Author: Helen Thomas

September 12, 2014

Hudson’s Bay Company is reaping the rewards of its acquisition last year of Saks.  The company’s retail sales soared 86.6% to $1.8 billion, from $948 million in the prior year.

Consolidated same-store sales increased by 1.9% on a local currency basis, with increases of 1.1% at HBC’s department store group (DSG), 2.2% at Saks Fifth Avenue and 14.9% at Off 5th.  Digital commerce sales totaled $162 million, including $116 million from Saks and growth of 82.2% at DSG.

In terms of merchandise category performance, sales growth at DSG was driven by men’s apparel, home and cosmetics.  Sales growth at Saks Fifth Avenue was led by menswear, gifts and accessories.  Sales growth at Off 5th was strong across the majority of categories.

Gross profit jumped to $700 million, from $368 million in the prior year, again primarily attributable to the inclusion of Saks.

“HBC’s quarter was characterized by strong performance from the higher end of our businesses, demonstrating the sustained strength of affluent consumers, and softer performance from our more moderate businesses.  Off 5th, buoyed by its new digital business, experienced outsized same store sales growth for the quarter,” said Richard Baker, HBC’s governor and CEO.  “We continued to invest in HBC Digital, where we witnessed tremendous sales growth.  Based upon our results for the first half of the year and our positioning for the back-to-school and holiday quarters, we are affirming our outlook for full-year fiscal 2014.”

During the second quarter, HBC began the integration of the Home Outfitters business with the Home business of the Hudson’s Bay banner.

“Joining our two Home businesses not only allows us to create a more powerful Home destination, but also drives efficiency by combining our merchandising and marketing efforts and organizations,” said Donald Watros, HBC’s president.

HBC is currently in the process of assessing its Home Outfitters locations and previously announced the closing of locations in Mississauga, Ontario, and Abbotsford, British Columbia, in December 2014 and January 2015, respectively.  Beginning with this year’s third quarter results, Home Outfitters will be included in HBC’s department store segment.

During the quarter, the company opened four new Off 5th stores located in Boston, Massachusetts; San Diego, California; Charlotte, North Carolina and Lousiville, Kentucky.  During the third quarter, HBC expects to open a Lord & Taylor store in Albany, New York, Off 5th stores in Eagan, Minnesota; Costa Mesa, California; and Columbus, Ohio and a Hudson’s Bay Outlet in Mirabel, Quebec.

HBC also recently announced the planned opening of a Saks Fifth Avenue store in the fall of 2016 at Brickell City Centre in downtown Miami, Florida.  Previously, the company has announced plans for Saks Fifth Avenue stores in San Jual, Puerto Rico, in the spring of next year and in Honolulu, Hawaii, in the spring of 2016.

Looking ahead to the full fiscal year, the company anticipates total sales ranging from $7.8 billion to $8.1 billion.  This implies low-to-mid single-digit consolidated same store sales growth calculated on a local currency basis, driven in part by strong digital sales growth.

As previously announced, Paul Beesley joined the company during the second quarter as CFO.  Subsequent to the second quarter, John Caplice joined HBC as SVP, treasury and investor relations, a week ago.  Caplice most recently served as SVP, treasurer and investor relations, at Shoppers Drug Mart Corporation, Canada’s largest retail drug store chain with annual sales in excess of $11 billion, from 2000 to 2014.

Source: Retailing Today 

September 12, 2014

The National Retail Federation calculates that August retail sales – excluding automobiles, gasoline stations and restaurants – increased 0.5 percent seasonally adjusted month-to-month and 2.7 percent unadjusted year-over-year.  When combined with revisions to July, August sales indicate a consistent improvement in consumer confidence and spending but run contrary to August’s lackluster jobs report.  NRF fully anticipates upward revisions in employment and payroll numbers next month.

