Walmart’s Q2 Results
By Stephen Springham, senior retail analyst Planet Retail
After the horror show of Q1, Walmart had so much to prove domestically in Q2. And it has again come up short. A U.S. comp store decline of 0.3% was below earlier management of a 0.2% decline, guidance that was endorsed as recently as the Annual Shareholder Meeting in June. This marks the second quarter that U.S. comps have been both in negative territory and below guidance. Those accusing Walmart of ‘crying wolf’ in its bullishness (ourselves included) may feel vindicated.
“Although ostensibly an improvement on Q1 (when U.S. comps were down 1.4%), Q2 was arguably a weaker performance. Although the U.S. consumer remains challenged, the factors that derailed performance so horribly in Q1 (delays in tax refunds, poor weather and lower inflation in food) have all receded and the operating backdrop in Q2 was far more benign. One telling factor is that the company seems to have woefully underestimated the effect of income tax increases that came into force at the end of 2012, and continue to weigh heavily on Walmart’s core customer demographic.
‘Headline’ growth of 2.9% (or +4.4% at constant currency rates) at the International division also paints a flattering picture of what lies beneath. The top-line growth figure masks a very mixed performance, but trading remains almost universally tough. Mexico, the U.K. and Canada have been previously highlighted as the three key drivers of international profitability, but all three markets are challenged. Trading has been soft in Mexico, the U.K. remains a mature and highly competitive environment, while the arrival of Target in Canada has intensified pressure on a business already struggling to achieve comp growth. There were some positives in Q2, e.g. continued comp growth in China on the back of a prudent location planning strategy. But by and large, the International division failed to provide much comfort.
Predictably, e-commerce was flagged as a bright spot, with year-on-year growth sustained at around the 30% mark. With a more coherent e-commerce strategy taking shape, investments in businesses such as Yihaodian in China are looking increasingly shrewd.
General Growth names fearless fashionista blogger
Los Angeles — Self-proclaimed beauty and fashion junky, Jennifer Geisman, creator of Beautygrl.com, has begun writing a new fashion and lifestyle blog, “Fearless Fashionista,” for four Southern California retail centers, owned and managed by General Growth Properties.
The centers include Galleria at Tyler, Glendale Galleria, Northridge Fashion Center and Otay Ranch Town Center. The blog is available at each center’s website.
Q2 comp-store sales rise at Kohl’s, but miss Wall Street estimates
MENOMONEE FALLS, Wis. — Kohl’s continues to focus on funding its e-commerce growth following results for the second quarter ended August 3.
The company reported net sales of $4.29 billion, a 2% increase from $4.21 billion. Comparable-store sales increased 0.9% for the quarter, but according to a Reuters report, fell short of Wall Street estimates.Net income for the quarter was $231 million, a drop from $240 million for the prior-year quarter.
“We are pleased with our progress in the second quarter. Sales improved significantly over the first quarter and our gross margin improved over last year,” said Kevin Mansell, Kohl’s chairman, president and CEO. “Expenses were well-managed and we ended the quarter with inventory per store up mid-single digits while funding our e-commerce growth. I would like to thank each of our associates for their contribution to our results."
Kohl’s ended the quarter with 1,155 stores in 49 states, compared with 1,134 stores at the same time last year. The company opened nine new stores during the first quarter of 2013 and expects to open three new stores and remodel 30 stores in the fall.