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Fast Retailing profit surges, raises full-year guidance

BY Katherine Boccaccio

Tokyo — Japan’s Fast Retailing Co., parent of Uniqlo, reported Thursday that its net profit for the Sept.-Feb. period surged 38.7% to $705 million as an usually cold weather bolstered sales at Japan stores. Same-store sales in the period rose 2.3%.

The company lifted its full-year profit forecast to $1.7 billion from a previously announced $1.6 billion for the fiscal year ending in August, surpassing analysts’ projections.

Revenues at Uniqlo overseas locations surged 45% in the first half, thanks to strong sales growth in China and Hong Kong, and 53 more outlets overseas than the previous year.

Fast Retailing is looking to open 200 to 300 new Uniqlo stores annually, most of them in Asia outside Japan. The company has already announced plans to open a flagship store in San Francisco, as part of an expansion program that calls for 20-30 stores in San Francisco and Los Angeles, matched by another 20-30 stores in New York City, the Wall Street Journal reported. However, the chain also said its operations in the United States were in the red for the six-month period due to opening costs and weaker-than-expected performance at its location on New York’s 34th Street.

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Rite Aid posts strong Q4, FY 2012

BY CSA STAFF

CAMP HILL, Pa. — Despite running fewer stores, Rite Aid grew its sales and narrowed its losses during the fourth quarter and fiscal year 2012, thanks to a boost in its loyalty card program membership, a longer fiscal year and the continuing dispute between Walgreens and Express Scripts.

Much of the 4,667-store chain’s continued success was owed to the Wellness+ loyalty card program. The number of members of the program grew to 52 million from 36 million at the end of fiscal year 2011, including a 16% growth in active members, to 25 million. Members accounted for 68% of front-end sales, with gold and silver members showing the largest baskets, and members overall showing higher retention rates in the pharmacy than nonmembers.

Discussing improvements in the program’s numbers in a conference call with investors Thursday morning, president and CEO John Standley said the company was "committed to making it even better while finding more ways to deliver more value to our most loyal customers."

These include plans to expand delivery of targeted offers to members in fiscal year 2013, Standley said. To an extent, the company already has done this with Wellness+ for Diabetes, which it launched in September 2011, as well as other enhancements to the program, such as "wellness rewards" for members that include magazine subscriptions and gym memberships and Load2Card, which allows users to download coupons to their cards.

Another initiative that saw expansion was the Wellness store format, with 280 stores converted to the new format at the end of the quarter and plans to convert another 500 in fiscal year 2013. Standley said most of the stores in the chain — between two-thirds and three-quarters — would be converted, with an emphasis on the better-performing "top guns."

Standley also brushed off concerns about a congressional inquiry into the stores Wellness Ambassadors, specially trained staff with iPads who answer customers’ questions about dietary supplements and over-the-counter medications and directing customers to the pharmacist for further information. The inquiry centered on allegations by a political advocacy group that the Wellness Ambassadors were making health claims about OTC products not verified by the Food and Drug Administration, though the company already has hired 400 of them and did not expect their role to change.

In terms of the Wellness stores’ performance, the company was starting to see a "positive impact" on front-end sales, though pharmacy sales continued to lag, though Standley said this was expected, and the company hoped to see comps at 3% above the rest of the chain in the stores; most of the $250,000 invested in each store tended to focus on the front end. "We’re making some solid progress there," Standley said.

Despite speculation earlier in the year that Rite Aid would become an acquisition target for Walgreens, the subject didn’t come up during the call, and Guggenheim Securities analyst John Heinbockel wrote in a report that the prospects of an acquisition were "unlikely."

All in all, the company posted a strong quarter and fiscal year. Sales for fourth quarter 2012 were $7.1 billion, while losses were $161.3 million, with a 3% increase in comps. This compared with fourth quarter 2011 sales of $6.5 billion and losses of $205.7 million, with sales receiving a 10.7% boost, thanks to the additional week in fiscal year 2012.

Fiscal year 2012 sales were $26.1 billion, with losses of $368.6 million and a 2% increase in comps. This compared with sales of $25.2 billion in fiscal year 2011 and losses of $555.4 million.

For 2013, the company expects sales of between $25.4 billion and $25.8 billion, with comps remaining flat or increasing by up to 1.5% and losses of between $103 million and $267 million. During the year, the company plans to work on increasing medication adherence for pharmacy customers, especially diabetes patients. On Tuesday, it announced that it would start offering Rite Care Prescription Advisor reports, which give patients medication adherence scores in the form of easy-to-read line graphs and are based on consultations with pharmacists.

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Deloitte: Spending up after several months of decline

BY Katherine Boccaccio

New York — A report released Thursday by Deloitte found that consumer spending posted an increase in March, reversing a trend of declines.

The Deloitte Consumer Spending Index climbed higher in March, marking only the third monthly increase over the past 12 months. The Index tracks consumer cash flow as an indicator of future consumer spending.

“The Index turned upward as the pace of declining new home prices slowed,” said Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index. “Despite this improved performance, there is little evidence the housing market is picking up. On the positive side, initial unemployment claims continue to move lower from a year ago.”

According to Deloitte’s analysis, recent developments that indicate consumer cash flow may be strained despite the recent steady increase in real consumer spending include:

Real incomes fell 0.1% in February even as consumer spending rose, and are up just 0.3% from a year ago. The savings rate has fallen from 4.7% to 3.7% over the past two months, adding roughly $110 billion to consumer spending.

Gasoline prices continue to rise. The average price of gasoline rose 4 cents last week to $3.97 a gallon up $0.68 since mid-December.

The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — rose to 1.80 from an upwardly revised reading of 1.52 the previous month.

“The warmer weather is helping consumers shake off the winter doldrums, but they remain vigilant about their pocketbooks, particularly in the face of rising gas prices this spring,” said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader. “In our third annual spring survey of U.S. households, consumers told us they are feeling slightly better about the economy and their finances compared to a year ago. While 67% indicate they plan to spend the same or more this year, nearly 80% say higher prices could cause them to change their spending in the months ahead. We also found that consumers’ use of mobile and online continues to grow across the board. This suggests that digital channels should be one of retailers’ strongest competitive plays to capture the consumer, particularly those shoppers keeping an eye on their household budgets.”

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C.Floz says:
Nov-30-2012 11:07 am

The most important statistic I found in the article that really made me smile is the lower unemployment rate. To me, that is really one of the major effect of the decline of the economy. - Markus Lattner

C.Floz says:
Nov-30-2012 11:07 am

The most important statistic I found in the article that really made me smile is the lower unemployment rate. To me, that is really one of the major effect of the decline of the economy. - Markus Lattner

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