“Family Dollar CEO Said to Guard Job” by Shelly Banjo at WSJ. “Dollar General said the chief executive of Family Dollar Stores, Howard Levine, shrugged off multiple requests to pursue a merger between the country’s two largest dollar chains out of fear he would have to step down as CEO, according to a letter sent to Family Dollar’s board of directors late Wednesday.” Read more
WSJ: “Shopper Malaise Hangs Over Target” by Paul Ziobro & Anna Prior. “Target posted a 62% drop in earnings for the fiscal second quarter ended Aug. 2, as losses in Canada continued and margins shrank because of heavy discounting. The price cuts didn’t entirely work. Target rang up 1.3% fewer transactions at U.S. stores open more than 13 months, its seventh straight quarter of falling traffic.” Read more
“Target sees signs of progress, but cuts outlook for year” by Kavita Kumar at Star-Tribune. “You see this sometimes when new CEOs come in: companies lower the bar,” said Brian Yarbrough, an analyst with Edward Jones. “It gives them a better opportunity to beat numbers and to gain Wall Street’s confidence.” Read more
“Home Depot’s CEO Will Never Make My ‘Worst’ List” by Herb Greenberg at Real Money via Dallas News. “I mentioned to Blake that I was impressed as I shopped his stores throughout Southern California, the Chicago area and Connecticut…He: “You’ve only been in the ones that worked.” Me: “Ones that worked?” He: Yep. It’s up to the store manager, and we usually promote an assistant manager to store manager, and they don’t always have what it takes. But you don’t know that until they get the job.” That floored me, because rather than just acting like it was a big success, he was acknowledging how hit-and-miss it can be and how hard, in practice, it really is.” Read more
Australia: Meet Costco Mum at Herald-Sun. “The Canberra mum runs the “Costco Mum” Facebook page, which offers price and deal advice to the 8600 people who like her page…Mrs. Romano started the page to try to get discussion going about deals and experiences, and soon the page took off. “They’re all American brands so you don’t always know what you’re buying, so I thought it would be a good idea to have a page where I could do product reviews,” Mrs Romano said.” Read more
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“Sears Reports Q2 Net Loss of $573 Mil” “Sears Full-line stores experienced comparable store sales growth of 0.1% for the quarter as compared to a decline of 0.8% in the second quarter of last year.” Read the release
“Sacramento’s epic environmental battle – plastic bags” by Jessica Calefati at San Jose Mercury News. “Lobbyists have launched a frenzied eleventh-hour effort to kill a bill that would make California the first state to outlaw flimsy plastic grocery bags…”This bill is not about helping the environment,” Daniels said. “It’s a cash grab for grocers who will get to keep all the money they make when they start charging customers for so-called reusable bags.” Read more
“Home Depot launches “Smart Home” partnership in Canada” by Brian Platt at The Star. “At a “Smart Open House” on Tuesday, Home Depot representatives demonstrated a line of products ranging from light switches, blinds, thermostats, security cameras and door locks that all interface with an app called Wink.” Read more
Target Q2 Earnings Call Highlights
Q2 comparable sales (US) were strongest in hard lines driven by both toys and electronics… also positive in our less discretionary food, health and beauty categories, while they were down slightly in apparel and down low single-digit in home.
U.S. comparable transactions were down 1.3% completely offset by an increase in the average basket.
We are pleased that the U.S. traffic trend improved a full percentage point compared with the first quarter.
Second quarter digital sales increased more than 30% over last year…reflects a nearly 50% increase in visits to our mobile website.
TargetExpress: We plan to expand our test of this new format to several additional locations outside the Twin Cities next year.
Store pickup: About one-fifth of guests engaged in additional shopping in-store when they picked up their online purchases.
About 14% of our digital sales today are being picked up in-store.
Subscription orders account for more than 15% of digital sales.
We are exploring gifting subscriptions, which would allow guests to register for subscriptions that are easy for gift givers to fulfill.
This fall when we rollout standard ship from store capabilities to 35 additional markets, we will be within 1 to 2-day ground transit of 91% of the U.S. population.
Of the 70,000 items in a typical Canadian Target store, about 30,000 items will be new between now and the holiday season.
In Canada, on September 7, we will be launching two new lines of cleaning products, Better Life, an all-natural line of cleaning products designed by two fathers with charismatic packaging.
We are working to moderate our promotional intensity to a level we believe is more appropriate in the long run.
In the U.S., second quarter sales penetration on REDcards was 28.8%, up more than two percentage points over last year.
REDcard penetration in Canada was 4.8% in the second quarter, more than double last year’s 2.3%
This quarter the Canadian comp was down more than 11%.
We are currently forecasting U.S. comparable sales will be flat to up 1% this quarter.
We are encouraged by the positive comps we have seen so far in August.
I am impressed with the progress that John and the team made in the last three months, including a strategy review that is the most comprehensive effort I have seen in my career.
I want to be a good student of the business, but clearly we have to have a sense of urgency here and a sense of pace.
Lowe’s Q2 Earnings Call Highlights
Comparable sales were 4.4% with an increase in comp transactions of 3.1% and an increase in comp average ticket of 1.3%.
With regard to the rumors on Brazil, obviously we don’t comment on specific rumors of a nature like that.
Outdoor product sales were strong with a roughly 6.5% comp for the quarter while indoor comps were roughly 3%.
All 14 regions had positive comps for the quarter; likewise, all 12 product categories had positive comps.
Saw particular strength in lawn and garden during the quarter.
Strength in millwork, paint and tools and hardware which were all above the Company average.
Solid performance in line with the Company average in fashion fixtures, flooring and lumber and building materials.
ProServices business outperformed the Company average during the quarter.
Canada delivered double-digit comps in local currency for the fifth consecutive quarter.
We’ve got some key things we’re working on from a website standpoint to improve the functionality of our website that will be delivered in the next 12 months.
Appliances: obviously something that was a little bit of a challenge in the second quarter.
A couple of parts of flooring were a little weak in the quarter.
Patio and outdoor products topped their solid first-quarter results generating double-digit positive comps.
Introduced Valspar Reserve exterior and interior paints at the end of the first quarter to appeal to both DIY and pro customers and our sales to both customers have exceeded our expectations.
www.lowesforpros.com is currently being tested with a select group of pro customers.
In Q2, our pro applications grew 23% over last year so we continue to see the pros respond very well to the initiatives that we’ve got in place.
Flexible fulfillment allows us the capability to ship from 54 of our stores as well as all of our distribution hubs and nodes direct to consumer.
Interior project specialist: We rolled it to another 582 stores. We are looking at our rollout campaign into 2016.
Monthly comps were 4.7% in May, 4.6% in June and 3.7% in July.
Flooring: we see very good performance in tile. We see very good performance in carpet. We see a little pressure in wood.
Pros: We expanded our lineup of Lenox and Irwin. Certainly our Bosch brand continues to do well, DeWalt does very well.
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