“The rise in cosumer confidence, labor markets and retail sales is encouraging,” NRF Chief Economist Jack Kleinhenz said.  “August sales figures signal that consumers are willing and ready to spend as the economy improves.  However, until the pace of income picks up, we should not expect a sustained surge in spending.”

All retail categories improved over the previous month with the exception of general merchandise stores.  Even though year-over-year sales slowed from 4.2 to 2.6 percent, “by and large merchants had a strong fiish to the back-to-school season, especially those selling clothing and electronics,” Kleinhenz said.

“My overall impression is that the economy is moving in the right direction but that other factors, including rising concerns over the uncertainty in the Middle East, may produce some drag.  We remain hopeful but cautious.”

Additional findings from NRF’s retail sales analysis include:

• Building material & garden equipment & supplies dealers:
  • +1.4% month-to-month
  • +3.3% year-over-year
• Clothing & clothing accessories stores:
  • +0.3% month-to-month
  • +1.0% year-over-year
• Electronics & appliance stores:
  • +0.7% month-to-month
  • +0.5% year-over-year
• Furniture & home furnishing stores:
  • +0.7 month-to-month
  • +0.7 year-over-year
• General merchandise stores:
  • -0.1% month-to-month
  • +1.8% year-over-year
• Health & personal care stores:
  • +0.6 % month-to-month
  • +6.4% year-over-year
• Nonstore (online) retailers:
  • +0.1% month-to-month
  • +4.2% year-over-year
• Sporting goods, hobby, book & music stores:
  • +0.9% month-to-month
  • +4.1% year-over-year

Source: Retailing Today

September 12, 2014

Overall retail spending growth in August 2014 was the strongest in more than a year.  Retail dollar volume growth reached 2.8% in August – compared to 2.6% in July – as back-to-school shopping propelled spending growth in several retail categories.

August’s overall average ticket growth remained positive at 1.2%, slipping slightly from July’s 1.5% on a year-over-year basis.  Looking at growth rates of different payment types, credit transactions grew 5.8% in August, while signature debit card transactions rose 3.9% and transactions using PIN debit cards increased 3.4%.  Check transactions decreased 5.9% and prepaid card transactions grew 6%.

“Two important factors, back-to-school spending and late summer vacationing, contributed to strong overall consumer spending in August and despite stagnant wage growth and a moderate housing market, consumer confidence rose in August.  Robust credit card spending at 5.8%, was healthy again last month, surpassing both PIN and signature debit growth.”

The report examined the period for August 2 through September 2, 2014, compared to August 1 through September 1, 2013. 

Dollar volume growth at furniture and home furnishings and general merchandise stores was positive on a year-over-year basis and increased sequentially compared to July, with a growth of 4.5% and 4.4%, respectively.

Source: Retailing Today 

September 11, 2014

Kroger reported total sales of $25.3 billion, representing an increase of 11.6% for its second quarter.  Total sales, excluding fuel, increased 12.4% in the second quarter over the same period last year.

“We are winning with customers because we offer a full range of advantages including a great overall shopping experience, excellent customer service, a complete assortment of both national and corporate brand products and everyday low prices and promotional offerings,” stated Rodney McMullen, Kroger CEO.  “As we improve our connection with customers, we are also executing our growth plan and delivering on our key performance indicators – all of which is fueling strong financial results for shareholders.”

Net earnings totaled $347 million, or $0.70 per diluted share, and identical supermarket sales growth, without fuel, was 4.8% in the second quarter of fiscal year 2014, marking the 43rd consecutive quarter of positive identical supermarket sales growth.

Net earnings in the same period last year were $317 million, or $0.60 per diluted share.

Based on the second quarter results, the company raised and narrowed its adjusted net earnings per diluted share guidance to a range of $3.22 to $3.28 for fiscal 2014.  The previous guidance was $3.19 to $3.27 per diluted share.  Kroger raised its identical supermarket sales growth guidance, excluding fuel, to 3.5% to 4.3% for fiscal 2014.  The previous guidance was 3% to 4%.

