Thursday Tipsheet: Target Wage Hike? | NY Times Hits WMT on ‘Hours’ | Lowe’s/Target Call Highlights
Wal-Mart CEO talks about pay raises, how customers shop and what he’s learned from critics by Anne D’Innocenzio at AP via Star Tribune. “McMillon, 48, spoke with The Associated Press exclusively about the pay and training increases, the fallout from the Bangladesh disaster and other issues that are affecting Wal-Mart. What follows are edited excerpts from a 40-minute interview at Wal-Mart’s headquarters in Bentonville, Arkansas.” Read the interview
Dollar Tree says Family Dollar stores could be re-branded by Katherine Peralta & Ely Portillo at Charlotte Observer. “Switching Family Dollar stores to Dollar Tree and vice-versa. “Most of the early re-bannering will be Family Dollar stores to Dollar Tree stores,” (CEO Bob) Sasser told investors. Family Dollar stores in the suburbs could be especially ripe for a transition, he said. “Our first priority was to take a look at the Family Dollar, underperforming Family Dollar stores that would perform better as Dollar Tree stores.” Read more
Dollar Tree Q4 Comp Sales +5.6% Read the release
Target hints at grocery makeover by Kavita Kumar at Star-Tribune. “The impending changes are making suppliers nervous as they wonder if they will be part of Target’s plan, said Amy Koo, an analyst with Kantar Retail.” Read more
Target CFO John Mulligan Appears on CNBC See the video
Target Q4 Comp Sales +3.8% Read the release
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NY Times: Next Goal for Walmart Workers: More Hours by Hiroku Tabuchi. “He says he constantly begs his managers for full-time work at the bustling Walmart superstore in Rosemead, Calif. He generally works around 28 hours a week, but can be assigned as few as 18. “I work as hard as I can, and when they offer me hours, I stay,” he said. “But when the time comes, and I beg them for hours because I’m not going to afford rent, they don’t want to help me.” Read more
A Target wage increase could be coming soon by Nick Halter at Minn./St.Paul Business Journal. “Edward Jones analyst Brian Yarbrough expects a wage announcement Tuesday at Target’s annual analyst day in response to Walmart’s recent announcement that it will boost its minimum wage to $10 an hour. “I would assume that’s why Target’s not giving annual guidance today and that’s what they’re going to talk about on their analyst day,” Yarbrough said. “I would assume Target is going to match (Walmart) it or potentially take it even higher.” Read more
Wal-Mart exec says retailer still committed to U.S manufacturing push by Kim Souza at The City Wire. “…some say all has seemed quiet on the retailer’s push to return manufacturing jobs to the U.S. since the departure of former Walmart U.S. CEO Bill Simon, Wal-Mart disagrees…Catherine Johnson, seafood buyer at Wal-Mart for the past 5 years, said her team is seeking out locally sourced seafood items…“Next month we are traveling to Boston for a seafood show and we recently completed a trip to the Pacific Northwest to Pike’s Market. We source shrimp and what we can from the Louisiana Gulf,” Johnson said.” Read more
Ace Hardware reports record revenue and income for the year by Lewis Lazare at Chicago Business Journal. “Ace posted revenues of $4.7 billion, an increase over the previous year of $546.3 million of 13.2 percent.” Read more
Sears Revenue Falls 23.5%, Comp Sales -4.4% Read more
Kohl’s Q4 Comp Sales +3.7% Read the release
Lumber Liquidators warns of possible criminal charges at AP via St. Louis Post Dispatch. “CEO Robert Lynch said in a conference call Wednesday that news program “60 Minutes” may feature the company in an “unfavorable” segment this weekend. He said the story is related to a 2014 lawsuit that alleged the company did not properly warn customers that certain products may emit formaldehyde.” Read more
Guest Author: Rebuilding Empires by Thomas Lee (Excerpt 3 of 4). Published by St. Martin’s Press.
In his corner office at Target corporate headquarters, Jeff Jones keeps a copy of The Singularity is Near by futurist and Google engineer director Ray Kurtzwell. In the book, Kurtzwell argues that technological advances like computers and the Internet will create such exponential growth that it will eventually outstrip humans’ ability to comprehend the phenomenon.
“Target has been extraordinary at strategic planning,” Jones said. We’ve been very clear about our destination, of the initiatives we had to tackle. Keeping that same discipline and clarity is important, especially when you’re dealing with several hundred thousand employees that you’re trying to bring along on a journey. We just kind of knew it’s going to look like this and these are the things that will allow us to achieve our goals.”
