Thursday Tipsheet: Costco Tepid Online | H.Depot Wants Same-Day Ship | Call Highlights


Costco’s Q1 Earnings Call:  Quick Summary:  Plan 30 New Stores in ’14; Ramping up Int’l; Online not a Major Focus.

Heard on the Call:

Richard Galanti – CFO

* We opened 13 locations during the first quarter of fiscal 2014.  Since the end of the Q1, we have opened in Q2 two new locations, one in Illinois and one in Canada, in Ontario. That gives us 15 new openings thus far in fiscal 2014.

* We have a current plan of 30 new locations in ’14, 16 – U.S., 4 – Australia, including the two we recently opened, 3-Canada, 2 each in Korea, Japan, and Spain – and of course those would be our first two units in Spain – and one additional location in Mexico.

* Food and sundries, candy, deli, and refrigerated were the relative standouts. Hardlines was probably the most challenging category.

* Majors came in negative for the quarter, challenging of course in televisions and in cameras. And better-performing departments within the hardlines were office and automotive, but slightly negative overall for the department.

* Within the low double digit softlines positive comps, small electrics, apparel, and jewelry were the relative standouts. And within fresh foods, comps in the mid singles. Better performing departments included produce, meat, and deli.

* Costco Online, we’re now in four countries, U.S., Canada, U.K., and most recently Mexico.

* Q1 ecommerce sales were up 24%…And ecommerce still is a relatively small part of our company, running about 2.5% of our total sales.

* We have no plans currently to deliver to homes anything other than through ecommerce, which tends to be nonfood items, and very limited foodstuffs, and surely not fresh foods.

Newer Merchandising Initiatives:

* Certainly we’ve talked about apparel now for a year, year and a half, and having still double digit increases year over year, two years out.

* Cosmetics, we’ve got a couple of units in the L.A. market where we’re testing some expanded cosmetics. We still would like to get more brands to sell us, but we’re pretty scrappy.

* The ticket programs, whether it’s for movies or for ski vacations or local restaurants, those continue to grow.

Read the Full Costco Transcript via Seeking Alpha


Costco’s Q1 Conference Call Webcast  Listen Here via Seeking Alpha


“Costco slowly shifting sights to international shores” by Angel Gonzalez at Seattle Times.  “Five years ago between 75 percent and 80 percent of the company’s new stores were in the U.S., Chief Financial Officer Richard Galanti said in an earnings call with analysts Wednesday. Over the next three or four years, U.S. openings will account for as low as 40 percent, he added.”  Read more


Home Depot’s 2013 Investor & Analyst Conference: Quick Summary:  Pursuing Same-Day Delivery Options; Expect Comp Sales of 5% in 2014; 8 New Stores in 2014; Mobile is 35% of Online Traffic.

Heard on the Call:

Frank Blake – CEO

* Kevin refers to the smartphone as a store in a pocket and like the physical store, the virtual store requires constant upgrading and improvement, only with the virtual store the pace is a lot faster.

* The pro for the first time has actually outperformed the consumer from a net promoter score. So we’re slightly above 73.

Marvin Ellison

* We’ve also taken steps to expand our focus on making an emotional connection within the four walls of our stores (handing out coffee & doughnuts, meet Santa, etc.)

* Company Call Out:  DAP Smartbond (showed 1 minute Pro video)

* Pro is 3% of our customers or approximately 35% of our sales.

Craig Menear

* We must provide simple solutions with the products that we put our shelves.

* Company Call Out (Strategic Partners):  BEHR & Paint, TTI & Tools, Custom building products and tiles and materials and CREE and LED.

* Brand Call Out:  3M’s Command Product (related to Micro-Space planning in-store), Symmons Faucets

* We are a branded house and we intend to remain a branded house to satisfy our customer preferences. Our private label products fill in inline structures and give customers alternatives.

* Channel optimization:  Next year we’ll continue to enhance this experience and actually shift more business in this category to away from the stores and this will free up space in-store allowing additional sales with other products.

Kevin Hoffman

* Just a few years ago, we had only 4% of our traffic coming from mobile phones and tablets; this year, it will approach 35%; and in some days in events, it’s even higher.

