising
Comps above company’s average:
* Appliances, tools, plumbing, décor, lighting, kitchen and bath, hardware and flooring.
* Siding, builders’ hardware, compressors, boards, gypsum, fasteners, concrete and insulation.
* Cleaning, wiring devices, circuit protectors, plumbing repair parts, pipe and fittings and light bulbs.
* Tile, in-stock kitchens, recessed lighting, bath fixtures, vanities, ceiling fans, faucets, interior lighting and bath accessories.
Double digit comps in water heaters, power tools, commercial lighting, flooring tools and materials, power tool accessories, air circulation and hand tools.
Outdoor garden was slightly negative.
* Outdoor project categories like soils and mulch, live goods and fertilizers were pressured…from weather…like the drought in California and record rainfall in parts of Texas and the Midwest.
Transactions for tickets over $900…20% of our U.S. sales, were up 6.3% in Q2. The drivers…were appliances, water heaters, windows and riding mowers.
Utilizing our regional merchandising managers and our planning and assortment tools, we’ve recently refined our assortment in cleaning.
New product mentions:
* 20-volt MAX sliding miter saw from DEWALT
* New from Commercial Electric is the LED Smart Downlight
* LifeProof carpet, featuring texture, twist, loop, and patterned styles.
Q&A on the piloting of the auto supply products:
* In 500 odd stores at the end of Q2, we had an extended set of up to six bays. And we’re looking at the different locations in the store. If the category is more productive in the front ends or in bay, so we have various tests going on with those six-bay sets and very pleased.
Carol Tome, CFO
Comps by month:
* 2.6% in May, 3.6% in June, and 6.1% in July.
* U.S. stores 3.5% in May, 5.1% in June, and 8.2% in July.
Beginning in Q3 of last year and through Q2 of this year, our gross breach-related expenses totaled $232 million, and our net breach-related expenses after claiming reimbursement from our $100 million insurance policy were $132 million.
Total sales per square foot for the second quarter were $420, up 4.1% from last year.
Q&A: I’m happy to comment on quarter (Q3) to date performance. We’re very pleased.
Mark Holifield, EVP Supply Chain & Product Development
Q&A on direct fulfillment centers:
* The third one is now in the process of stocking. We think that three will do us fine for the stated goal of getting the customers on two-day parcel delivery.
Q&A: We’re in four markets with our Buy Online, Deliver From Store implementation…tighter time windows are harder to meet than all-day windows, so we want to be absolutely certain that we can meet those before we roll further, but we would expect to roll that through 2016.
Read the full transcript via Seeking Alpha
Walmart Q2 Earnings Call Highlights
Doug McMillon, CEO
We just returned from our Wal-Mart U.S. holiday meeting in Denver.
I shared an article from Fortune magazine that I keep in my office titled “Can Wal-Mart get back the magic.” It’s a pretty strong indictment of our future. And the fun fact is that, it was written in 1996.
Customer traffic was strong again this quarter, lower gas prices helped.
…we did fall short on managing the bottom line…We are not pleased or satisfied, for the back half of the year, we will manage these items closely with the continued commitment to efficiency, cutting cost were appropriate.
In the second quarter, Wal-Mart’s worldwide eCommerce sales grew approximately 16%.
Neil Ashe, CEO for Global E-Commerce
On the largest day of our dare to compare event, we saw more than double the number of new customers to Wal-Mart.com than a typical day.
We opened two new automated online fulfillment centers, each bigger than 20 football fields. And we have two more coming this quarter.
Grocery pickup: We are in five markets and sales continue to grow because customers especially moms with children love the convenience of ordering online and having their car loaded at a pickup location.
In Brazil, the overall economic environment is very challenging but we have continued to take share in this down market.
Greg Foran, CEO of Walmart US
Three major factors contributed to our underperformance…I want to be straight forward; these issues will present continuing profit challenges for the remainder of the year.
This month store managers are receiving mobile tablets that will help them stay connected to the business, while keeping them on the sales floor to help our customers and associates.
We have lowered our second quarter print advertising count from 20 pieces last year to just four pieces this year.
Since June, we’ve been working on amending terms and allowance agreements with our suppliers.
