FINANCE

Weak sales trend hits Dick’s Sporting Goods

BY Gina Acosta

The CEO of Dick's Sporting Goods said strong back-to-school sales couldn't help his company recover from a slowdown in consumer spending in the third quarter.

For the third quarter ended Oct. 31, Dick's reported a 0.7% increase in same-store sales. Earnings were $47.2 million, or 41 cents a share, compared with $49.2 million, or 41 cents a share, in the same period a year ago. Revenue rose 7.6% to $1.64 billion.

"Our positive same-store sales for the quarter reflected a strong back-to-school selling season tempered by slowing trends later in the quarter. Strength in athletic footwear, accessories and athletic apparel was moderated by the impact of record warm weather in more seasonal categories," said Edward W. Stack, chairman and CEO. "With strong operational discipline, we generated earnings per share within our guided range."

The company said inventory was up 13.1% year over year, and that it is working with its vendors to reduce its exposure to slow-selling merchandise by returning product, canceling orders and securing markdown allowances.

"As we look to the fourth quarter, we anticipate a more promotional environment. Our focus will be to actively manage our inventory levels, while continuing to take the appropriate actions to win share and strengthen our business for the long term."

Dick's says e-commerce penetration for the third quarter was 8% of total net sales, compared to 7.3% during third quarter 2014.

For the fourth quarter, Dick's is forecasting earnings in the range of $1.10 to $1.25, compared with $1.30 in the prior year. Same-store sales are projected in a range of down 2% to up 1%, compared with an increase of 3.4% in the same period a year ago.

In the third quarter, the company opened 27 new Dick's Sporting Goods stores and seven new Field & Stream stores. The company now operates 645 Dick's Sporting Goods stores, 75 Golf Galaxy stores and 19 Field & Stream stores.

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FINANCE

Walmart U.S. is Q3 bright spot

BY Mike Troy

Despite weak overall sales growth and an expected decline in third quarter profits, Walmart’s third quarter results offered reasons for the company to be optimistic and for competitors to be concerned.

The company’s overall performance was uneven with sales growing at the massive U.S. stores division increasing 3.8% to $72.7 billion, but operating profits declining 8.6% to $4.5 billion. Same-store sales increased 1.5% on top of a 0.5% increase the prior year, marking the fifth consecutive quarter of comp growth. Especially strong same-store sales of 8% were generated by Walmart’s smaller format Neighborhood market stores.

The company’s international division was negatively affected by a strengthening of the U.S. dollar. Walmart International sales declined 11.4% to $29.8 billion and operating profits fell 6.4% to $1.3 billion. However, excluding the effects of currency fluctuations, Walmart International sales increased 3.2% to $34.7 billion. Sam’s Club’s total sales, negatively affected by lower year over year fuel prices, declined 2.2% to $14 billion. Excluding fuel, same-store sales advanced a meager 0.4% on top of a similar gain the prior year. Sam’s operating profits increased 9.3% to $539 million.

"We are pleased with the continued sales growth in Walmart U.S. and in our international business. Strong traffic and our fifth consecutive quarter of positive comps in Walmart U.S. stores show we are taking the right steps to win with customers,” said Doug McMillon, president and CEO of Wal-Mart Stores, Inc. “Although we still have work to do, we are positioning for sustainable growth through investments in people and technology to deliver a seamless shopping experience at scale."

Total company sales declined 1.3% to $116.6 billion and net income declined 11% to $3.3 billion. Earnings per share of $1.03 were better than the 97 cents analysts forecast, but 10.4% lower than the $1.15 a share the company earned in third quarter 2014.

“We delivered solid earnings per share that was well within our guidance,” said CFO Charles Holley.

The better-than-expected performance caused the company to tighten the range of its full year profit forecast to $4.50 from $4.65 from a forecast of $4.40 to $4.70 that was provided when second quarter results were reported on Aug. 18. That forecast had been a reduction from a projection provided back in February when full year profits were expected to range from $4.70 to $5.05.

As for sales, Holley said, “We continue to expect relatively flat total sales growth for the year. Without the currency impact, our full-year total net sales growth would be around 3%.”

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OPERATIONS

Kohl’s names Walgreens exec as COO; hints she could become CEO

BY Mike Troy

Kohl’s has named Walgreens' former digital and chief marketing officer to the newly created role of COO and indicated she could eventually replace Kevin Mansell as CEO.

Kohl’s named Sona Chawla to the newly created position of COO, which might as well stand for chief omnichannel officer given her range of responsibilities and most recent experience at Walgreens. She will report directly to Kohl’s chairman, president and CEO Kevin Mansell.

Chawla will join Kohl’s on Nov. 30 with responsibility for Kohl’s full omnichannel operations, store operations, logistics and supply chain network, information and digital technology, e-commerce strategy, planning and operations, and store construction and design. Her hiring is the result of a search that Mansell described as exhaustive and dynamic.

“As our future vision for Kohl’s developed under our Greatness Agenda, the search for this role dramatically evolved. We saw an enormous opportunity to create something truly unique in retail – a leader that has oversight for the full omnichannel experience,” Mansell said. “When stores, online and digital teams are not just compatible but truly integrated, new thinking and new ways of delivering a seamless customer experience emerge.”

Prior to joining Kohl’s, Chawla spent seven years with Walgreens in a variety of senior leadership roles including president of e-commerce. Most recently, Chawla was president of digital and CMO. Prior to joining Walgreens, she was VP of global online business at Dell, Inc., and before Dell she worked at Wells Fargo’s Internet Services Group and Andersen Consulting and Mitchell Madison Group.

During her tenure with Walgreens, Kohl’s said Chawla led a team responsible for developing industry-leading digital innovations that significantly enhanced core aspects of the company’s customer experience such as refilling prescriptions in seconds, printing photos from smartphones directly to stores, enabling seamless shopping through the integration of the Walgreens loyalty program, coupons and mobile payments in store and launching digital health coaching and telehealth.

“We’ve never been more clear about the future of the company or the types of leaders that we need in place to deliver against our vision and Sona is exactly the right leader to join us,” Mansell said. “(She) will lead the seamless integration of all of our operations – from our stores to our website to all of our digital touchpoints with our customers. Her depth of experience in retail and her understanding of how to fully integrate technology and e-commerce into a retail experience will help Kohl’s elevate our customer conveniences across all channels.”

Even before she begins at Kohl’s, the company is mentioning her along with chief merchandising and customer officer Michelle Gass as potential successors to long-time CEO Mansell.

Kohl’s operates 1,166 stores in 49 states.

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