This is the second consecutive quarter that includes Harris Teeter in Kroger’s statement of operations.  Year-over-year percentage comparisons are affected as a result.

Source: Retailing Today

September 11, 2014

In July, unemployment rates remained mixed in Europe, according to unemployment rates and employment growth data compiled and standardized by The Conference Board International Labor Comparisons (ILC) program.

Unemployment decreased in Germany (from 5.0 to 4.9 percent), the Netherlands (from 6.8 to 6.7 percent) and Sweden (from 7.9 to 7.7 precent), but increased in France (from 9.8 to 9.9 percent) and Italy (from 12.5 to 12.7 percent).

“The variation in recent unemployment trends throughout Europe – remaining elevated and increasing in France and Italy while gradually coming down in the Netherlands and Sweden – highlights the mixed paths toward labor market recovery in the region,” said Elizabeth Crofoot, Senior Economist with the International Labor Comparisons Program at The Conference Board.  “Contrary to most other European markets, Germany shows signs of existing labor market shortages given an overall upward trend in employment and historically low and declining unemployment rates, dipping below 5 percent for the first time since unification in 1991.”

In the U.S., joblessness rose (from 6.1 to 6.2 percent) after four straight months of steady or declining unemployment.  Australia and Japan also saw the unemployment rate rise, while remaining stable in Canada.  While Japan’s unemployment rate remains the lowest of all countries compared (3.2 percent) and has largely been on a downward trend since September 2013, it has increased in the previous two consecutive months.

Source: The Conference Board

September 10, 2014

Since Family Dollar’s board of directors unanimously rejected Dollar General’s second and sweetened tender offer from September 2, Dollar General has decided to make the tender offer directly to the company’s shareholders.

The company’s all-cash offer of $80 per share beats Dollar Tree’s offer of $74.50 per share cash/stock offer originally made July 28.  The Family Dollar board has rejected both Dollar General’s offers on the basis of antitrust regulatory considerations.

But Dollar General is appealing to Family Dollar’s shareholders with approximately $640 million of additional aggregate value over Dollar Tree’s offer – a premium of 31.9% over the closing price of $60.66 for Family Dollar stock on the day prior to the Dollar Tree announcement.

As part of a definitive merger agreement with Family Dollar, Dollar General would be willing to agree to divest up to 1,500 stores if required by the FTC and to pay Family Dollar a $500 million reverse breakup fee if the transaction does not close for reasons related to antitrust approvals.

The offer is not conditioned upon any financing arrangements, according to Dollar General, which added that it has received written financing commitments that are in full force and effect from Goldman, Sachs & Co. and Citigroup Global Markets for all the financing necessary to consummate the proposed all-cash transaction.

“Our offer provides Family Dollar shareholders with significantly greater value than the existing agreement with Dollar Tree, as well as immediate and certain liquidity for their shares,” said Rick Dreiling, chairman and CEO of Dollar General.  “By taking this step, we are providing all Family Dollar shareholders a voice in this process, and we urge them to tender into our offer.  Additionally, we now can begin the antitrust review process and will have an opportunity to present our position directly to the FTC.  As we previously have stated, we are confident in the results of our antitrust analysis, and we look forward to a constructive dialogue with the FTC.”

Meanwhile, the Family Dollar board has confirmed that it will review and consider Dollar General’s latest move in accordance with applicable law, and advise shareholders of its position regarding the tender offer by making available to shareholders, and filing with the Securities and Exchange Commission, a solicitation/recommendation statement on Schedule 14D-9.

“Applicable securities laws prevent Family Dollar from making any further comments on Dollar General’s tender offer or its terms until after this filing is made on Schedule 14D-9 which will be no later than September 23, 2014.  Until that time, Family Dollar shareholders are advised to take no action,” the board said in a statement, adding only that it has not changed its recommendation in support of the merger with Dollar Tree.”

Source: Retailing Today 

September 8, 2014

CVS Health has completed the purchase of Miami-based Navarro Discount Pharmacy.

