Author: Helen Thomas

July 24, 2014

Walmart named Greg Foran president and CEO of its U.S. stores division to replace Bill Simon, who is leaving the company after an eight-year run.

Foran is a relative newcomer at Walmart, who joined the company in October 2011 and by March of 2012 had been elevated to the role of president and CEO of Walmart China.  In that capacity, he reported to current Wal-Mart Stores president and CEO Doug McMillon, who at the time served as president and CEO of Walmart International.  McMillon assumed his new role earlier this year prompting speculation that Simon would leave the company if he were passed over for the top job.

“Greg is one of the most talented retailers I’ve ever met.  His depth of knowledge and global experience will bring a fresh perspective to our business,” said McMillon.  “His passion for fresh food, experience in general merchandise and commitment to e-commerce will help us serve our customers even more effectively for years to come.”

Although he only briefly oversaw Walmart’s China operations, the team made significant progress with its assortment, pricing, store operations and compliance as Foran led strategic investments in the supply chain and improved the store portfolio, according to a Walmart statement.  Foran was elevated to the role of president and CEO of Walmart Asia earlier this year to oversee the retailers business in Japan and India as well as China. 

McMillon spoke highly of Simon who will transition out of the company in the next six months.

“During Bill’s eight years of service to Walmart, his passion for our mission, dedication to our associates and our customers, and innovative thinking pushed us forward,” McMillon said.  “From the very beginning, his vision led us to lower the cost of health care through our $4 prescription offering.  And, most recently, he put us on a path to future growth with small formats and efforts that integrate digital and physical retail.”

Foran will assume his new responsibilities on August 9.  Prior to joining Walmart three years ago, Foran held a number of roles with Woolworths, the leading retailer in Australia and New Zealand.  He served as the managing director of supermarkets, liquor and petrol with responsibility for more than $40 billion in sales at that time.  Under Foran’s leadership, the business grew sales and market share in a strong competitive market.  Earlier in his career, Foran served as general manager of Big W, Woolworth’s industry leading discount store business and as general manager of Dick Smith Electronics.

“I’ve worked closely with Greg for the past few years and I’ve seen firsthand his passion for retail.  I’m confident that Greg’s strong leadership skills and alignment with our culture will serve our customers and associates well,” McMillon said.  “I’m excited what he will bring to this important part of our business.”

“Being asked to lead the Walmart U.S. business is a privilege that I don’t take lightly,” said Foran.  “I am excited to get started.  The needs of our customers are changing dramatically and we have an enormous opportunity to serve them in new and different ways.  We must be fierce advocates for our customers, work meticulously to exceed their expectations and earn their trust every day.”

Simon said it had been an honor to work for Walmart for the past eight years, adding, “this felt like the right time to move on and focus on my next opportunity.  I look forward to helping the company as much as I can in the next six months.”

Walmart said it would name Foran’s successor as president and CEO of Walmart Asia at a later date.

Source: Retailing Today

July 23, 2014

The National Retail Federation today lowered its retail sales forecast for 2014 because of slow growth recorded during the first half of the year, but said sales are expected to grow significantly faster over the next five months.  NRF forecasted in January that retail sales would grow 4.1 percent in 2014 over 2013, but today’s revision lowers the forecast to 3.6 percent.

NRF calculated that sales grew 2.9 percent during the first half of the year and are expected to grow at least 3.9 percent during the second half.  The numbers include general retail sales and non-store sales, and exclude automobiles, gasoline stations, and restaurants.

No retailer was immune to the doldrums witnessed during the first quarter, and as a result, the year’s growth trajectory was impacted,” said NRF President and CEO Matthew Shay.  “That said, there is plenty of evidence that the second half of the year will be better for the industry as consumers begin to feel more optimistic about their spending decisions.

“And though we maintain realistic expectations of retail sales growth in 2014, we are optimistic that the chances for a stronger economy still exist,” continued Shay.

“The severe weather and other factors we experienced earlier this year have taken their toll on retail, but most of those problems are behind us,” said NRF Chief Economist Jack Kleinhenz.  “A second look at our forecast shifted our expectations slightly, but it’s important to note that the outlook is positive.  Sales are growing and we expect them to continue at a moderate pace.”

In this month’s Monthly Economic Review, Kleinhenz noted,”…one of the worst winters in recent memory kept shoppers home during the first quarter, and weak numbers for real estate, inventories and exports continued to hamper the economy through the second quarter.  However, employment has grown at its strongest pace since 2005, business and consumer confidence have edged higher, manufacturing activity has expanded and inflation pressures remain tame, improving expectations for the second and third quarters.”

