FINANCE

Sears details survival strategy

BY Marianne Wilson

It’s not over yet for the embattled Sears Holdings, which is streamlining its operations on the heels of what appears to be a brutal fourth quarter.

The long-struggling retailer on Friday announced a comprehensive restructuring that will cut at least $1 billion in operating costs a year. The plan involves reducing corporate overhead (although Sears did not specify, job cuts are likely), closer integration of the Sears and Kmart operations and improving its merchandising, supply chain and inventory management.

Some of the $1 billion in savings will come from the previously announced 150 Sears and Kmart store closings. And more closings are likely. In its restructuring statement, Sears said it would "actively manage our real estate portfolio to identify additional opportunities.”

In addition, the retailer announced plans to reduce its outstanding debt and pension obligations of $1.5 billion for fiscal 2017.

"We believe the actions outlined today will reduce our overall cash funding requirements and ensure that Sears Holdings becomes a more agile and competitive retailer with a clear path toward profitability," Sears chairman and CEO Eddie Lampert said in a statement.

Sears also said it has amended an existing deal with creditors that will allow it to borrow $140 million more, giving the company more breathing room and help as its closes stores and improves its online operations.

Sears announced the restructuring following what appears to be an awful fourth quarter. In preliminary results, the chain said same-store sales fell 10.3%, with decrease of 8.0% at Kmart and of 12.3% at Sears Domestic. Total revenue fell 16% to $6.1 billion, and net losses widened by up to $635 million from $580 million in the year-ago period.

Despite grim warnings by many analysts and industry experts that Sears is headed toward extinction, Lampert continues to remain relentlessly upbeat. He noted in Friday’s statement that Sears “significantly improved” its operating performance and made progress toward profitability in fourth quarter 2016.

“In the first several weeks of 2017, we undertook a series of transactions to optimize our capital structure and unlock value across our wide range of assets,” Lambert stated. “We also reached an agreement to amend our asset-based credit facility which further enhances our liquidity and financial flexibility. Furthermore, we intend to use net proceeds from our announced Craftsman and real estate transactions, as well as from improvements in the operating performance of the company, to meaningfully reduce our outstanding obligations and their associated expenses.”

Under the restructuring program announced on Friday, Sears said it intends to:

• Simplify Sears Holdings' organizational structure, including greater consolidation of the Sears and Kmart corporate and support functions, as well as improve accountability for profitability at its store and online channels;

• Implement an integrated model to drive efficiencies in pricing, sourcing, supply chain and inventory management;

• Optimize product assortment at Sears and Kmart stores, using data analytics to better align with preferences of its “Best Members” and focusing on profitable, high-return “Best Categories;” and

• Actively manage it real estate portfolio to identify additional opportunities for reconfiguration and reduction of capital obligations.

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D.Nguyen says:
Mar-19-2017 03:24 am

Apparel company
We do hope to receive the update news from all apparel company. Thank you

D.Nguyen says:
Mar-19-2017 03:24 am

We do hope to receive the update news from all apparel company. Thank you

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Target to help health-related start-ups ‘takeoff’

BY Deena M. Amato-McCoy

Target is prepping for another program aimed at start-ups, specifically those focused on health and wellness.

The new program, called “Target Takeoff,” supports health- and wellness-related start-ups through a “mini-accelerator” effort that will help young companies develop and connect with the major retailers in town.

The discounter will pick 10 founders of up and coming wellness businesses, and invite them to the company’s Minneapolis headquarters May 1-5, “for an opportunity to network, meet with mentors, and talk all things retail,” Target said in a posting on its website.

Participants will then prepare for a Demo Day on July 25, when they will pitch ideas to investors and Target buyers.

“Our goal is to help founders go further, faster by providing a network of mentors, a cohort of peers, and an opportunity to deepen their knowledge and experience,” Target said. “We want to support the next generation of entrepreneurs creating accessible, affordable, inclusive and inspirational wellness products and services.”

Target is accepting applications online through the end of February.

The chain made its first jaunt into the start-up accelerator space last year when it launched a retail-focused program in partnership with Techstars — an intensive mentor-driven boot camp of sorts for global start-ups.

Ten companies took part in the initial class last year, and the retailer is currently recruiting its next set of candidates. Target and Techstars will announce the selected startups in July, and host a final demo day at the 14-week program’s close in October.

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FINANCE

Pharmacy services segment fuels CVS Health Q4 sales

BY CSA STAFF

CVS Health on Thursday reported record fiscal fourth-quarter and full-year 2016 results

Net revenues for the three months ended Dec. 31 increased 11.7% to $46 billion, up from $41.1 billion in the year ago period.

Net income also enjoyed a healthy increase, with GAAP diluted earnings per share rising to $1.71 billion, or $1.59 per share in the most recent quarter, compared to $1.5 billion, or $1.34 per share in the year-ago period. Adjusted earnings per share were $1.71, an increase of 11.7% year over year.

Perhaps the greatest source of strength can be attributed to revenues in CVS’ Pharmacy Services Segment, which rose 17.9% to $31.3 billion in the three months ended Dec. 31. This increase was primarily driven by growth in pharmacy network and specialty pharmacy claims.

Revenues in the Retail/LTC Segment increased 4.7% to $20.8 billion in the three months ended Dec. 31. The increase was largely driven by the addition of the pharmacies of Target, which were acquired in December 2015.

Pharmacy same-store prescription volumes rose 2% on a 30-day equivalent basis. Same-store sales decreased 0.7% versus the prior year, with pharmacy same store sales up 0.2% and front store same store sales down 2.9%.

Front-store same-store sales were negatively impacted by softer customer traffic and efforts to rationalize promotional strategies, partially offset by an increase in basket size. Pharmacy same-store sales were negatively impacted for the quarter by approximately 380 basis points due to recent generic introductions.

“In 2016, we delivered strong results across the enterprise, with revenues up nearly 16% and Adjusted EPS up more than 13%,” said Larry Merlo, president and CEO of CVS. “Adjusted EPS in the fourth quarter came in just above the high end of our guidance, as the Retail/LTC segment delivered results in line with our expectations while the PBM exceeded expectations. We also generated more than $8 billion in free cash for the full year, exceeding our expectation, and we returned more than $6 billion to shareholders through dividends and share repurchases. Our substantial cash generation capabilities provide opportunities to bolster our growth, and we will continue to be thoughtful and disciplined with respect to using our free cash to return value to shareholders.”

For the full year, ended Dec. 31, net revenues increased 15.8% to $177.5 billion, compared to $153.3 billion last year. Net income for the year ended Dec. 31 was $5.3 billion, an increase of $80 million or 1.5%.

For its 2017 fiscal year, CVS expects to deliver GAAP diluted earnings per share of $5.02 to $5.18 and Adjusted earnings per share of $5.77 to $5.93 for the full year 2017. CVS expects to deliver GAAP diluted EPS of $0.82 to $0.88 and Adjusted EPS of $1.07 to $1.13 in first quarter 2017.

CVS opened 40 new retail stores and closed 25 retail stores in its fiscal fourth quarter. In addition, it relocated 16 retail stores. As of Dec. 31, the CVS operated 9,709 retail stores, including pharmacies in Target stores, in 49 states, the District of Columbia, Puerto Rico and Brazil.

As CVS previously discussed, it intends to close approximately 70 retail stores during 2017 and expects to take a charge of approximately $225 million associated with the remaining lease obligations of such stores. The vast majority of the store closures are expected to occur by the end of this quarter.

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