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Specialty apparel retailer Q1 sales up 22%

BY Marianne Wilson

Duluth Trading Company continues to grow its sales and store footprint.

The retailer of men’s and women’s workwear, casual clothing, and accessories reported that net sales increased 21.9% to $83.7 million in the quarter ended April 30, up from $68.6 million in the prior-year first quarter. It was the company's 29th consecutive quarter of increased net sales year-over-year.

Net income fell to $0.4 million, or $0.01 per diluted share, compared to $3.2 million, or $0.10 per diluted share in the year-ago period.

“Our first quarter results were in-line with our expectations and we remain on track to deliver on our 2017 financial guidance,” said Stephanie Pugliese, CEO of Duluth Trading. “We made several investments in the business this quarter that impacted SG&A in the short term but will benefit us long term."

On the retail side of the business, the retailer said it continues to make "great progress" in expanding its geographical footprint and omnichannel presence.

"This quarter we opened four new stores to serve customers in the Indianapolis, Boston, Detroit and Providence markets, and these new stores are performing exceptionally well," Pugliese said. "In fiscal 2017, we now expect to open a total of 12 retail stores and one outlet store."

In addition to the expansion of retail, Duluth launched a women's TV advertising campaign in the first quarter as it continues to grow that part of its business.

The company reaffirmed its fiscal 2017 outlook, forecasting net sales in the range of $455.0 million to $465.0 million.

Duluth describes itself as a lifestyle brand for the modern, self-reliant American, offering high-quality, solution-based apparel for men and women who lead a hands-on lifestyle and value a job well-done. The company strives to offer customers an engaging and entertaining in-store experience.

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Macy’s warns profit margins are shrinking

BY CSA STAFF

Already navigating tumbling sales, Macy’s is preparing for even tighter margins.

At the company’s annual investor day, Macy’s CFO Karen Hoguet said that second-quarter gross margins are running about 1 percentage point below what they were last year. The company is slashing costs in a bid to maintain its earnings forecast, which it reaffirmed on Tuesday, according to Bloomberg.

Coinciding with the announcement, the department store chain’s stock fell by 7.5% to $22.08 — marking the worst intraday drop since May 11, the day Macy’s released its results for the first fiscal quarter. The chain is already down 33% this year, the report added.

For the first quarter, Macy's posted a profit of $71 million, or 23 cents a share, down from $116 million, or 37 cents a share, in the year-ago period. Excluding some costs, Macy's adjusted per-share profit fell to 24 cents from 40 cents, below analysts' expectations for 35 cents.

Revenue fell 7.5% to $5.34 billion, versus analysts estimates of $5.47 billion, which Macy’s attributed partly to store closings. Same-store sales fell 4.6%, more than expected. The retailer did not break out its online sales but said its digital platforms showed “continued strong growth” in the quarter.

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Convenience store retailer’s Q4 misses Street

BY Deena M. Amato-McCoy

Despite 16 consecutive years of positive same-store sales growth among key categories, Casey’s General Stores’ top and bottom line revenues missed the mark in the fourth quarter.

For the period ended April 30, the convenience store chain reported total revenue of $1.85 billion, just shy of analysts’ estimate of $1.87 billion. Diluted earnings per share for the quarter were $0.76, a drop from $1.19 for the same period a year ago. This also missed analyst expectations of 82 cents a share. Meanwhile, net income hit $30 million, compared with $47 million in the same period last year.

For the fiscal year, diluted earnings per share were $4.48 versus $5.73 for the same period last year. However, the company hit a milestone as it ended its fiscal year, achieving its “16th consecutive year of positive same-store sales growth in both the grocery and other merchandise, and prepared food and fountain categories," said Terry Handley, the chain’s president and CEO.

Specifically, in fuel, same-store gallons decreased 0.5% with an average margin of 17.2 cents per gallon. The company sold 15.5 million renewable fuel credits for $7.1 million in the fourth quarter.

For fiscal 2017, total gallons sold were up 5.6% to 2.1 billion. Gross profit was down slightly to $378.3 million, primarily due to a 1.2 cents per gallon lower fuel margin partially offset by an increase in gallons sold.

In grocery and other merchandise, fourth quarter same-store sales were up 1.5% with an average margin of 31.1%. For the year, total sales were up 5.7% to $2.1 billion and gross profit dollars increased 4.4% to $657.2 million.

Prepared food and fountain same-store sales were up 3.2% for the quarter, with an average margin of 61.7%. For fiscal 2017, total sales increased 8.3% to $953.4 million, and gross profit dollars rose 7.9% at $594.0 million.

The company also continues with its aggressive store expansion and renovation plan. For the fiscal year, Casey’s built and opened 48 new stores, acquired 22 stores, completed 21 replacements, and remodeled 103 stores. As of April 30, there were 27 new stores, 21 replacement stores, and 11 major remodel stores under construction.

At fiscal year end, Casey’s had 116 sites under agreement for new store construction and five acquisition stores under agreement to purchase. "We also recently opened our first store in the state of Ohio,” Hadley added. “We are optimistic about our growth opportunities.”

Looking ahead to fiscal 2018, the company plans to increase same-store fuel gallons sold by 1.0% to 2.0% with average margin of $0.18 to $0.20 cents per gallon. Same-store grocery and other merchandise sales will increase 2.0% to 4.0% with average margin of 31.0% to 32.0%. Same-store prepared food and fountain sales will grow 5.0% to 7.0% with average margin of 61.5% to 62.5%.

Finally, the chain plans to build or acquire 80 to 120 stores, replace 30 existing locations, and complete 75 major remodels.

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