Source: National Retail Federation

July 17, 2014

Families this summer will spend slightly more on back-to-school items than they did in 2013.  According to NRF’s 2014 Back-to-School Survey, the average family with children in grades K-12 will spend $669.28 on apparel, shoes, supplies and electronics, up 5% from $634.78 in 2013.

NRF broke out spending by grade, and according to the survey, families with high school students will spend the most.  The survey found the average family shopping for high school students will spend $682.99, while spending on middle school/junior high comes in a close second at $682.13.  Parents with elementary school-age children will spend an average of $580.94.

Total spending on back to school will drop slightly to $26.5 billion as the survey found there are slightly fewer students in households this summer.

Overall, every category will see an increase in spending, including healthy increases in average spend on supplies and electronics.  According to the survey, back-to-school shoppers will spend an average $212.35 on electronic items, up 7% from $199.05 in 2013, with total spend expected to reach $8.4 billion.  High school students and their families specifically will spend an average $229.88 on electronic items.

Perhaps due to school districts’ growing requests for classroom supply contributions, spending on school supplies will increase 12% to an average of $101.18, compared to $90.49 in 2013.  In addition, shoppers will spend an average of $231.30 on clothes, up from $230.85, and $124.46 on shoes, up from $114.39 in 2013.

The survey found 53.8% of back-to-school shoppers will shop a clothing store, up from 51.5% last year and a survey high; 27.5% will shop at electronics stores, up from 25.9% last year and another survey high.  Six-in-10 (64.4%) will visit discount stores, 59.1% will shop at their favorite department store, 42% will shop at office supply stores, 38.2% will shop online, and 20.5% will shop at drug stores.

The survey also found 36.7% of smartphone owners shopping for school items will research products using their mobile device, up from 34.7% last year and the highest since NRF started asking in 2011; one-in-five (21.8%) will make a purchase via their smartphone, up from 18.2% last year and another survey high.  And while many will simply shop online directly through their smartphone, one-quarter (25.1%) will use their device to find information about a physical store.

School shoppers that own tablets will also use their device more to shop this summer; 31.4% will purchase school items via their tablet, up from 29.9% last year, and 45% will research products, up from 41.8% last year.

In addition, NRF’s 2014 Back-to-College Survey found the average college student and their family will spend $916.48 on dorm furniture, school supplies, electronics and more, up 10% from $836.83 in 2013.  Total college spending is expected to reach $48.4 billion.  Combined college and school spending is expected to reach $74.9 billion.

When it comes to mobile usage, nearly six-in-10 (57.8%) will use their smartphone in some fashion as they shop for college items.  Of those with smartphones, the survey found one-third (33.8%) will research products, the highest since NRF added mobile shopping questions to its survey in 2011.  Additionally, one-in-five (22.4%) will purchase items, up from 19.1% last year and another survey high, and 29.8% will look up retailer information, up from 20.9% in 2013.  More than half (54.5%) of tablet owners will use their tablet to shop for college items.  Specifically, 37.4% will research products, and 27% will use their tablet to purchase items.

Source: Retailing Today 

July 17, 2014

Sam’s Club opened three new locations this month including locations near Chicago, Fort Worth and Wichita, Kansas, that pushed its club count to 630 units.

The Wichita location at 3084 N. Maize Road opened on July 17 and provided Sam’s with an opportunity to remind current and prospective members of its value proposition.  For example, Sam’s noted that it recently became the first U.S. retailer to actively implement chip-enabled credit card reader technology in its clubs and also recently introduced a new credit card which has an embedded chip designed to protect cardholders from fraud.  The new card also features a cash back program giving members the opportunity to earn cash back on all purchases, up to $5,000 per year.

The Wichita location featured Sam’s now familiar trio of health services that includes a pharmacy, optical and hearing aid centers.  To expose residents to those services, Sam’s provided a wide range of free screenings on opening day and the weekend of July 18-19.

Earlier in the month, Sam’s Club opened locations in Montgomery, Illinois, a far western suburb of Chicago and Burleson, Texas, a half hour due south of Fort Worth.  The location in Montgomery, at 1050 Ogden Avenue, also featured health care screenings, and a bit of grand pening novelty.  The club offered members the opportunity to experience Marvel 3D printing and create miniature versions of themselves with their faces on the bodies of Marvel superheroes.

The 3D capability brought a bit of “wow” factor to the opening as did some big name Chicago sports stores.  Former Bears defensive tackles Dan Hampton and Anthony Adams were on hand along with former Blackhawks coach Denis Savard.

The location near Fort Worth in Burleson at 600 N. Burleson Boulevard also featured the Marvel 3D experience and former Dallas Cowboys great Charles Haley was on hand for autograph signings.

