FINANCE

Friday Halloween spurred early holiday spending

BY Katherine Boccaccio

Atlanta —This year, a Halloween that fell on Friday helped boost spending growth in October, according to the monthly SpendTrend report from First Data Corp.

While the Halloween weekend helped contribute to the 3.8% spending growth, a healthy uptick from September’s growth of 3.1%, early holiday shopping also spurred the increase, according to the First Data report, which tracks same-store point-of-sale data by credit, signature debit, PIN debit, EBT, closed-loop prepaid cards and checks.

The First Data SpendTrend analysis looked at the period Oct. 1 through 31, 2014, compared to Oct. 2 through Nov. 1, 2013.

Spending growth for all card types (credit, PIN and SIG debit) experienced a healthy increase in October. Dollar volume growth of 5.5% on credit outperformed both SIG and PIN debit growth of 2.1% and 2.5%, respectively. The growth in credit was supported by strong showings in categories such as Hotels, where credit is the preferred spending method. The growth in PIN and SIG debit was driven by stronger spending in categories such as Food & Beverage Stores and Food Services and Drinking Places.

From a regional perspective, dollar volume growth was strong across the U.S., with the exception of the Mid-Atlantic region. The Southwest region saw spending growth of 5.4%, an impressive gain from September’s growth of 3.0%. The Midwest also enjoyed healthy spending growth at 4.7% as the pace of employment and new home sales have improved in this region.

October’s average ticket growth remained positive at 0.7%, but slipped slightly again vs. September’s growth of 1.0%. Overall average ticket in October remained moderate due to the drop in gasoline prices and retailers slashing prices ahead of the holidays.

“We’re off and running with a strong start to the holiday shopping season as this year, consumers are showing confidence in their early spending,” said Krish Mantripragada, senior VP, Information and Analytics Solutions, First Data. “This confidence, which is buoyed by a lower unemployment rate, made October, 2014 a robust spending month.”

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MOBILITY

Amazon ramps up SKUs in readiness for Black Friday

BY Katherine Boccaccio

New YorkRamping up for Black Friday, Amazon increased its product listings by 43% in the third quarter of 2014, adding four times as many SKUs to its website between July and September than it did in the entire first half of 2014. According to a report by CommerceHub, the online retail giant primarily grew products within the categories of electronics, home improvement and health & beauty.

The CommerceHub Product Assortment Index also found that, leading up to the third-quarter explosion, Amazon reduced its product assortment by 7% in the first quarter and slowly ramped up in the second quarter, increasing listings by 18%.

The marked third-quarter increase is the first time this year that Amazon has added products at a faster pace than other large retailers included in the CommerceHub Product Assortment Index, which tracks more than 600 million SKUs every week. Collectively, those retailers increased their product assortment by 15% over the same period.

With many pre-holiday predictions indicating that e-commerce sellers will see record sales this year, Amazon is adding products in key categories ahead of Black Friday. Traditional retailers have also been steadily increasing their product assortment throughout the year as they race to catch up with Amazon’s vast number of SKUs. “Product assortment expansion is an important growth lever for retailers,” said Frank Poore, CEO and founder of CommerceHub, which provides a sourcing, merchandising and fulfillment platform that connects retailers and suppliers. “Amazon has proved that massive listings can drive sales and revenue, and other retailers are aggressively expanding their product assortments to provide consumers with exactly what they want.”

Amazon’s product assortment growth focused on a few specific categories heading into the holidays, including electronics, home improvement, home goods, and health and beauty. The company reduced listings in baby and kids, and toys and games, two categories where other retailers added products.

Over the course of the entire year, other major retailers have added products faster than Amazon, according to CommerceHub. Traditional retailers grew SKUs by 82% in the first nine months of the year, outpacing Amazon in 13 of 15 categories.

“Traditional retailers are growing their product assortments significantly to increase their scale,” Poore said. “Amazon has invested millions of dollars in fulfillment centers worldwide to offer such a massive product assortment at strategic times of the year, but this approach is simply not realistic for most retailers, who are increasingly turning to third-party suppliers to expand their assortment through virtual inventory fulfillment.”

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News

Walmart gives gift of positive comps

BY CSA STAFF

Walmart’s same store sales turned positive during the third quarter, ending a two year drought, prompting the company to forecast a U.S. comp increase of as much as 1% during the fourth quarter.

Third quarter same store sales at U.S. stores increased 0.5% and were aided by inflation and the impact of a 5.5% comp increase at the company’s Neighborhood Market locations. Fourth quarter comps at U.S. stores are forecast to be flat or up 1%. One percent may not sound like much, but if realized or possibly exceeded the additional sales volume would be substantial considering the U.S. stores division generated third quarter sales of $70 million, a 3.4% increase from the prior year.

Total company sales increased 2.8% to $118.1 billion, including a negative impact of nearly $400 million related to currency exchange fluctuations. Profits declined 0.7% to $3.7 billion, but earnings per share increase by a penny from the prior year to $1.15, squarely in the middle of the company’s guidance range of $1.10 to $1.15 and three cents better than analysts forecast. Walmart’s earning per share calculations benefited from the repurchase of 1.1 million shares during the quarter.

Despite the slight advance in earnings, Walmart Stores, Inc., president and CEO Doug McMillon called the profit performance “solid.” He singled out as positives the U.S. stores comp increase, a 21% increase in e-commerce sales and profitability of the Sam’s Club and Walmart International businesses.

"We're investing in key areas of our business, including wages in our U.S. stores and in e-commerce and mobile capabilities. We continue to see opportunities to improve our business," McMillon said. "Being the price leader is an ongoing priority for us and a commitment to customers. As with every year, that is even more important during the holiday season. We have some things in our favor this fourth quarter, including lower fuel prices in the U.S. and other key markets, and we're set to deliver for customers during this time."

Same store sales at Sam’s Club, excluding fuel, increased 0.4% and total sales, excluding fuel, increased 2.3% to $12.7 million. Despite the modest top line growth, operating profits increased 12% to $493 million, the strongest improvement of Walmart’s three divisions.

Walmart International sales increased 1.7% to $33.7 billion, but on a constant currency basis increased 2.9% to $34.1 billion. Operating profits increased 3.7% to $1.43 billion.

Operating profits at U.S. stores declined 1.2% to $4.9 billion.

Looking forward, Walmart forecast fourth quarter earnings between $1.46 and $1.56 and full year earnings per share to range from $4.92 and $5.02, lower than the company’s earlier guidance of $4.90 to $5.15.

"Our earnings per share guidance assumes several important factors, including the economic conditions in several of our largest markets, and a highly promotional holiday season," said Walmart CFO Charles Holley. "As a reminder, our full year EPS guidance includes the four factors we discussed last quarter, which were higher U.S. health-care costs, incremental investments in e-commerce, ongoing investments in Sam's Club, and our effective tax rate.”

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