Financial Management Question
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WalmartBuildsSalesMomentum.pdf
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xx.xx xx.xx + x.xx xx.xx xx.xx + x.xx xx.xx xx.xx + x.xx
Jean Coutu Group* xx.xx xx.xx + x.xx xx.xx xx.xx + x.xx
Rite Aid xx.xx xx.xx + x.xx WBA 4 xx.xx xx.xx + x.xx
4 Walgreens Boots Alliance
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Amerisource
Good Neighbor Pharm.
Drug Store
Medicine Shoppe
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McKesson
CVS Cardinal Health
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DRUG STORES
Health Mart
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Delhaize x,xxx x.x + x.xx Harris Teeter x,xxx x.x + x.xx Kroger x,xxx x.x + x.xx Loblaws* x,xxx x.x + x.xx Sobeys* x,xxx x.x + x.xx Supervalu x,xxx x.x + x.xx Whole Foods x,xxx x.x + x.xx
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SUPERMARKETS
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xx.xx xx.xx + x.xx Dollar General xx.xx xx.xx + x.xx Dollar Tree xx.xx xx.xx + x.xx Family Dollar xx.xx xx.xx + x.xx Fred's xx.xx xx.xx + x.xx Sears Holdings xx.xx xx.xx + x.xx Target xx.xx xx.xx + x.xx Walmart xx.xx xx.xx + x.xx
* Figures are in Canadian dollars.
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DISCOUNTERS
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MMR/June 11, 2018 5
MMR MONEY
Health Mart
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McKesson
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Amerisource
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MASS RETAIL STOCK UPDATE
DISCOUNTERS
Costco
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MONEY NEWS
SCOREBOARD
RETAILERS Quarter ended
Dollar Sales
% Change
Net Income (Loss)
% Change
Net-to- Sales Ratio
Ingles1 3/31/18 984.56 mil +4.1 9.3 mil +1.6 0.9
Home Depot2 4/29/18 24.95 bil +4.4 2.4 bil +19.4 9.6
Sprouts3 4/1/18 1.29 bil +13.8 66.62 mil +43.9 5.2
TJX4 5/5/18 8.69 bil +11.6 716.4 mil +33.6 8.2
Walmart5 4/30/18 122.7 bil +4.4 2.13 bil -29.8 1.7
1. Ingles’ earnings reflect a reduction in effective tax rate to 23.8% from 35.1% a year ago primarily due to U.S. tax reform in December 2017. 2. Home Depot’s earnings reflect a reduction in effective tax rate to 23.5% from 35.2% a year ago primarily due to U.S. tax reform in December 2017. 3. Sprouts’ earnings reflect a reduction in effective tax rate to 9.8% from 31.8% a year ago primarily due to U.S. tax reform in December 2017 and the change in accounting standards for stock-based compensation in 2017. 4. TJX’s earnings reflect a reduction in effective tax rate to 25% from 35.6% a year ago primarily due to U.S. tax reform in December 2017. 5. Walmart’s revenues reflect a 4.4% increase in net sales to $121.63 billion and a 4.3% increase in membership/other income to $1.06 billion. Earnings were reduced by special items totaling a net of approximately $1.25 billion, which includes unrealized losses of around $1.39 billion on its JD.com investment.