Source: Retailing Today

July 17, 2014

Nationwide housing production fell 9.3 percent to a seasonally adjusted annual rate of 893,000 units in June, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  The drop was due primarily to a nearly 30 percent decline in the South.  All other regions posted monthly gains.

“A modest 2.6 percent increase in single-family permits falls in line with the general optimism that we are hearing from our builders,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

Single-family housing starts were down 9 percent to a seasonally adjusted annual rate of 575,000 units in June, while multifamily production fell 9.9 prcent to 318,000 units.

Regionally in June, combined single and multifamily housing production rose in the Northeast, the Midwest and the West, with respective gains of 14.1 percent, 28.1 percent and 2.6 percent.  Total production fell by 29.6 percent in the South, the nation’s largest region.

“Take away the South and the nationwide housing starts would have been in positive territory this month,” said NAHB Chief Economist David Crowe.  “This sharp regional decline could be due in part to lots and labor shortages, which are particularly acute in that part of the country.  However, the general direction of housing production is trending upward, and we expect 2014 to be a positive year.”

Issuance of building permits registered a 4.2 percent decline to a seasonally adjusted annual rate of 963,000 units in June.  Multifamily permits dropped 14.9 percent to 332,000 units while single-family permits increased 2.6 percent to 631,000 units.

The Northeast, South and West registered overall permit losses of 15.5 percent, 6.3 percent and 1.8 percent, respectively, while the Midwest posted a 6.6 percent gain.

Source: National Association of Home Builders 

July 17, 2014

Driven by increased demand for electronic items and parent’s need to restock their children’s school supplies from last year, families this summer will spend slightly more on back-to-school items than last year.  According to NRF’s 2014 Back-to-School Survey, the average family with children in grades K-12 will spend $669.28 on apparel, shoes, supplies and electronics, up 5 percent from $634.78 last year.  Total spending on back to school will drop slightly to $26.5 billion as the survey found there are slightly fewer students in households this summer.

Combined spending for back to school and college is expected to reach $74.9 billion.

“Slow improvements in the economy may have contributed to the growth in confidence among back-to-school shoppers, and while we are encouraged by the overall tone of the results and expect to see continued improvement in consumer spending through the year, we know Americans are still grappling with their purchase decisions every day,” said NRF President and CEO Matthew Shay.  “Throughout the history of this survey, spending has fluctuated based on family needs each year, and this summer, we expect parents to continue to use caution, but also make smart decisions for their family budget that is a good balance between what their children ‘want’ and what they actually need.”

NRF this year broke out spending by grade, and according to the survey, families with high school students will spend the most.  The survey found the average family shopping for high school students will spend $682.99, while spending on middle school/junior high comes in a close second at $682.13.  Parents with elementary school-age children will spend an average of $580.94.

Source: National Retail Federation 

July 14, 2014

It is one of the smaller acquisitions CVS Caremark has done, but the purchase of the 33-unit Miami-based Navarro Discount Pharmacy could have big implications.

CVS Caremark late Monday said it reached an agreement with Navarro, the largest Hispanic owned drugstore chain in the U.S., to acquire 33 stores and Navarro Health Services, a specialty pharmacy serving patients with complex or chronic diseases.  CVS Caremark operates more than 7,600 stores, but said it will continue operating the acquired units under the Navarro banner.

“The acquisition of Navarro wil strengthen CVS pharmacy’s position in the Hispanic marketplace, the fastest growing demographic in the U.S., and we are excited to be adding the Navarro Discount Pharmacy brand to the CVS pharmacy family,” said Helena Foulkes, president of CVS/pharmacy.

“Like CVS pharmacy, Navarro is committed to improving patient health and providing individualized attention,” said Juan Ortiz, Navarro’s CEO.  “The combination of our stores will continue our tradition of excellent pharmacy care and high quality products.”

Navarro caters to South Florida’s heavily Hispanic and ethnic marketplaces and further differentiates itself by offering many products and services that are less prevalent in traditional drugstores such as wireless phones and designer fragrances.

Source: Retailing Today

July 16, 2014

Builder confidence in the market for newly built single-family homes reached an important milestone in July, rising four points to a reading of 53 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.  Any reading over 50 indicates that more builders view sales conditions as good than poor.

“This is the first time that builder confidence has been above 50 since January and an important sign that it is strengthening as pent-up demand brings more buyers into the marketplace,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

“An improving job market ges hand-in-hand with a rise in builder confidence,” said NAHB Chief Economist David Crowe.  “As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales expectations for the next six months as “good,” “fair” or “poor.”  The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”  Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted gains in July.  The index gauging current sales conditions increased four points to 57, while the index measuring expectations for future sales rose six points to 64 and the index gauging traffic of prospective buyers increased three points to 39.