“But in today’s world, given the pace of transformation, you need to also create the environment and the comfort level with the ambiguity of what that actually means. The cycles of innovation that are impacting humans, let alone impacting retail, are just faster than ever. We need to create a culture of comfort with the unknown so people still are driven to go fast and are destination oriented, they want to win, they’ve got goals, but they also recognize that arriving there just might not be the same linear path that it used to be.”
Target Q4 Earnings Call Highlights
Brian Cornell, CEO
Our fourth quarter comparable sales increase of 3.8% was also stronger than the updated guidance we provided in January, as we saw unexpected strength in our store channel sales in the last two weeks of the quarter.
The digital channel growth contributed nearly a full percentage point to our fourth quarter comparable sales increase.
We’re seeing strong financial results from our eight City Target stores and we’ve seen very strong initial performance in the test of our first Target Express location, which opened here in the Twin Cities last August.
In 2015, of the 15 new stores we’re planning to open more than half of these are new formats with eight additional express stores and a new City Target set to open in Boston, next to Fenway Park.
I can tell you that the entire leadership team is prioritized, one, increasing traffic to our stores, and two, visits to our site. Kathee and I were recently out in the market together.
We spent several days visiting our stores, looking at competitive food retailers as we begin to build our reinvention plans for food.
Kathee Tesija, Chief Merchandising & Supply Chain Officer
We saw particularly strong trends in fourth quarter sales in our signature categories. Specifically, healthcare, beauty, apparel and home, all grew faster than our overall sales.
Within apparel, results were strongest in baby and kid, and home comps were led by domestics and seasonal items.
Our toy category had a fantastic quarter recording a double-digit increase in comparable sales.
Digital channel for the fourth quarter, we saw a high single-digit increase in visits, driven entirely by growth in mobile which includes both tablets and smartphones.
Orders were up well over 50% driven by very strong conversion increases on both the conventional site and mobile.
Mobile accounted for more than 40% of our digital orders in the fourth quarter.
In home, we have begun testing highly inspirational vignettes to show product in lifestyle settings which we’re rolling out to another 15 stores this quarter.
Farther back in the testing phase, we are looking at innovations to bring even more fun to our toy area.
On Black Friday, 10% of our iPhone app revenue was from guests purchasing on their phone while they were simultaneously shopping one of our stores.
35% of the time guests who picked up a digital order also shopped the store on the same visit.
Following the addition of Mannequins at the apparel floor pad, in more than 600 stores last fall, we are planning to roll them out to another 400 stores this quarter.
Based on the guest response to our enhanced, entertainment and electronics experience which is currently in 42 stores, we plan to roll this environment out to another 275 stores this year.
John Mulligan, CFO
Digital channel sales increased a robust 36% in the fourth quarter.
Outlook for Q1: We expect our comparable sales to increase about 2%, driven by an increase in digital channel sales of 30% or more, combined with the modest growth in store channel sales.
Read the full transcript via Seeking Alpha
Lowe’s Q4 Earnings Call Highlights
Robert Niblock, CEO
Comparable sales growth of 7.3%.
Comp growth was driven by a 4.9% increase in comp average ticket and a 2.3% increase in comp transactions.
All 14 regions had comps greater than 5%.
Canada delivered double-digit comps in local currency for the seventh consecutive quarter.
Approximately one-half of homeowners now believe the value of their homes is increasing.
Rick Damron, CPO
Purchases made on Lowes.com, approximately 60% are picked up in store.
Above-company average comps in flooring, kitchens, appliances, lumber, building materials, millwork and outdoor power equipment.
Our interior project specialist program has an average ticket above $10,000…So we are expanding into another 470 stores in 2015 reaching over three-fourths of our stores by year-end.
Lowe’s now has the number one and number two brands making us the destination for pneumatic tools, particularly for the pro.
We are also completing our beta test of lowesforpros.com, which has been well-received by our pilot customers.
We will reduce our total marketing spend even while increasing our presence in targeted digital media.
Our pro accounts grew 24% during the quarter.
lowes.com: was up 25% for the quarter, 2.5% of our total sales for the year.
Bob Hull, CFO
Looking at monthly trends, comps were 6.7% in November, 7.2% in December and 8.2% in January.
For the year, we expect a total sales increase of approximately 4.5% to 5% driven by a comp sales increase of 4% to 4.5% and the opening of 15 to 20 stores, which includes six Orchard and two city center locations.
Kitchens, flooring, millwork, all three of those categories are the furthest away from where they were back in the peak. What I can tell you is, at the peak, those items were — those three categories were close to 19%, 20% of our sales. Today, they are 16% to 17%.
Read the full transcript via The Street
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