PriceSmart profit dips in Q1
San Diego — Warehouse club operator PriceSmart said Friday that net income for the quarter ended Nov. 30 edged down to $14 million, compared with $14.9 million in the year-ago period.
Net warehouse sales increased 24.1% to $468.3 million from $377.3 million, and total revenue rose to $478.7 million from $386.1 million.
A&P optimizes merchandising strategy
CHICAGO — Galleria Retail Technology Solutions, a provider of retail and category optimization solutions, has announced that grocer A&P has chosen Galleria to help optimize its merchandising strategy and improve the customer experience within its more than 300 Northeast and Mid-Atlantic stores.
A&P will roll out several of Galleria’s solutions throughout its family of supermarkets.
“A&P is continuing to become a more innovative retailer that is dedicated to providing its customers with an outstanding shopping experience,” stated Bryan Eckhoff, Galleria’s EVP sales and account management in North America. “We are delighted to work with A&P to provide a full range of retail and category optimization solutions, and we are confident that the implementation will enable A&P to achieve its goals.”
Another reason for Walmart to not like Target
Just when it looked like Walmart shares might be ready to make a run earlier this week after poking above $60 for the first time in more than three years, along came Target to spoil the party.
Walmart’s rival reported disappointing same-store sales during December, and given the high degree of overlap between the retailers’ product mix and base of customers it was logical to conclude business likely tailed off for Walmart in December as well. Shares of Target were clobbered as the company also lowered it fourth-quarter profit outlook and Walmart went along for the ride and pulled back to below $60.
Investor enthusiasm for shares of Walmart had been looking up after the company ended a two-year same-store sales slide in the third quarter and indicated momentum was building for the holiday’s. However, if the cadence of sales at Walmart is closely correlated to the pattern at Target then Walmart’s easly stage comp recovery could be in jeopardy.
Then again, it is conceivable that a portion of Target’s weakness was attributable to action on the part of Walmart just as a portion of Walmart’s topline weakness the past few years was attributable to Target. Times have changed though, and Walmart has added back merchandise that caused it to lose shopper trips to such rivals as Target and dollars stores and with more shoppers now in its stores they are being enticed to buy more as a result of compelling feature displays that now clog store aisles. In addition, Walmart went crazy with advertising during the holidays between the increased frequency of circulars and a high frequency television campaign.
Either way, December was a disappointing month for Target as the company reported a 1.6% comps increase despite an easy prior year comparison to a December 2010 comp that was only 0.9%. Even more disappointing for Target investors was the fact that chairman, president and CEO Gregg Steinhafel had essentially promised a better performance after reporting a weak showing in November when comps increased 1.8%. At the time, the company forecast a December gain in the low- to mid-single digits, but Steinhafel indicated the figure would exceed November’s 1.8% increase.
The soft sales didn’t deter the company from maintaining a January comp estimate in the low- to mid-single digits, but the fourth quarter profit estimate was dialed back to a range of $1.35 to $1.43 from $1.43 to $1.53.
“December sales were below our expectations as growth in grocery and beauty offset softness in electronics and music, movies and books,” Steinhafel said. “Sales and traffic were strongest in the week leading up to Christmas as guests waited to shop for last-minute gifts. In 2012, we’ll continue to pursue initiatives designed to deliver compelling value and a superior shopping experience against the backdrop of continued slow and volatile economic growth.”
If there was a bright spot amid the company’s December showing it was the fact that the majority of the growth the company experienced was driven by an increase in average transaction size, which suggests loyalty among core customers remains strong as Target has been hammering on it REDcard Rewards program, which discounts prices by 5%.