Traffic was particularly strong on the general merchandise and soft line side of the box.
eCommerce sales contributed approximately 20 basis points to our overall comp.
Comps in neighborhood markets were up approximately 7.3%.
On the grocery side of the box, consumables had positive comps.
This quarter we opened 16 Supercenters including relocations and expansions. Additionally, we opened 22 traditional format Neighborhood Markets and the final six of our smaller format neighborhood market test locations.
We have decided not to pursue a number of potential Neighborhood Market locations…We now expect to open a total of 160 to 170 neighborhood markets in fiscal 2016 including the 51 locations already opened – Our previous forecast was to open between 180 and 200 Neighborhood Markets.
We are still on track to do approximately 60 to 70 Supercenters this year, which was our original forecast.
For the 13 week period ending October 30, we anticipate a comp sales increase of approximately 1% to 2%. Last year, our comp sales for the period were up 0.5%.
David Cheesewright, CEO of Walmart Int’l
Comp sales were positive in Mexico and Canada while the UK, Brazil and China posted negative comps. All other markets had positive comp sales.
UK sales declined 4.1% and comp sales excluding fuel were down 5.2% driven by declining traffic especially in fresh fruit categories.
Mexico sales grew 7.4% and comp sales increased 5.4%.
In Canada, sales grew 5.4% and comps grew 3.9%.
For Wal-Mart Brazil, net sales declined 9% and comp sales were down 1%.
Wal-Mart China sales grew 1.2% while comp sales declined 1.4%.
Rosalind Brewer, CEO of Sam’s Club
Net sales without fuel grew 2.8%, comp sales without fuel were up 1.3%.
Home and apparel delivered low single-digit comp sales with strength and apparel offset by softness in kitchen electrics, domestics, and furniture.
Our fresh freezer cooler business was softer than expected.
Grocery and beverages delivered low single-digit comps.
The consumables business also delivered low single-digit comps driven by laundry and tabletop categories.
Traffic to our site was up just over 20%.
Read the full transcript via Seeking Alpha
Dick’s Sporting Goods Q2 Earnings Call Highlights
Edward Stack, Chairman & CEO
eCommerce penetration (grew) to 7.3% of sales in the second quarter of this year, compared to 6.3% in the second quarter of 2014.
Our golf business is beginning to show some encouraging trends. Our margins have improved significantly over last year, and the apparel side of our business has comped positively throughout the second quarter.
CALIA has performed better than expected and we continue to believe it will become our number three women’s athletic apparel brand by the end of 2016.
During the quarter, we opened our first combo store in Mobile, Alabama…We plan to have four of these combo stores in place by the end of 2015.
Q&A: We’re pretty pleased with where we are from an opening price point standpoint. We will be adding a couple of brands…that will be a bit more opening price point, such as SKECHERS.
Q&A: We continue to be happy with…the athletic apparel business…on the men’s side and in the women’s side. The license business was not what it was last year…we’ve been very pleased with the outdoor category and the golf business is getting better.
Q&A on Jordan shops: We’re starting out with ten stores this fall and it will roll out if it goes well, and we expect it will, then there’ll be a meaningful increase going into 2016 and 2017.
Q&A on future Field & Stream format: Well, we haven’t made a final decision yet…but with the research that we’ve done and the first store that we’ve opened…I would expect the vast majority of them will be in the combo format.
Q&A on TaylorMade: We’re going to be looking at their product for next year tomorrow and I’ll have a better – I could answer that question better tomorrow than I can today.
Andre Hawaux, COO
Now, turning to our outlook for the remainder of fiscal 2015…We expect same-store sales to increase in the range of 1% to 3%.
In 2015, we expect to open 44 new DICK’S stores, relocate seven DICK’S stores and relocate one Golf Galaxy store… and expect to open nine new Field & Stream stores this year.
Q&A on comp without Hunt & Golf: For DICK’S omni, instead of a 1.5 comp we would have been a 2.8 comp for this quarter.
Read the full transcript via Seeking Alpha
***
Eye-on-Retail Tipsheet is created early every weekday morning and read by retail merchants and executives worldwide. We love data, earnings reports, executive presentations and stories off the beaten path that get at what’s really happening in the world of retail. See our website at www.eyeonretail.net