Levi Strauss profit up in Q4, revenue slides
San Francisco — Levi Strauss & Co reported Thursday that net income for the quarter ended Nov. 25 rose to $53 million, from $44 million in the year-ago period.
Revenue slid 3% to $1.3 billion, hurt by slowed sales in Asia.
RadioShack nabs Walgreen exec for CEO
Everybody loves a turnaround story. RadioShack is betting that the now-former president of daily living products and solutions for Walgreens, Joe Magnacca, will help author a turnaround story of its own for the small-box consumer electronics retailer.
RadioShack stopped the presses late Thursday evening with news that Magnacca had agreed to join the company as CEO — less than one week removed from Magnacca’s promotion from a corporate SVP to EVP of Walgreens, in addition to his title as president of daily living products and solutions. Magnacca — who came to Walgreens in the 2010 acquisition of Duane Reade, where he had served as president — replaces CFO Dorvin Lively in the top spot at Radio Shack. Lively had served in the role on an interim basis since September following the departure of former CEO James Gooch. Prior to Duane Reade, Magnacca was SVP at Shoppers Drug Mart.
In the wake of Magnacca’s departure, Bryan Pugh, VP well experience deployment, will lead the merchandising group for Walgreens on an interim basis.
“I am delighted to join RadioShack and to be part of this team as we build upon the strengths of such a great brand,” Magnacca noted. “I see advantages in being a small-box retailer in the consumer electronics space today, particularly with the broad retail footprint and convenience that RadioShack offers its customers. I believe my experiences will help the team identify and execute on new opportunities that can return this great company to a position of prominence in the lexicon of American retailers.”
Magnacca has good reason to be confident — so far he has demonstrated a rather deft hand at helping to lead turnaround stories and transforming the retail experience for customers. Magnacca was the major visionary behind the health and daily living store concept that shapes Walgreens’ Well Experience stores, which are modeled largely after the new format Magnacca pioneered at Duane Reade.
The transformation of the Duane Reade stores was a major reason Walgreens moved to acquire the company in 2010, Walgreens president and CEO Greg Wasson told DSN in an exclusive interview last summer. Wasson described the acquisition as an accelerant of one of five key strategic growth imperatives for Walgreens, to transform the traditional drug store into a health and daily living destination. “Duane Reade had started the new drug store concept, and now you see a lot of that infuence coming back to Walgreens and accelerating where we’re headed,” Wasson told DSN last August.
It is clear that RadioShack’s board is looking for Magnacca to bring some of that magic to its stores. “Joe is a leader with significant experience in transforming iconic brand names into strong operating businesses,” noted RadioShack non-executive chairman Daniel Feehan. “We believe he will be a catalyst for change at RadioShack in refining our merchandising strategies, reinvigorating the shopping experience for our customers and building sustainable value for our shareholders.”
RadioShack needs the help, coming off of three consecutive quarters of losses. The company posted a third-quarter loss of $76 million.
Unlike finance guys Gooch and Lively, Magnacca brings a different perspective to the job — a merchant’s perspective. With 4,700 stores in the United States and Mexico, the company has an opportunity to outflank its biggest competitor Best Buy in markets all across the country. And in the era of omnichannel retailing, that kind of footprint could enable Radio Shack to better compete against the Amazons of the world that are still trying to figure out a scalable solution for same-day delivery. Clearly, the company is putting together the team to lead a transformation. In December, Radio Shack added former head of Target store operations Troy Risch as EVP operations and former Sam’s Club exec Huey Long as EVP marketing, business development and multichannel.
In the wake of Magnacca’s departure, Walgreens DVP corporate communications Michael Polzin noted, "We wish Joe the best in his new role, which reflects the depth and talent in our organization. Bryan Pugh, VP well experience deployment, will be leading our daily living and merchandising operations on an interim basis, reporting to Mark Wagner, president of operations and community management. The strength of our leadership team allows us to continue moving forward with our key strategy of creating a well experience for our customers.”
Amazon lengthens online lead over Walmart and others
Traffic trends at Walmart and other major retailers declined in December even though e-commerce sales set new records in the fourth quarter and throughout 2012.
Online sales now account for 10% of total retail sales following a 15% increase in 2012 that caused sales to reach a new high of $186.2 billion, according to online measurement firm comScore Media Metrix. Fourth quarter online sales also set a record, increasing 14% to $56.8 billion to mark the first time quarterly online sales topped $50 billion. It was the thirteenth consecutive quarter of positive year-over-year growth and ninth consecutive quarter of double-digit growth.
However, traffic at Walmart.com during December 2012 declined to 52.2 million visitors compared to 55.8 million in December 2011, according to comScore’s top 50 Web properties report. Target.com was essentially flat with 37.4 million visitors while Bestbuy.com declined to 32.6 million visitors from 34.5 million and Sears dropped to 27.7 million from 29.8 million. Conversely, Amazon.com traffic during December increased to 120.8 million visitors from 114.7 million the prior year.
The correlation between a Web site’s visitors and actual sales is a bit murky, but more traffic is always a good thing. That’s true online or in a physical store even if average transaction sizes are growing and somewhat offsetting weaker traffic.
In Amazon’s case, the December traffic growth appeared to translate to sales. Fourth quarter sales increased 22% to $21.3 billion and for the year ended December 31 sales increased 27% to $61 billion. For the eighth consecutive year, Amazon was the top ranked company in holiday season customer satisfaction according to the ForeSee annual Holiday E-Retail Satisfaction Index.
Walmart and other conventional retailers don’t typically share their e-commerce sales although Walmart is due to report its fourth quarter results on February 21 and will presumably address the topic and its enhanced multichannel capabilities. Previously, the company has said it is difficult to break out a pure e-commerce sales figure due to the multichannel nature of its business. Assigning credit for a sale will become increasingly challenging for Walmart because products may be researched online, ordered via a mobile device and picked up in-store with Walmart’s Site-to-Store service or viewed in store and ordered online for home delivery.
Even so, the decline in December traffic at Walmart and other retailers is not an encouraging sign given Amazon’s performance and overall e-commerce sales growth.
"2012 was a year in which, for the most part, e-commerce continued to grow strongly, despite an uneven macroeconomic environment showing signs of recovery but also cause for continued concern," said comScore chairman Gian Fulgoni. "With e-commerce growth rates consistently in the mid-teens throughout the year, it is clear that the online channel has won over the American consumer and will increasingly be relied upon to deliver on the dimensions of lower price, convenience and selection."
The overall industry growth was driven by a combination of traffic and transaction size with a 6% increase in the number on online buyers and an 8% increase in spending per buyer. The top-performing online product categories were during the past year were digital content and subscriptions, consumer electronics, toys and hobbies, apparel and accessories and books and magazines, according to comScore. Each grew by at least 15%.