Walmart leverages ‘employees’ for last-mile delivery initiative
Walmart has a new delivery team dropping off customers' online orders — but they don’t work for a major shipping company or third-party delivery venture.
The retail giant is testing a new delivery concept that leverages its own store employees to drop off online orders right at customers’ front doors. The new program is designed to solve the challenges associated with the last-mile of delivery, which include “cutting shipping costs and getting packages to their final destinations faster and more efficiently,” said Walmart’s U.S. digital chief Marc Lore.
The opt-in program, which is app-based, enables employees to set preferences, including how many packages they can deliver, the size and weight limits of those parcels, and which days they’re able to make deliveries after their work shift ends. The app also tries to minimize the collective distance associates need to travel off of their commute when making a delivery.
“Associates are fully in control of their experience. If they don’t want to participate, they don’t have to,” he said. “They can choose to opt in, and they can update those preferences at any time.”
The program is a strategic way to combat Amazon’s signature same-day delivery services. Between a network of 4,700 Walmart stores across the U.S. and more than 1 million associates, “our stores put us within 10 miles of 90% of the U.S. population,” Lore said.
“Now imagine all the routes our associates drive to and from work, and the houses they pass along the way,” he added. “It’s easy to see why this test could be a game-changer.”
The test is currently available in two New Jersey stores, and one in northwest Arkansas. Many orders are being delivered the next day.
Walmart associates are being paid to participate in the program, however the chain did not reveal their compensation, “Associates love having the option to earn more cash while doing something that’s already part of their daily routine,” Lore reported. “An unexpected benefit is they’re finding quicker routes home, thanks to the GPS built into our proprietary app.”
Hot fitness equipment start-up to expand retail footprint
Peloton, a four-year-old startup that sells exercise bikes tied to a live-streamed workout experience, is revving up for expansion armed with fresh capital.
The company announced it has recently closed a $325 million series E financing round, which brings its total valuation to $1.25 billion. The round was led by Wellington Management, Fidelity Investments, Kleiner Perkins, and True Ventures. Other significant investors in this round included Comcast NBCUniversal, GGV Capital, Balyasny, and QuestMark.
Founded in 2012, Peloton sells a high-tech and high-cost ($1,995) exercise bike that allows home users to have, essentially, the same type of experience that they would have at a spinning class. It does so by selling a subscription service that gives the user access to live and on-demand fitness group classes (along with archived ones) led by elite cycling instructors. It also provides performance tracking metrics and a real-time leaderboard designed to motivate users.
The company sells its product through its website and its network of showrooms. It currently has 22 retail stores around the nation, including locations at such premium malls as The Mall at Short Hills, Short Hills, New Jersey; The Westchester, White Plains, New York; and The Galleria, Houston. It is set to open a store at Bellevue Square Mall, Seattle, at the beginning of June. The brand hopes to have 40 stores by year-end, according to Business Insider.
“We are changing the way people engage in fitness," said Peloton founder and CEO John Foley. "This financing will allow us to expand our product and content offerings, open new showrooms across the country, and continue to innovate the experience we offer our members at every touch-point."
In addition to its bike, Peloton sells a limited number of accessories, from cycling shoes to weights. It recently introduced a commercial-grade bike designed for high-traffic environments and equipped with software designed to quickly onboard new users. And in April, the company announced a partnership with Westin Hotels and Resorts. Peloton's commercial bike is already in over 30 Westin properties around the country.
“Peloton is supporting especially broad subscriber engagement and growth. We believe Peloton is the leader in a new business that has significant potential – physical interactive media,” said Mary Meeker, partner at Kleiner Perkins.
Lululemon starts year strong, but division restructuring is underway
Product innovation, an enhanced digital experience, and its first-ever global brand campaign boosted Lululemon’s first quarter earnings — however these gains are not swaying the company’s restructuring plans.
The athleisure brand is currently restructuring Ivivva, its activewear brand for girls. The division will operate primarily as an e-commerce business, supported by only a select number of stores in key communities across North America.
The chain plans to close approximately 40 of its 55 Ivivva-branded stores and will convert approximately half of these locations to Lululemon-branded stores. The company will also close all of its Ivivva-branded showrooms and other temporary locations, and will streamline its corporate infrastructure.
Lululemon expects the closures and restructuring to be complete by the end of the third quarter of fiscal 2017. In connection with this restructuring plan, the company reported pre-tax costs totaling $17.7 million in the first quarter of fiscal 2017.
For the first quarter ended April 30, the athleisure brand also reported net revenue of $520.3 million, or 32 cents a share, an increase of 5% compared to the first quarter of fiscal 2016. Revenues also surpassed analysts’ projections of $514 million, or 28 cents per share.
Gross profit was $256.9 million, an increase of 7% compared to the first quarter of fiscal 2016. Adjusted gross profit was $262.3 million, an increase of 10%.
Total comparable sales decreased 1%. Same-store sales decreased 2%, and direct-to-consumer net revenue was flat.
"From our cadence of product innovation, to our enhanced digital experience, and first-ever global brand campaign, we have never felt more deeply connected to our guest or better positioned to expand our collective,” said Laurent Potdevin, CEO,Lululemon. “We remain laser focused on owning our position as the global brand defining an active, mindful lifestyle."
Looking ahead to the second quarter, Lululemon expects net revenue to be in the range of $565 million to $570 million. It also predicts total comparable sales increases in the low-to-mid single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $0.13 to $0.15 for the quarter.
Excluding the impact of the Ivivva restructuring, Lululemon expects ad-justed diluted earnings per share to be in the range of $0.33 to $0.35 for the quarter. Based on the restructuring of the Ivivva operations, the chain expects to recognize total pre-tax costs of between $50.0 million and $60.0 million in fiscal 2017, including the $17.7 million recognized during the first quarter. This primarily relates to long-lived asset impairment and lease termination costs, according to the retailer.
"I'm excited to see the positive trends that materialized late in Q1 continuing into Q2,” Potdevin said. “Our current outlook for the remainder of 2017 is strong, and I'm energized by the growth strategies taking shape. I'm also confident in our plans to restructure Ivivva, and believe they are the best means to optimize this part of the business.”