MANUFACTURERS Quarter ended
Dollar Sales
% Change
Net Income (Loss)
% Change
Net-to- Sales Ratio
Abbott1 3/31/18 7.39 bil +16.7 409 mil +6.1 5.5
Campbell2 4/29/18 2.13 bil +14.7 (393 mil) N/A N/A
Church & Dwight3 3/31/18 1.01 bil +14.7 157.8 mil +20 15.7
Clorox4 3/31/18 1.52 bil +2.7 181 mil +5.2 11.9
Coca-Cola5 3/30/18 7.63 bil -16.4 1.33 bil +12.1 17.4
Colgate-Palmolive6 3/31/18 4.0 bil +6.4 634 mil +11.2 15.8
Coty7 3/31/18 2.22 bil +9.4 (77 mil) N/A N/A
Energizer8 3/31/18 374.4 mil +4.3 7.8 mil -83.4 2.1
Hasbro9 4/1/18 716.3 mil -15.7 (112.5 mil) N/A N/A
Newell10 3/31/18 3.02 bil -7.6 53.3 mil -91.7 1.8
Revlon11 3/31/18 560.7 mil -5.7 (90.3 mil) +12.6 N/A
1. Abbott’s results are from continuing operations, with earnings reduced by special items totaling a net of $641 million in the most recent quarter and $457 million a year ago. Including a $9 million gain from discontinued operations, the company had net income of $418 million in the most recent quarter. This compared with net income of $419 million a year ago, which included $33 million from discontinued operations. 2. Campbell’s results reflect the acquisition of Snyder’s-Lance, with earnings reduced by special items totaling a net of $603 million in the most recent quarter and $4 million a year ago. 3. Church & Dwight’s earnings reflect a reduction in effective tax rate to 21.4% from 30.9% a year ago primarily due to U.S. tax reform in December 2017. 4. Clorox’s earnings reflect a reduction in effective tax rate to 25.2% from 30.4% a year ago primarily due to U.S. tax reform in December 2017. 5. Coca-Cola’s revenue reduction primarily reflects a 26% headwind from the ongoing refranchising of bottling territories. The company’s results are from continuing opera- tions, with earnings reduced by special items totaling a net of $696 million in the most recent quarter and $697 million a year ago. 6. Colgate’s earnings for the most recent quarter were reduced by special items totaling a net of $20 million in the most recent quarter and $31 million a year ago. 7. Coty’s results reflect the 2016 acquisition of the P&G beauty business. The net loss for the most recent quarter reflects a $173.2 million reduction by special items. The company had a $164.2 million net loss in the prior-year period, reflecting a $274.5 mil- lion reduction by special items. 8. Energizer’s results reflect the acquisition of Spectrum Brands’ battery and portable lighting products business, with earnings reduced $19.6 million by acquisition- and integration-related costs. Prior-year period earnings were increased by a net of $15.5 million from special items. 9. Hasbro’s earnings were reduced by special items totaling a net of $124.9 million, which includes a $47.79 million charge related to U.S. tax reform and $61.37 million in incremental costs related to the liquidation of Toys ‘R’ Us. 10. Newell’s results reflect the Jarden acquisition. Earnings in the most recent quarter were reduced by special items totaling a net of $110.4 million. Prior-year period earn- ings were increased by a net of $474.9 million from special items, which included a gain of $626.4 million related to the divestiture of the tools business. 11. Revlon’s results reflect the September 2016 acquisition of Elizabeth Arden. The net loss for the most recent quarter reflects a $15 million reduction by special items. The company had a $37.4 million net loss in the prior-year period, reflecting a $25.3 million reduction by special items.
SPARTANNASH REPORTS UPTICK IN SALES IN Q1: Spartan- Nash Co. reported a 1.3% increase in sales, to $2.39 billion, for the 16- week first quarter ended April 21. Operating earnings were $25.7 million, down from $29.6 million in the prior-year quarter.
5/29/18 5/7/18 %
Ahold Delhaize 22.66 22.64 + 0.09 Kroger 24.50 23.98 + 2.17 Loblaw* 66.07 65.07 + 1.54 Sobeys* 24.73 24.99 - 1.04 Supervalu 18.21 16.81 + 8.33
5/29/18 5/7/18 %
82.57 84.69 - 2.50 51.75 52.77 - 1.93 64.80 61.75 + 4.94
Jean Coutu Group* 24.50 24.48 + 0.08 141.22 144.28 - 2.12
Rite Aid 1.64 1.65 - 0.61 WBA 62.70 62.30 + 0.64
5/29/18 5/7/18 %
196.74 193.06 + 1.91 Dollar General 96.24 94 + 2.38 Dollar Tree 94.90 92.80 + 2.26 Fred's 1.55 1.67 - 7.19 Sears Holdings 3.44 2.99 + 15.05 Target 71.70 69.33 + 3.42 Walmart 82.40 85.47 - 3.59
* Figures are in Canadian dollars.
