FINANCE

Home Depot plans $2 billion of debt to build cash, buy stock

BY CSA STAFF

Atlanta — Home Depot said Monday it is returning to the corporate bond market for the second time in less than seven months to rebuild its cash stockpile and finance share buybacks.

According to a filing with the Securities and Exchange Commission, the company plans to sell 10- and 30-year bonds. It is offering $1 billion of each maturity.

Home Depot is replacing $1 billion of 5.2% notes issued in 2006 that matured March 1, and raising money to buy its own stock. The notes may be sold as soon as Monday.

Moody’s Investors Service changed the retailer’s outlook to positive on March 25, citing the “expectation that the size of Home Depot’s remaining share authorization will shrink over the near term,” it said in a statement.

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Great news for the great outdoors (retailer)

BY CSA STAFF

SEATTLE— REI (Recreational Equipment Inc.) announced 2010 sales of $1.66 billion, up 14% from $1.46 billion the previous year, proving that even in a down economy outdoor enthusiasts will find ways to support their passion. Net income in 2010 was $30.2 million, up 1.4% from $29.8 million in the previous year. The company’s direct sales channel, which includes online and catalog sales, grew by 22.9%. Comp-store sales grew by 8.1%, up from negative 3.5% in 2009.

“REI achieved remarkable results last year in an economy that remained uncertain, and I credit the dedication and commitment of our more than 9,500 employees who are focused on serving our members and customers. Our performance positions REI well for ongoing strategic growth and business investments,” said Ivar Chhina, REI’s CFO and EVP. “As the nation’s largest consumer cooperative, we are extremely pleased to also share our success with our members, communities and employees.”

By year-end 2010, REI operated 114 stores, including four new stores in Arizona, Connecticut, Maryland and Montana. The company also relocated two stores last year in California and Montana. Seven new stores will open in 2011, including Dublin and Santa Barbara, Calif.; Paramus, N.J.; Carle Place, Manhattan and Yonkers, N.Y.; Olympia, Wash.

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Every day confusing prices

BY CSA STAFF

Two new pricing studies out this past week show Target and Walmart are so close to one another on a basket of goods that shoppers would have a hard time discerning which company is the low-price leader.

That’s a good thing for Target, but not so much for Walmart where the company is intent on convincing shoppers it has the lowest prices. Sometimes it does and sometimes it doesn’t, as researchers at Credit Suisse and Customer Growth Partners discovered. Credit Suisse look at a basket of 60 items in the Chicago and Dallas/Fort Worth markets and found Walmart 4.2% lower than Target compared with 3.9% the prior month. The Customer Growth Partners study found Target was lower than Walmart by 0.6% when it surveyed stores in Connecticut, Florida, Indiana and New York compared to a 0.7% gap the prior month.

“The 2011 data represent the first time Target has achieved nominal price parity versus Walmart since Customer Growth Partners started its price checks in 2006,” according to the firm’s president Craig Johnson.

The basket of items examined included such categories as grocery, household chemical, paper product, personal care, HBA and commonly purchased general merchandise items. In the case of Credit Suisse, the basket is more narrowly focused on the food, household and HBA categories but comparisons are conducted across a broader spectrum of competitors. For example, in Chicago the firm looked at prices at Dominick’s, Jewel, Food-4-Less, Walgreen, CVS, Target and a Walmart discount store. In Dallas-Ft. Worth, surveyed retailers included Tom Thumb, Albertson’s, Kroger, Walgreen, CVS, Target and a Walmart discount store. In both markets the surveyed stores are located within a five mile radius.

“Our monthly pricing survey in Dallas and Chicago showed that most retailers, including Walmart, raised prices in February as they looked to pass along rising input costs. We believe the industry’s ability to successfully pass on upcoming inflation depends on what Walmart decides to do,” according the firm. “The 1.2% sequential increase in Walmart’s basket price observed in February suggests that the company is rationally passing through cost increases. Most other retailers in our survey raised prices even more and their relative price gap versus Walmart increased, but only modestly.”

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