Thursday Tipsheet: Most Admired: Costco #12, H.Depot #40 | Target & Lowe’s Call Highlights | Sam’s Quiet Test


“Target’s 4Q profit falls 46% after breach, Canada expansion” by Jennifer Bjorhus at Star-Tribune.  “Bottom line, results and outlook were not good,” Binder said. “But expectations were worse.”  There was legitimate good news in Target’s earnings, Binder said: U.S. sales continue recovering from the hit of the breach, use of Target’s Redcard continues to climb and the company cut stock buybacks but didn’t eliminate them altogether, as feared.”  Read more


“Fortune:  World’s Most Admired Companies 2014 (Amazon #2, Costco #12, Target #29, Home Depot #40…)”  See the Top 50 List


“Sam’s Club Quietly Tests Online Subscription Service as Threat From Amazon Grows” by Shelly Banjo at WSJ via Yahoo.  “Called “My Subscriptions,” the service mirrors Inc.’s Subscribe & Save program, which was launched in 2007 and has given the Internet retailer a foothold in sales of basic consumer products. Sam’s Club, a unit of Wal-Mart Stores Inc., is launching the service as Amazon prepares to move deeper into the business itself.” Read more


“The Most Powerful Sales Tool at Lowe’s: Satellites” by Kyle Stock at Bloomberg.  “Lowe’s said on Wednesday that it has been gauging traffic at its almost 1,900 stores from space, scanning satellite images of its parking lots to find out how many shoppers it can expect at every hour of every day. It has also starting syncing its parking lot observations with actual transaction counts to see how many people drove away without making a purchase.”  Read more


“Costco’s Auto Program Expected to Sell 375,000 New Cars this Year “ by Philip LeBeau at CNBC.  “We really save the members a lot of time by doing all that legwork on their behalf,” said Jeff Skeen, general manager of Costco Auto Program. “They would rather spend their weekends doing something else than haggling with car dealers.”  Skeen says Costco car buyers wind up paying about $1,000 less than those who visit dealers on their own trying to get the best deal possible.”  Read more


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“Why Amazon Prime shoppers may flee with fee hike” by Lou Carlozo at Reuters.  “In a survey of more than 6,400 current Prime customers, Prosper Insights & Analytics found that 63 percent of consumers would pay only the current $79 fee for Prime – and no more. An additional 29 percent would pay $89-$99, and only 8 percent would pay $109 or more, a $30 minimum increase.”  Read more


“Dollar Tree Same-Store Sales up 1.2% in Q4”  “For fiscal year 2013, the Company’s consolidated net sales were $7.84 billion, compared with 2012 sales of $7.39 billion. Comparable store sales increased 2.4%, on top of a 3.4% increase last year.”  Read the release


“Sears Lost $358 Million During The Holiday Quarter” by Phil Wahba at Reuters via Business Insider.  “The retailer reported a net loss of $358 million, or $3.37 a share, in the quarter ended February 1…Sales fell 13.6 percent to $10.59 billion.”  Read more


“Best Buy Cuts 2,000 Managers” by Adam Belz and Steve Alexander at Star-Tribune.  “Best Buy apparently told about 2,000 managers around the United States on Wednesday that they were being laid off…The layoffs will affect about 1.4 percent of Best Buy’s 145,000-person workforce.”  Read more


“Best Buy shares jump after profit beats” at MarketWatch.  “Best Buy shares jumped in premarket trade Thursday after it said it swung to a fourth-quarter profit of $293 million, or 83 cents a share, from a year-earlier loss of $409 million, or $1.21 a share.” Read more


“Highlights from Target’s Q4 Earnings Call”


Gregg Steinhafel (Chairman, President, CEO)

We are pleased that our early cycle Canadian stores have seen the most improvement giving us confidence that we will continue to see continued improvement across all our Canadian stores in 2014.

U.S segment fourth quarter sales were running ahead of plan prior to December 19th.

(Seeing) high single digit comparable sales in our second year CityTarget stores.

Plan to open our first (Target Express) location in our home market in July so we can carefully study both operational and financial results before we determine our plans to expand this format to other markets.

The team’s number one operational focus (in Canada) is on in-stocks.

The guests who have REDcards continue to shop our stores.


Kathy Tesija (EVP Merchandising)

Electronics saw an increase in Q4 comparable sales led by mobile phones, tablets and video game hardware and software. We also saw relative strength in our sporting goods and housewares categories.

Thanksgiving was our biggest digital sales day ever with mobile devices accounting for a full 25% of those sales.

In-store pick up requests represented about 10% of fourth quarter digital orders.

About 30% of store visits to pick up an online order resulted in store shopping on that same trip and the size of that store transaction was much larger than an average store trip.

Cartwheel app: ended 2013 with over 5 million users, more than half of its users are Millennials, a much higher percentage than they represent in our overall guest base.

Earlier this month, Target began offering AMBAR a new apparel collection designed with the Latina guest in mind. AMBAR is set in 50 U.S. stores this month and is also available on

Target will offer an exclusive addition of Catching Fire the second film in The Hunger Games trilogy…includes 45 minutes of exclusive content.

Have expanded the Target Beauty Concierge’s program to more than 300 stores.

Continue to see great results from the pilot of our new baby layout.


John Mulligan (CFO)

2014 outlook:  Our current view is that U.S comparable sales will grow in the range of 0% to 2% in 2014.

In Canada, we expect total sales will be approximately double our 2013 experience.

Q1 outlook:  In the U.S we expect first quarter comparable sales in the range of flat to down 2%. So far in February comparable sales have been running within that range

Read the Q4 Target Earnings Transcript


“Highlights from Lowe’s Q4 Earnings Call”


Robert Niblock (Chairman, President, CEO)

15 new Lowe’s stores planned:  6 in the U.S., 4 in Canada, and about 5 down in Mexico. 5 new Orchard Supply stores planned.


Greg Bridgeford (Chief Customer Officer)

At the end of the quarter, we had completely finished the first round of value improvement line reviews and substantially all of the associated resets.

Resets completed in the fourth quarter include core products like pliers and wrenches, décor products such as bathroom vanities and pedestal sinks, and seasonal products such as house and patio plants.

We will also focus on three priorities: First, we will use our enhanced selling and operations planning process to address micro-seasons by market. Second, we will improve our product and service offering for the pro customer. Our third priority will be to build customer experience design capabilities.

We grouped (Pro) categories into the leadership of a general merchandise manager who is focused on ensuring we have the types of products and brands that pros demand.

In Q2 we will re-launch, which will provide a dedicated platform for pro customers to purchase online from Lowe’s.

So we have got a very, very heavy focus on (Pro) right now

Q4: tickets above 500 were 8.9% comps, tickets below 50 were 1.2% and the middle was – the 50 to 500 was 2.2%.

We hit historical highs in sales of snow throwers.    

Bob Hull (CFO)

Total transaction count increased by 4.4% and total average ticket increased 1.1% to $63.08. Looking at monthly trends, comps were 3.3% in November, 6.3% in December and 1.4% in January.

For the year, we expect total sales increase of approximately 5% driven by a comp sales increase of 4% and the opening of approximately 15 big-box stores and 5 Orchard Supply locations.

Categories that stood out in Q4: The biggest one in the fourth quarter was outdoor power equipment. We also had strength in snow throwers and then appliances and fashion fixtures.

Read the Q4 Lowe’s Earnings Transcript


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