Mark Holifield

* One of the primary intents of our new network is to provide same day shipping and fast ground delivery usually within two days to parcel freight. Perhaps this is a good time to [drone] on a bit about next day or even same day delivery.

* We’re not yet able to take an order online and drop that order to the optimal store for delivery direct to the customer. We’re investing in state-of-the-art systems that would allow us to do in the future.

Carol Tome

* Total company sales growth (in 2014) will be approximately 5%.

* We are targeting eight new store openings in 2014, most of which will take place in Mexico.

* The services business is performing really well. Currently, it’s roughly 4% of total sales.

* Many retailers said they had a pretty soft Black Friday and they were disappointed with their sales results and that certainly wasn’t the case here at The Home Depot.

Read the Full Transcript via Seeking Alpha


Home Depot 2013 Investor Conference Webcast and Executive PowerPoint Presentations  Listen/Read Here


“Home Depot Looks to Offer Same-Day Shipping” by Shelly Banjo at WSJ.  “The moves are aimed at boosting online sales, including a same-day delivery service aimed at customers and professional contractors who might be in the midst of a home improvement product and want lumber, tiles or screws in a matter of hours.  “It’s a big investment,” Chief Financial Officer Carol Tome said during the retailer’s investor conference on Wednesday.”  Read more


Home Depot CEO Frank Blake Interviewed Yesterday on CNBC/Cramer  See the Video


“Target blows past Walmart as most-browsed retailer on mobile” by Chantal Tode at Mobile Commerce Daily. “The findings underscore the success of Target’s efforts to build its mobile strategy, with 39 percent of smartphone shoppers and 45 percent of tablet shoppers browsing Target’s app and site, up from 22 percent and 28 percent last year.”  Read more


“ShopperTrak:  Brick & Mortar Sales Decreased 2.9% from 12/2 – 12/8”  “With the shortened Christmas shopping season now in full swing, shoppers can’t procrastinate like they did last year. As we approach the holiday, we expect that shopper activity will increase each week.”  Read more


“Glassdoor’s 2014 Top 50 Places to Work”  Costco #16, H-E-B #27.  See the Full Rankings


“Outlet Malls:  Bait & Switch” at Sacramento Bee via Dallas News.  “When you buy something at an outlet mall, do you know what you’re getting?  If you think it’s a top-quality, brand-name product at a deep discount, think again.  Ten years ago, that may have been true. But most brands now sell lesser-quality merchandise made just for their outlets.”  Read more


“Dick’s Tests Three New NHL ‘Stores Within Stores’ “ by Teresa Lindeman at Pittsburgh Post-Gazette.  “Just before Thanksgiving, three Dick’s stores — including one in Cranberry, one near Chicago and one in West Nyack, N.Y. — launched in-store departments meant to offer a taste of that flagship NHL experience.”  Read more


“AmazonFresh starts same-day grocery delivery in S.F.” by Andrew Ross at SF Gate.  “Minimum requirements: More than $35 worth of groceries. Order by 10 a.m. to get it by 6 p.m., or by 10 p.m. to get it eight hours later (in 12 out of 51 zip codes). Most of the goods will originate at Amazon’s recently opened warehouse in Tracy, 60 miles from San Francisco.”  Read more


“Home Depot Sold 2.6 Million Christmas Trees Last Year; Online Sales Surge” by Katarina Gustafsson and Mathew Boyle at Businessweek.  “Though online sales make up no more than 3 percent of the $1 billion U.S. holiday tree market, according to the National Christmas Tree Association, more retailers are starting to peddle them on the Web. Home Depot, the biggest seller of Christmas trees in the U.S., began offering them online last year and says it has expanded its lineup for this season”  Read more


“Walmart CMO Stephen Quinn Named Chair of Association of National Advertisers’ Alliance for Family Entertainment” at Sacramento Bee.  “Quinn assumes the leadership of a coalition of national marketers that has achieved considerable success in the past 15 years developing and supporting quality programming about modern American family life across all content distribution platforms.”  Read more


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