Walmart
Builds Sales
Momentum BENTONVILLE, Ark. — Wal
mart posted first quarter revenue
of $122.7 billion, an increase of
4.4% from a year earlier, in part
due to a jump in online grocery
sales. But net income of $2.1 bil
lion was down nearly 30%, as the
company continued to invest in e
commerce and lower prices.
Walmart’s digital sales in
creased 33% in the quarter ended
April 27. The company projects
online sales will increase 40% for
the full year.
“The ecommerce food busi
ness we’ve been building is im
portant not only because of the
volume it’s driving but, strategi
cally, it’s helping to grow the num
ber of omnichannel customers
we serve,” Doug McMillon, the
company’s president and chief
executive officer, said in a pre
pared statement. Omnichannel
customers spend almost twice
as much at Walmart, he said, and
they also spend more in stores
even after becoming omnichan
nel customers.
McMillon noted that the compa
ny is on track to increase online
grocery pickup by roughly 1,000
new locations this year. Also, 800
stores will be used for fulfilling
online grocery orders with home
delivery.
Marc Lore, CEO of Walmart
eCommerce U.S., said in an earn
ings call that the recent redesign
of the company’s website makes
grocery shopping options more
prominent. Lore said between
10% and 20% of new customers
are trying online grocery since
the site launched. Online gro
cery added 1% to Walmart’s U.S.
comparablestore sales increase
in the quarter. U.S. comps rose
2.1%, excluding fuel, in the first
quarter.
Lore also credited new brands
Target Traffic Surges MINNEAPOLIS — Target Corp.
said it had its strongest quarterly
performance in a decade as traf
fic to its stores and website in
creased 3.7% in the three months
ended May 5.
The retailer
cited a combi
nation of new
brands, updated stores, expand
ed delivery options and a healthy
economy for the strong fiscal first
quarter results.
Digital sales increased 28%.
Comparablestore sales in
creased 3%. Revenue rose to
$16.8 billion, topping projections
of $16.5 billion.
Brian Cornell, Target’s chair
man and chief executive officer,
said healthy sales growth in the
company’s home, essentials, and
food and beverage categories off
set the impact of delayed sales
in weathersensitive categories
such as apparel.
“The consumer is very healthy,
and they are spending more time
shopping at Target,” Cornell said.
“Traffic is such an important
measure. It shows that the guests
are voting with their wallet.”
However, investment in stores
and delivery operations hurt
first quarter profit, Cornell said.
Target is reinvesting more than
$7 billion through 2020 to update
stores and open smaller loca
tions in urban neighborhoods.
It’s also continuing to introduce
new store brands. And Target in
creased the minimum hourly pay
to $12 starting this spring, the sec
ond hike in a matter of months.
With last year’s acquisition of
delivery service Shipt, Target of
fers sameday delivery to more
than 700 stores. Target is also
expanding nextday delivery for
household essentials nationwide
and cutting the fee to $2.99 per or
der. Delivery is free for Target’s
loyalty card members.
Many of the retailer’s growing
array of fulfillment options to
meet the rapid growth in online
shopping leverage its existing
network of 1,800 stores. Target
now ships from more than 1,400 of
its stores instead of relying on its
more remote warehouses. Ship
ping from stores moves product
faster at a significantly lower
cost, according to the company.
The shipfromstore capabil
ity is one reason Target is able to
launch free twoday delivery on
hundreds of thousands of items
for its Redcard holders or on or
ders of at least $35 among non
Redcard holders.
Target is also expanding the
driveup service that the com
Shopper visits rose 3.7% at Target’s stores and website in the quarter
SPOTLIGHT
Gains in U.S. Help Lift Ahold Delhaize ZAANDAM, Netherlands —
Ahold Delhaize cited growth in
online sales and improved oper
ations in the United States in re
porting higher first quarter sales
and profit.
About 60% of company sales are
generated in the United States,
where it operates stores under
the Food Lion, Hannaford, Stop
& Shop, Giant/Martin’s and Gi
ant Foods banners and owns the
Peapod digital grocery business
Ahold Delhaize USA posted
sales of $10.8 billion in the quar
ter, an increase of 2.1% from a
year earlier.
