FINANCE

Nordstrom meets expectations with flat profit, rising sales

BY Katherine Boccaccio

Seattle — Just two weeks after announcing its $350-million acquisition of men’s personalized clothing service Trunk Club, Nordstrom Inc. reported second-quarter earnings and sales in line with Wall Street projections.

Profit for the quarter was flat at $183 million, and sales climbed 6.2% to $3.3 billion, from $3.1 billion last year. Same-store sales rose a respectable 3.3%.

On July 31, Nordstrom announced that it entered into an agreement to acquire Trunk Club, a personalized clothing service for men, for $350 million, expanding the department store retailer’s reach into the coveted menswear market.

Nordstrom said it plans to open three full-line stores (The Woodlands, Texas; Calgary, Canada and Jacksonville, Florida) later this year. To date in fiscal 2014, the company opened 11 Nordstrom Rack stores and plans to open 16 additional stores during the remainder of the year. In second quarter 2014, the company opened a Nordstrom Rack store in Manhasset, New York.

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OPERATIONS

Walgreens outlines new operational leadership structure

BY Michael Johnsen

Deerfield, Ill. — Following Walgreens’ announcement last week about taking the next step in acquiring Alliance Boots, Alex Gourlay, executive VP Walgreens Boots Alliance and president of Walgreens, announced a proposed operational organization structure in a letter to Walgreens employees.

Mark Wagner, currently president of community management and store operations, will take on a new role as president of business operations. In this new role, Wagner will be responsible for creating a customer-focused organization that supports Walgreens’ stores, eliminates waste and simplifies the work flow.

Brad Fluegel, currently senior VP and chief strategy officer, will become senior VP chief strategy and business development officer. He will continue to lead strategy for Walgreens and expand his responsibilities to include developing and implementing Walgreens’ healthcare clinic, clinical office and healthcare innovation strategies.

And Richard Ashworth will be returning from Alliance Boots in a new role as president of retail and pharmacy operations. He will assume responsibility for the field organization to implement a single customer plan and deliver customer care through Walgreens’ community locations.

Sona Chawla, president and digital and chief marketing officer, will continue in that role.

"I will continue to lead our merchandising team while we search for a new leader for the daily living organization," Gourlay wrote. "All of these proposed new roles and titles are subject to approval by the board of directors and will be effective as of Sept. 1," he said.

"I look forward to bringing together this talented team and continuing to work with Greg [Wasson] and the rest of our business partners across Walgreens," Gourlay added. "Looking to the future, we need to stay focused on our customers and patients because that’s what has made Walgreens the great business and brand that it is today. To continue to move forward, we will need to call on the company’s historic strengths — pharmacy-led, customer-driven, with a commitment to each other and a focus on care and service."

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News

Rebound for real at JCP

BY CSA STAFF

Same store sales growth of 6% and e-commerce strength helped J.C. Penney dramatically reduce its second quarter operating loss and demonstrate growing momentum of its turnaround.

Sales at the operator of 1,060 stores increased to $2.8 billion from $2.66 billion and the 6% comp increase the company reported was against an easy prior year comparison when comps declined 11.5%. Online sales through jcp.com were $249 million for the quarter, up 16.7 % versus the same period last year.

The company reported an operating loss of $70 million that, while sizable, was dramatically less than a prior year loss of $395 million. The company’s net loss of $172 million, or 56 cents a share, was also markedly better than the prior year loss of $586 million, or $2.66 a share.

"Our turnaround initiatives continue to produce improved financial results. In the second quarter, we gained additional market share while significantly increasing gross margin in a highly competitive promotional environment,” said J.C. Penney CEO Mike Ullman. “Our customers know they can count on J.C. Penney to deliver relevant stylish merchandise at a price that fits their budget. With our unique assortment of powerful private brands, key national brands and exclusive attractions — all at prices customers can afford — we expect to continue driving profitable sales this back to school season. As we approach the completion of our turnaround, we are focused on re-establishing J.C. Penney as the premier shopping destination for the moderate consumer."

The company singled our women’s and men’s apparel and accessories, home and fine jewelry as its top performing businesses during the quarter. Sephora inside J.C. Penney also continued its strong performance, according to the company.

Looking ahead, J.C. Penney said it expects third quarter comps to grow in the mid single digit range.

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