The HMI three month moving average was up in all four regions, with the Northeast and Midwest posting a one-point and two-point gain to 35 and 48, respectively.  The West registered a five-point gain to 52 while the South rose two points to 51.

Source: National Association of Home Builders

July 20, 2014

Just a month after activist investor Carl Icahn became Family Dollar’s largest shareholder prompting concerns of a hostile takeover, the company reported its third straight quarterly decline in same-store sales.

Same-store sales for the third quarter ended May 31 decreased 1.8% because of fewer customer transactions, partially offset by an increase in the average customer transaction value.  Sales in the third quarter of fiscal 2014 were strongest in the consumables category, driven primarily by strong growth in refrigerated/frozen food and tobacco.

Meanwhile, net sales increased 3.3% to $2.66 billion from $2.57 billion in the prior-year quarter.

“We are executing our previously announced restructuring initiatives to improve our performance,” said chairman and CEO Howard R. Levine.  “Our recent investment to permanently lower prices is resonating with customers; we are seeing savings from our workforce optimization efforts; and we are on track to close approximately 370 underperforming stores by the end of the fiscal year.  We remain confident that these steps will position the company to improve our financial performance and deliver higher long-term shareholder returns.”

Levine said that the company’s results reflected not only economic challenges facing its core customers but also an intense competitive environment.  But he’s remaining positive because although same-store sales did drop for the quarter, they actually improved in all four merchandise categories compared to its second-quarter results – a sign of improving trends.

Gross profit for the quarter was $910.9 million or 34.3% of net sales.  During the quarter, the company implemented a series of restructuring initiatives, including plans to close approximately 370 underperforming stores across the chain by the end of fiscal 2014.  As a result, the company incurred a $1.5 million inventory write-down in an effort to sell through merchandise at stores scheduled to close.

Excluding the inventory write-down, adjusted third quarter gross profit increased 2.2% to $912.3 million, or 34.3% of net sales, compared to $892.5 million, or 34.7% of net sales, in the third quarter of fiscal 2013.  As a percentage of sales, the impact on gross profit of stronger sales of lower-margin consumables, lower markups and higher markdowns was partially offset by lower inventory shrinkage.

During the quarter, the company opened 111 new stores, closed 3 stores and renovated, relocated or expanded 266 stores.

As part of its ongoing business review, the company lowered prices on nearly 1,000 basic items, investing more than $50 million, on an annualized basis, to deliver more compelling values to customers.  It has also made plans to slow new store growth beginning in fiscal 2015.  The company now expects to open 350-400 new stores in fiscal 2015, down from approximately 525 new stores in fiscal 2014.

In an effort to drive more profitable growth, the company is also investing in longer-term initiatives, which include further expanding its cooler program beginning in fiscal 2015 and expanding traffic-driving categories with a multi-year rollout of beer and wine likewise beginning in fiscal 2015.

Looking ahead to the fourth quarter, the company expects that comparable store sales will be approximately flat and that earnings per diluted share will be between $0.75 and $0.85, excluding approximately $0.37 related to restructuring charges.  Including the restructuring charges, the company expects earnings per diluted share will be between $0.38 and $0.48.

Source: Retailing Today 

July 14, 2014

Solid June spending growth was reported for May 31, 2014 through June 30, 2014, compared to June 1, 2013 through July 1, 2013.

A slowly improving economy and growing job market have helped drive consumer spending.  Spending growth in June slowed slightly from May but remained positive on a year-over-year basis with a growth of 3%.

While spending in travel and hotel slowed from the previous month, growth was still strong in these sectors, with a year-over-year increase of 4.9% and 7.1%, respectively.  Food and beverage stores spending was up 4.7% versus May’s 4.2% growth, a trend reflecting an increase in food costs.

Retail spending growth retreated slightly in June compared to May but remained positive with 1.2% growth.  5.7% growth in building and gardening materials and 1.5% growth in furniture and home furnishings reflect continued improvement in the housing market.  However, a slowly declining unemployment rate caused consumers to remain hesitant and kept overall retail spending growth moderate.

Average ticket growth also decreased slightly from May but remained positive at 0.9% growth on a year-over-year basis, reflecting increased food and gas prices.  Food and drinking places and food and beverage stores saw a growth of 2.5% and 1.5% respectively, as rising food costs impacted the average ticket in these categories for consumers.

Finally, credit spending continued to be the preferred spending method this month with a 5.3% increase in transaction growth and a 3.9% dollar volume growth.  The increase in transaction volume was supported by year-over-year growth in categories such as hotel and travel, where consumers tend to utilize this payment method most.

Source: Retailing Today