The acquisition includes Navarro’s 33 retail locations and Navarro Health Services, a specialty pharmacy serving patients with complex or chronic diseases.  The retail pharmacies will retain the Navarro Discount Pharmacy name.

“Navarro has a rich history and commitment to Hispanic consumers and we are excited to welcome them into the CVS Health family,” stated Helena Foulkes, president of CVS/pharmacy, the retail division of CVS Health.  “We value the strength of the Navarro brand and we look forward to combining Navarro’s unique understanding of its customers’ needs with CVS/pharmacy’s best in class pharmacy services and high quality health, beauty and personal care products, a combination that will strengthen our service to the Hispanic community.”

Navarro Discount Pharmacy caters to Hispanic and ethnic marketplaces and further differentiates itself by offering many products and services that are not found in traditional drug stores such as wireless phones, designer fragrances and a large assortment of OTC drugs and vitamins.

Source: Retailing Today

September 8, 2014

The Conference Board Employment Trends Index increased in August.  The index now stands at 121.29, up from 120.62 (an upward revision) in July.  This represents a 6.4 percent gain in the ETI compared to a year ago.

“The strong increase in the Employment Trends Index in recent months signals robust job growth through the fall,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board.  “The disappointing employment numbers for August seem to be a one month deviation from a stronger trend.”

Augus’ts increase in the ETI was driven by positive contributions from seven of its eight components.  In order from the largest positive contributor to the smallest, these were: Percentage of Firms with Positions Not Able to Fill Right Now, Industrial Production, Ratio of Involuntarily Part-time Workers, Real Manufacturing and Trade Sales, Number of Temporary Employees, Job Openings, and Percentage of Respondents Who Say They Find “Jobs Hard to Get.”

The Employment Trends Index aggregates eight labor-market indicators, each of which has proven accurate in its own area.  Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly.

The eight labor-market indicators aggregaed into the Employment Trends Index include:

• Percentage of Respondents Who Say They Find “Jobs Hard to Get” (The Conference Board Consumer Confidence Survey)
• Initial Claims for Unemployment Insurance (U.S. Department of Labor)
• Percentage of Firms With Positions Not Able to Fill Right Now (National Federation of Independent Business Research Foundation)
• Number of Employees Hired by the Temporary Help Industry (U.S. Bureau of Labor Statistics)
• Ratio of Involuntarily Part-time to All Part-time Workers (BLS)
• Job Openings (BLS)
• Industrial Production (Federal Reserve Board)
• Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)

The Conference Board

September 4, 2014

Costco said it plans to open nine new warehouse stores before the end of calendar year 2014, following a boost in net sales for August and the fourth quarter.

During the month of August, net sales were $8.8 billion, an increase of 10% from $8 billion during the similar period last year.  Same-store sales in the United States increased 7%.

For the 16 week fourth quarter, the company reported net sales of $34.8 billion, an increase of 9% from $31.8 billion in the year-ago period.  Same-store sales in the United States increased 6%.

For the 52 week fiscal year ended August 31, Costco reported net sales of $110.2 billion, an increase of 7% compared with the year-ago period.  U.S. same-store sales rose 5%.

Source: Retailing Today

September 5, 2014

A gain of only 142,000 new jobs in August, relative to a stronger trend in hiring in previous months of over 200,000 new jobs per month, is somewhat surprising as the economy overall has been quite strong recently.  Retail employment has dropped, which may relate to weaker consumption figures in the past month.  Still, most likely this was just a one off.  For example, some leading indicators, such as part-time employment for economic reasons, dropped.  Also, unemployment continued its downward path, closing in on the 5.5 percent natural unemployment rate we expect in 2015.  If that is the case, it could still mean tightening of the labor market, leading to upward pressure on wages later in 2015, as also discussed in The Conference Board’s new report, From Not Enough Jobs to Not Enough Workers, released earlier this week.

Source: The Conference Board