Best Buy reports net loss
Minneapolis – Best Buy reported a net loss of almost 10% for first quarter fiscal 2014, seeing its revenue drop from roughly $10.34 billion the prior year to $9.38 billion. Increased price competition and the closure of 49 large-format stores contributed to the electronics retailer’s decline in revenue. A shift in the Super Bowl, which typically drives TV sales, to the prior quarter and reduced non-core sales also impacted revenue.
Best Buy CEO Hubert Joly said that the retailer is already seeing benefits from its “Renew Blue” restructuring program, which eliminated $175 million during the most recent quarter in annualized costs through efficiency improvements and removal of management layers. Renew Blue has reduced annualized costs by a total of $350 million since its implementation last year, and Joly expects the savings to continue.
“Looking ahead, we remain focused on making progress on our Renew Blue priorities announced last November and reiterated in March,” said Joly. “During the second quarter, we will, in particular, complete the deployment of the Samsung Experience Shops and make significant progress in our efforts to optimize the allocation of our retail floor space to more attractive product categories, so as to increase revenue and operating profit per square foot.”
Hershey heads to China
SHANGHAI — Hershey is heading to China to launch a candy brand called Lancaster, marking the first time in its 120-year history that the company has launched a new brand outside of the United States. It’s also the first time in 30 years that Hershey launches a brand that is neither a brand extension nor an acquisition.
The brand will be available in the cities of Wuhan, Hangzhou and Chengdu in June, with wider distribution following next year.
Lancaster products will compete with traditional candies in China’s milk candy confection category that account for one quarter of the total candy market in China and about 7.5 billion RMB, or $1.2 billion. The Lancaster brand will enter the market’s milk candy segment, which is currently showing the strongest growth in the entire category.
“Consumers in China love high-quality, delicious candy that reflects care and craftsmanship and gives them a rich taste experience that is distinct and premium,” said Jane Xu, VP and GM of Greater China for the Hershey Company. “Lancaster was carefully developed with the consumer experience in mind. We believe that quality ingredients and craftsmanship are what make Lancaster extraordinary and making something extraordinary takes time.”
The candy will come in three flavors: Original Pure Nai Bei, Pure Nai Bei filled with Rich Nai Bei and Pure Nai Bei filled with Strawberry.
Hershey considers China a priority market. The country plays a critical role in the company’s long-range growth vision, which includes reaching $10 billion in worldwide net sales by 2017. Hershey has substantially strengthened its brands’ in-store presence in China during the past five years and its products are becoming closely associated with key gifting occasions, including holidays, weddings, Chinese New Year and Chinese Valentine’s day.
“It’s significant that Hershey chose to launch its first new brand in three decades here in China,” said Steven Schiller, SVP of the global sweets and refreshment business unit for Hershey. “This demonstrates the company’s deep commitment to China, as well as the importance of this market in Hershey’s global growth plans.”
Bad weather can’t hold back Home Depot Q1
The Home Depot shrugged off bad weather, and thanks, in part, to a recovering housing market, the company reported first quarter sales of $19.1 billion, up 7.4% from last year’s quarter, which had one less week.
On a like-for-like basis, comparable store sales for the first quarter were positive 4.3%. U.S. stores comps were positive 4.8%, also on a like-for-like basis.
Cold weather across much of the country hurt spring sales for the home improvement industry. But the world’s largest home improvement retailer still grew profits and sales, despite feeling the chill. Net earnings for the quarter were $1.2 billion, up from $1.0 billion in the first quarter last year.
"In the first quarter, we saw less favorable weather compared to last year, but we continue to see benefit from a recovering housing market that drove a stronger-than-expected start to the year for our business," said Frank Blake, chairman and CEO.
The company also raised its fiscal 2013 sales guidance. It now expects sales to be up about 2.8% for the year, with comp-store sales up about 4.0% for the year.
In other news, the Home Depot Foundation, the company’s philanthropic arm, has created a $1 million weather impact fund to aid relief, recovery and rebuilding efforts in response to the recent tornadoes in Oklahoma and throughout the Southwest United States, and in expectation of continuing violent storms throughout the spring season.
The foundation is donating $250,000 to the American Red Cross for immediate relief needs in response to recent tornadoes and storms that caused serious damage, and has also committed $100,000 to Team Rubicon, whose primary mission is engaging veterans in disaster relief and recovery efforts, where their skills and experience greatly benefit communities. Additionally, the foundation continues to support nonprofits and first responders to assist with emergency needs of local communities.
"The violent storms that have recently stricken Moore and other areas throughout the Southwest make it incumbent upon us to respond quickly to help our communities recover and rebuild, both now and during the many months to come," said Frank Blake, chairman and CEO of the Home Depot. "It is our sincere hope that the worst of this ferocious weather is behind us, but we stand ready to continue assisting through this funding, volunteerism and partnership with our communities."
In addition to funding, Team Depot, the company’s associate-led volunteer force, has been mobilizing locally to help with relief and recovery efforts. The Home Depot is also a member of the American Red Cross Annual Disaster Giving Program. The company’s annual $500,000 contribution to the ADGP enables the Red Cross to respond immediately to the needs of individuals and families affected by disaster anywhere in the United States. Separately, The Homer Fund, a charity for Home Depot associates in need of emergency financial assistance, has begun helping associates and their families affected by these storms.
The Home Depot in Moore, Okla., has opened its doors to displaced animalsfound in the wreckage, and is serving as a shelter. Home Depot also has at least one veterinarian on site treating injured animals.