Comparablestore sales in the
United States rose 3% from the
yearago quarter, when comps
declined 0.7%, the company said
earlier this month. Excluding
fuel sales, U.S. comps increased
2.8% in the first quarter, a period
in which the supermarket opera
tor benefitted from a calendar
shift for the New Year’s and Eas
ter holidays as well as favorable
weather.
Online sales increased 9%
across its U.S. banners. Online
sales growth was driven by its
Peapod digital grocery opera
tions — which constitutes 85%
of its U.S. online business — as
To page 6
To page 6 To page 6
MONEY
6 MMR/June 11, 2018
Dollar General’s Value, Convenience Proposition Resonates GOODLETTSVILLE, Tenn. —
Dollar General Corp. said rev-
enue jumped 30.5% to $6.1 billion
in its first quarter as net sales
increased 9%. Comparable-store
sales rose 2.1% in the 13 weeks to
May 4.
First quarter net income rose
9% to $365 million, or $1.36 per
share.
Dollar General reiterated its
forecast for full-year earnings
of between $5.95 and $6.15 per
share. The company expects net
sales to increase about 9% in
fiscal 2018, with same-store sales
growth estimated to be in the
mid-2% range.
The retailer is managing to de-
liver growth and expand gross
margins as management contin-
ues to execute a cost-contain-
ment strategy, said Todd Vasos,
Dollar General’s chief executive
officer.
“We are proud of our execu-
tion and solid performance, par-
ticularly given the significant
weather-related headwind we
faced during the first quarter.
We are pleased with the start of
the second quarter and, based
on our year-to-date performance
and outlook for the remainder of
2018, we are reiterating our full-
year guidance,” Vasos said in a
statement. “We offer a unique
value and convenience proposi-
tion that continues to resonate
with customers, and we are excit-
ed about the initiatives we have
in place.”
Shoppers’ average transaction
amount increased in the first
quarter, but the contribution
to same-store sales growth was
limited by a decline in custom-
er traffic due to unseasonably
cold and damp weather, Dollar
General said. Robust sales of
consumables drove much of the
comparable-store gains; sales
languished in the apparel, sea-
sonal and home categories.
The Tax Cuts and Jobs Act
passed by Congress last Decem-
ber lowered Dollar General’s
effective income tax rate in the
first quarter to 21.6% from 37.2%
in the first quarter of 2017, the
company said. Dollar General
anticipates a cash benefit of $300
million in fiscal 2018 as a result of
the corporate tax cut.
Share repurchases for fiscal
year 2018 are expected to be ap-
proximately $850 million, the
company said.
Dollar General repurchased
1.6 million shares in the first
quarter, part of a share repur-
chase program begun in 2011.
Since then, Dollar General has
repurchased 83 million shares
of its common stock at a cost of
$5.3 billion.
Dollar General said it opened
241 new stores, remodeled 322
stores and relocated 31 stores in
the first quarter. The company
earlier announced plans for 900
new stores and 1,000 remodels
this year.
The remodels allow stores to
carry more perishables, includ-
ing fresh produce. Upgrades to its
snack and beverage aisles aim to
capitalize on consumer demand
for more healthy options. Dollar
General operates in mostly rural
communities where it’s one of the
few, if not the only, food retailer
around. The company has been
experimenting with a smaller-
store format, dubbed DGX, cater-
ing to shoppers in more densely
populated locales.
Walmart Builds Sales
in e-commerce, including a part-
nership with Lord & Taylor, as a
factor in the surge in online sales.
“Overall, we’re pleased with
the underlying strength in the
Walmart U.S. business,” Brett
Biggs, the company’s chief finan-
cial officer, said in prepared re-
marks. “We’re finding new ways
to leverage our stores to provide
even more convenience through
the expansion of pickup towers
as well as online grocery pickup
and delivery. We’re saving cus-
tomers time and money, and
they’re responding favorably.”
Greg Foran, CEO of Walmart
U.S., told analysts that Walmart
continued to lower its prices in
the first quarter, and that these
investments, along with higher
transportation costs, contributed
to a 0.23% decline in the unit’s
gross margin. Sales of fresh food
and packaged goods contributed
to the increase in U.S. comps.
Sam’s Club had one of its best
quarters in recent years, with
comp sales up 3.8%. Club traffic
was up 5.8% in the quarter. Sev-
eral of the clubs discontinued
the sale of tobacco products,
producing a 1.4% drag on comps.
