1) Comparable sales for the quarter were positive 9.6%, driven by a healthy balance of ticket and transaction growth. As expected, we recovered most of the outdoor sales we missed in the first quarter from unfavorable weather conditions.
2) We expect the (Orchard Supply) deal to close at the end of August and to be funded with operating cash flow.
Rick Damron (COO)
3) Our outdoor product comps increased approximately 13% in the second quarter, compared to a decrease of 7% for the first quarter, resulting in an outdoor comp of 3.5% positive.
4) Categories such as hardware, paint, and [fashion] electrical not only achieved mid single digit comps, but did so with solid growth and gross margin rates.
5) The financial benefit of value improvement is greatest once we have reached stabilization. That is, when we are past the clearance and selling only new product assortments. We estimate that roughly 50% of our business was at this stage in the second quarter.
6) We continue to expect average mid single digit comps and roughly 100 basis points of improvement in gross margin rate for product lines that have reached stabilization.
7) We continue to see good growth in the pro for the quarter. Our pro business outperformed our sales totals, or comp totals. You look at it overall, it’s roughly, we say, approximately 25% of our total volume at this point in time.
8) Whether it’s kitchen cabinets, whether it was appliance sales, or whether it was fashion plumbing sales, we’re seeing strength in those categories and interest and traffic in those categories that we haven’t seen in previous quarters.
Robert Hull (CFO)
9) Comps were 9.5% in May, 8.5% in June, and 11.3% in July. For the quarter, comp transactions increased 5% and comp average ticket increased 4.4%.
10) For the quarter, the percentage of resets completed increased from 50% to 70% while the percentage of resets stabilized increased from 30% to 50%.
1) Our second quarter comparable sales increased 1.2% below our expectations going into the quarter, but nearly 2 percentage points ahead of our first quarter pace.
2) While emerging strength in the housing and automotive sectors is a long term positive, the near term spending on these big ticket items is crowding out other spending.
3) Second quarter sales in our digital channels grew in the teens overall with mobile traffic and sales continuing to grow at a triple digit pace.
4) We opened another 44 Canadian Target stores in the second quarter putting our total at 68 today on the way to our goal of operating 124 Canadian stores by year end.
5) Now that we have successfully opened 68 stores in Canada we need to drive trips and conversion in trips and conversion in frequency categories like healthcare, food and other basic commodities. Sales in these categories have grown much more slowly than we expected causing overall sales and profit momentum to build more slowly as well.
6) In Canada, we know that we have an opportunity to break those shopping habits and we have got to focus on driving need-based trips. So, there in particular, we will sharpen up our pricing and make sure that we are taking a more of a market leader position.
7) We are analyzing results in our first 70 Target stores to understand where in the stores we have the ability to reduce space even more allowing us to further shrink the size of this store format.
8) Our partners at Facebook have told us that engagement statistics for Cartwheel (mobile coupon platform) are among the best they have seen in the beta stage of any app both within and outside the retail space.
Kathy Tesija (EVP Merchandising)
9) Cartwheel is growing rapidly; it currently has more than a million users who have saved more than $2 million so far.
10) Based on successful results from our team member test of buy online and pickup and in-store, we’re moving quickly to begin offering this option for guests in this third quarter.
“Is Kroger’s Dillon the next Sam Walton?” by Steve Watkins at Cincy Business Courier. “Veteran tech writer Dana Blankenhorn, in commentary he posted as a contributor to TheStreet.com’s site, compared Kroger CEO Dillon with Walton, who opened the first Wal-Mart store in 1962. Blankenhorn notes that Kroger’s stock, up nearly 50 percent this year, has far outpaced Wal-Mart’s gain of about 10 percent. Other big retailers have gained less than 20 percent. He also pointed out that Dillon is a fourth-generation grocer and comes from a long line of successful operators of the Dillon supermarket chain in Kansas and across the Plains states and the West.” Read more
“Disappointing Canada sales drag down Target second quarter earnings” by Thomas Lee at Star Tribune. “Initial euphoria over Target Corporation’s expansion into Canada has given way to disappointing sales and prompted the retailer Tuesday to lower its profit forecast for the year. With U.S. stores producing tepid growth, Target has embarked on the most ambitious expansion in its 50-year history — opening more than 120 stores in Canada by early next year. But as it announced quarterly earnings Tuesday, the Minneapolis-based retailer said its Canadian locations — more than 50 open so far — are struggling to sell seasonal goods and non-discretionary items like food and health care products.” Read more
“Wal-Mart, Toys R Us Among First Retailers to Unveil Holiday Promotions” by Jennifer Booton at Fox Business. “Wal-Mart announced changes to its three-month holiday layaway promotion that include a scrapped opening fee, compared with $5 last year, the return of the cancellation fee from zero in 2012, and new start and end dates: Sept. 13 through Dec. 13…The company is even getting tech-savvy this year, allowing its Facebook “fans” to get a two-day head start with access to layaway beginning on Sept. 11.” Read more
“Whole Foods’ Battle for the Organic Shopper” by Julie Jargon at WSJ. “The upscale grocer, known for its pricey organic products, is increasingly emulating the discount tactics used by traditional supermarkets…”The recession was a wake-up call for us,” said co-Chief Executive Walter Robb in an interview. One of the chain’s latest initiatives: nationwide “flash” sales on specific items promoted on Twitter and Facebook FB -0.23% that run for just a few hours, like a five-hour buy-one-get-one-free deal on ice cream last month.” Read more
“Google Patents ‘Pay-Per-Gaze’ Eye Tracking” at Retail & Loyalty. “Google could be betting that advertisers will pay to know whether consumers are actually looking at their billboards, magazine spreads, and online ads. The company was just granted a patent for “pay-per-gaze” advertising…The idea is to measure how long a person looks at an ad, as well as their emotional response as indicated by pupil dilation.” Read more
“Tepid sales, bigger discounts hurt Sears” results by Dhanya Skariachan at Reuters. “Sales fell 6.3 percent to $8.9 billion, falling short of the analysts’ average estimate of $9.5 billion, according to Thomson Reuters I/B/E/S. Sales at stores open at least a year fell 2.1 percent at Kmart, 0.8 percent at Sears Domestic and 2.5 percent at Sears Canada. Online sales rose 20 percent at the company, which has invested heavily in its e-commerce business.” Read more
“Sears Canada revenue falls yet again” at Reuters. “Department store chain Sears Canada Inc’s revenue declined for the 18th quarter in a row as the company struggles with weak demand and increasing competition from U.S. retailers. Sears Canada, to compete with companies such as Target Corp and Wal-Mart Stores Inc announced a three-year plan in 2012 that included making radical changes to its pricing strategies and sprucing up stores. “This period marks the half-way point of our three-year transformation plan, and although we have much work to do, we are starting to see progress …” Chief Executive Calvin McDonald said in a statement.” Read more
“Staples Plunges Most Since 2011 on Profit Forecast Cut” by Matt Townsend at Businessweek. “Net income in the second quarter fell 15 percent to $102.5 million, or 16 cents a share, from $120.4 million, or 18 cents, a year earlier, Staples said. Analysts projected 18 cents, on average.” Read more
“Walmart Chairman Targeted for $16 Mil Car Hobby” by Tess De La Mare. “S. Robson Walton, 68, was targeted while taking part in a racing event in California with his collection of luxury cars, including a Maserati and a Ferrari, valued at an estimated $16 million.Two separate protests were staged – one in front of the Mazda Raceway Laguna Seca and the other at a nearby Walmart store.” Read more