Wednesday Tipsheet: Lowe’s Comp +.9%| H.Depot Call Highlights | Target Can. – Out with the Old…


Q1 2014 Target Corporation Earnings Conference Call – Wednesday, May 21, 2014 10:30 a.m. ET  Listen to Webcast


“Lowe’s Comp Sales Up .9% – ‘Reaffirms’ Sales Outlook  – May Performance ‘Improved’ ”  “Sales for the first quarter increased 2.4 percent to $13.4 billion from $13.1 billion in the first quarter of 2013, and comparable sales increased 0.9 percent…”Performance has improved in May which, together with our strengthening execution, gives us the confidence to reaffirm our sales and operating profit outlook for the year,” Niblock added.”  Read the release


CNBC Headline:  “Lowe’s posts earnings and revenue miss” “Lowe’s posted quarterly earnings and revenue that missed Wall Street expectations Thursday, due in part by a lower tax rate.”  Read more


Q1 2014 Lowe`s Earnings Conference Call – Wednesday, May 21, 2014 9:00 a.m. ET  Listen to Webcast


“Target Canada: How Barbie SUVs Snarled Supply Chain Traffic” at Reuters.  “This insiders’ view, which has not been reported before, may partially explain why shoppers have been disappointed by empty shelves at some of Target’s Canadian stores. It is a cautionary tale for other U.S. retailers who may be considering a big push into Canada.”  Read more


“Dick’s Sporting Goods shares tumble after earnings report” by Paul J. Gough at Pittsburgh Bus. Times.  “Why the drop? CEO Edward Stack said in a conference call Tuesday with analysts it had to do with weaknesses in Dick’s golf and hunting business. Stack said the hunting declines were expected but it’s a much tougher row to hoe with the golfing segment. It’s down $34 million below Dick’s expectations for the quarter.”  Read more


Target – Out with the Old, In with the New…


“Target’s Canada Chief Out “Effective Immediately” “ by Kavita Kumar at Star-Tribune.  “We want to make sure we have the right product in the right place at the right time,” Jenkins said. “Then we will have an opportunity to reintroduce ourselves to the Canadian marketplace.”  Read more


“Meet Mark Schindele, Target’s new top man in Canada” by Jim Hammerand at Minn./St. Paul Bus. Journal.  “Schindele joined Target Corp. in 1999 as a bath and rugs buyer after five years with Macy’s…climbed the Target ladder to senior buyer and then director of merchandise planning and presentation. He entered the executive world as vice president of domestics in 2006, and two years later became senior vice president of hardlines…As senior vice president of merchandising operations since 2011, he pushed the PFresh grocery initiative and helped launch the small-store-format CityTargets and Target Express.” Read more


“A Bullseye View Interviews New Canada Chief”  “Will you be relocating to Toronto?  I will be in Canada full time and my family is planning to join me this summer. I have school-aged kids, so we’re in the midst of figuring out the details.  What are some of your favorite things to do outside of work?  I love being with my family and I can’t get enough of the outdoors. I also love taking in the action at the track. You’ll find me glued to the Indianapolis 500 this weekend.”  Read more


“Target development chief John Griffith to retire” by John Vomhoff Jr. at Minn./St. Paul Bus. Journal.  “Target said Griffith has agreed to serve as a consultant on Target’s engagement with economic development organizations in the Minneapolis area.” Read more


“Amazon vs. Target:  Head-to-Head on Subscription Services” by Courtney Reagan at CNBC.  “We looked at a basket of six items, shown in the table, and found that Amazon was less expensive for those particular items, coming in $23.34 cheaper without the REDcard savings, and $17.49 with the extra REDcard savings.”  Read more


“Target is bringing its in-store clinics to Texas” by Maria Halkias at Dallas News.  “One-stop shopping in eight local Target stores this fall will include treatment for 60 minor illnesses and vaccinations…The company operates about 70 clinics in Florida, Illinois, Maryland, Minnesota, North Carolina and Virginia.”  Read more


“Heard on the Home Depot Call” – Highlights from Yesterday’s Home Depot Q1 2014 Earnings Call 


Frank Blake – Chairman & CEO

We’ve talked about the bathtub effect that weather can have on our spring seasonal business, where weak sales in the first quarter are counterbalanced by strength in the seasonal business in the second quarter. We expect the same effect to be true this year.


Our northern division, our largest division negatively comped, driven by weakness in seasonal and outdoor categories, but in our southern and western divisions we not only positive comped, but we actually did better than we expected.


Canadian business posted a positive comp in local currency for the quarter. In Mexico, our team posted their 42nd consecutive quarter of positive comps. They also inaugurated an online e-commerce site piloting it now in limited geographies, but eventually planning for coverage across the country.


Our dotcom business had sales growth of almost 40% for the quarter. We are consistently seeing over 3 million visits per day.


Craig Menear – President, U.S. Retail

15 of our 19 U.S. regions posted positive comps.


In the western and southern divisions we had solid positive comp performance, almost twice the U.S. average. The departments that outperformed the company’s average comp were tools, electrical, plumbing, kitchens, bath, hardware, decor, building materials, millwork and lighting. Flooring, indoor garden and paint were positive, but below the company average, while outdoor garden and lumber were negative.


Total comp transactions grew by 2.1% for the quarter, while average ticket increased 0.6%.


Transactions for tickets over $900 also representing approximately 20% of our U.S. sales were up 2.5% in the first quarter.


Our Pro Xtra loyalty program continues to gain traction, and we now signed up over 1.5 million pros.


Brand call outs:  CREE light bulbs, Toro, Glidden, KitchenAid


Carol Tome – CFO

Comps for U.S. stores were positive 3.3% for the quarter with positive comps of 2.8% in February, 4.6% in March and 2.8% in April.


May sales are robust. So today we are reaffirming the sales guidance relayed out our fourth quarter earnings call and we expect fiscal 2014 sales to increase by approximately 4.8% with positive comps of approximately 4.6%.


The sales growth for dotcom year-on-year was $232 million, now making up 4.2% of our total penetration. And for the U.S. the comp contribution is a little over 100 basis points.


If you look at the $232 million of (dotcom) growth that we saw in the first quarter, almost a 100 million of that came from BOSS-related sales (buy online ship to store).


(on interactive in-store technology) In total 450 additional stores, this year will have some sort of an appliance change made to them either more square footage or another kiosk. So, yes, the technology is a way that we can help drive sales.


We should look at home price appreciation harder than we do turnover. We can turnover with only 4% of unit. Home price appreciation really impacts the way people spend money on their homes.


Kevin Hoffman – President Online

(regarding online sales by region) Very, very little difference regionally…not as big of regional differences you would see in the physical stores.


Read the Full Earnings Transcipt via Seeking Alpha



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