FINANCE

Ann Taylor profit beats Street; same-store sales up 5.5%

BY Marianne Wilson

New York City — Ann Inc., formerly known as Ann Taylor, reported a 33.4% rise in quarterly net income to $32.3 million, beating analysts’ estimates.

The company’s performance was boosted by strong demand for its Loft brand, where same-store sales rose 7.9%. Same-store sales rose 2.5% at Ann Taylor. Comp-sales were up 45.8% in the Ann Taylor e-commerce channel and 1.8% in the Ann Taylor Factory channel. Total same-store sales were up 5.5%.

"Compelling product and effective marketing drove significantly higher sales and profitability across all Loft channels," said CEO Kay Krill said in a statement

Total net sales for the third quarter of fiscal 2011, ended Oct. 29, were $564.0 million, compared with net sales of $505.3 million in the year-ago period.

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No lump of coal here: 2% comp is Q4 possibility

BY CSA STAFF

Let’s not get ahead of ourselves here. That seems to be the message implied in Walmart’s guidance for fourth-quarter same-store sales in a range of flat to up 2%. The company’s comps expectations follow a third-quarter increase of 1.3% that ended a two-year string of negative results, but appear rather muted against the backdrop of talk about the company’s gathering momentum, the effectiveness of strategies and solid positioning for the holidays.

As Walmart U.S. president and CEO Bill Simon noted after the release of third quarter results earlier this week, Walmart has the assortment customers are looking for in store and online, the inventory they need and prices that can’t be beat.

“We’ve worked diligently throughout the year on our assortment and availability initiatives,” Simon said. “In addition, we’ve worked hard on our communication to customers. We’ve also stepped up our marketing campaign across multiple media platforms this holiday. Customers will see and hear Walmart everywhere this holiday season. We’ve bought a strong share of voice nationally and in individual key markets.”

Such programs as layaway, which is said to be exceeding expectations, and a 0% financing offer on the Walmart credit card purchases are designed to make holiday shopping easier and more attractive.

“Our ad match and holiday price guarantee will leave no doubt that Walmart is the clear price leader this holiday season,” Simon said.

Of course, competitors are sounding a similar pricing message and in some cases delivering values superior to Walmart’s every day low price, which has impacted traffic as shoppers don’t always apply the same logic in terms of evaluating price on a basket of items as Walmart would like. Notwithstanding the company’s price-match guarantee, competitors have been able to lure deal-oriented shoppers away with sharp pricing on key items, more convenient locations or a combination of both.

Walmart’s traffic trends have begun to improve, according to Simon, although they were still negative in the third quarter, but improved sequentially from the second quarter. If the momentum in traffic can be maintained, it will go a long way toward improving sales because to date top-line growth has been driven by selling more stuff to existing customers whose resources are limited. To drive more shoppers to its store during the holidays Walmart marketing is in high gear for Thanksgiving weekend.

“We’re aggressively going after the business this season, starting even before Black Friday. We’ve been open on Thanksgiving Day for several years now. This year, at 10 p.m., we kick off the event with outstanding prices in toys, home and apparel. Our electronics items follow at midnight,” Simon said. “And, we’ll have rollback prices throughout the store all day on Black Friday. We’re reaching out to customers on social media. Store-specific maps on Facebook will help our customers plan their shopping trip. There will be no doubt that Walmart is ready for the holiday season.”

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Has Walmart really turned the corner on comps?

BY CSA STAFF

Walmart gave investors an early Christmas gift earlier this week in the form of a long-awaited third-quarter same-stores sales increase, then ruined the holiday spirit by coming up a penny short of analysts’ earnings estimates.

The 1.3% comps increase ended two years of negative numbers and exceeded the upper end of the company’s guidance range that was set at 1%. The improvement was vindication of sorts, as Walmart has spent the past 18 months repositioning its business and asserting the changes would eventually yield results. And they did, even if the magnitude of the increase is rather modest and aided somewhat by inflation. Still, an increase is an increase, and competitors felt the inflation tailwind too. So now it seems the company is at one of those proverbial inflections points with the holiday season and fourth quarter set up to provide new evidence of whether the considerable effort expended during the past year has the company poised for greater things in 2012. Walmart obviously believes that is the case.

“We’ve continued to diligently execute on our core initiatives, and we see clear signs that our strategy is working,” said Walmart U.S. president and CEO Bill Simon. “We’re encouraged by the continued response we’re receiving from our customers. Following a positive comp in July, we continued to gain momentum, achieving positive comps for each successive month, with the strongest results in October.”

Total sales at U.S. stores increased 2.7% to $63.8 billion.

Walmart spent much of this year repositioning its domestic business and was intent on demonstrating the return to its core strategy of offering everyday low prices on a broad assortment of merchandise would resonate with shoppers and produce sales growth even in a challenging economy.

“Three key elements drove the comp improvement in the third quarter,” Simon said. “Our focus on expanded assortment, product innovation and local relevance improved merchandise offerings throughout the store and customers responded. Productivity initiatives improved in-stock levels, and we continue to drive price leadership in all our stores.”

The improved sales results contributed to third-quarter earnings per share of 97 cents, which was two cents better than the prior year when earnings of 95 cents a share were inflated by a tax benefit of five cents a share. Despite the improvement, the figure was a penny shy of analysts’ consensus estimate of 98 cents, but squarely within the company’s guidance range that called for earnings per share of 95 cents to $1.

Looking more broadly at the entire company, Wal-Mart Stores Inc., president and CEO Mike Duke characterized the third-quarter profit performance as solid and said each of the company’s business segments — U.S. stores, International and Sam’s Club — is stronger today than it was a year ago.

“Both Walmart U.S. and Sam’s Club exceeded comp-sales guidance, and I’m pleased that the sales momentum positions us exceedingly well for the holidays,” Duke said. “We also are pleased with the growth in both sales and operating income for Walmart International.”

Looking ahead, Walmart said it expects fourth-quarter earning in a range of $1.42 to $1.48, which encompasses analysts’ consensus estimate of $1.45 per share.

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