“I’m excited by the focus [Sam’s
Club CEO] John [Furner] is giv-
ing to the fresh food part of our
business and the momentum the
team is building,” McMillon said.
“Members are responding to im-
proved quality and freshness in
fresh food, lower prices and more
newness. The Sam’s team is also
doing a good job driving growth
in our private brand, Member’s
Mark. Private brand penetration
increased more than 2.2% year
over year.”
Walmart said eight of its 11 in-
ternational markets delivered
positive comps in the quarter.
The combined comp sales for
the international division rose
4.5% on a constant currency ba-
sis. Mexico led the way, with
same-store sales growth of 9.5%.
In China, comp sales rose 4%,
leading to the unit’s best perfor-
mance in more than five years.
Comparable-store sales in Cana-
da increased 2.9%. In the United
Kingdom, Asda’s comp sales grew
3.4%. Walmart is transitioning out
of its majority ownership of Asda
after recently selling a 62% stake
to rival Sainsbury.
‘Based on our year-to-date performance … we are reiterating our full-year guidance’
Gains in U.S. Help Lift Ahold Delhaize well as gains in same-day, third-
party deliveries and expansion
of the Hannaford To Go click-
and-collect program, available
at 41 of the Hannaford grocery
stores in Maine, New Hamp-
shire, New York, Vermont and
Massachusetts.
Hannaford also introduced its
My Hannaford Rewards program
in the first quarter, offering par-
ticipating customers a reward of
more than 5,000 own-brand prod-
ucts as well as personalized cou-
pons for national and regional
brand products, said Dick Boer,
Ahold Delhaize’s chief executive
officer.
Food Lion reported its 23rd-
consecutive quarter of volume
growth as the banner continues
to roll out its Easy, Fresh and Af-
fordable program, Boer told ana-
lysts on an earnings call. “We cur-
rently have more than 500 stores
rolled out, showing a good sales
performance in what we consider
to be a tough market with strong
discount competition. We’re
planning to roll out Easy, Fresh
and Affordable to another 160
stores in the course of this year.”
Giant/Martin’s benefitted from
growth in its in-store food-ser-
vice operations, which helped
the banner post a comparable-
store sales gain of 3.6% in the first
quarter.
The Peapod business sharp-
ened its focus on price cuts in the
first quarter, particularly in the
Chicago market, where digital
grocery competition is intensify-
ing, Ahold Delhaize officials said.
Ahold Delhaize USA is hoping
to leverage the Peapod business
through a recently created digi-
tal solutions company called Pea-
pod Digital Labs. The new enter-
prise aims to help the company’s
retail grocery brands upgrade
their omnichannel capabilities
to better meet the demands of
shoppers.
Plans call for the new entity to
become fully operational by the
end of the year. Peapod Digital
Labs will serve as the engine that
powers the retailer’s e-commerce
and digital strategies, according
to Kevin Holt, CEO of Ahold Del-
haize USA.
Target Traffic Surges pany began testing at 50 stores
last year. It expects to have
nearly 1,000 locations by the end
of this year, allowing shoppers
who prefer to stay in their cars to
place online orders in advance
and have a store employee load
the items into their trunks within
a few minutes of their arrival in
the parking lot.
The company also is bringing
Target Restock, its next-day de-
livery program for household es-
sentials and dry groceries, to 30
more cities this year.
“We have a rapidly growing
list of services that we’re scaling
across the chain, providing guests
with a combination of convenient
options, same-day, next-day, two-
day, pickup, in-store shopping and
returns. That makes us unique in
the marketplace,” John Mulligan,
Target’s chief operating officer,
said during the company’s first
quarter earnings call.
“Our stores are at the center
of all of them. So, we’re invest-
ing in tools and capabilities in
our stores to ensure they can
reliably fulfill in all these new
ways,” Mulligan said. “The front
of store still matters as well,
and we’re in the middle of an
unprecedented remodel plan to
ensure we continue to provide a
differentiated in-store experi-
ence, whether you’re focused on
a quick Target run or coming in,
grabbing a Starbucks and taking
a more leisurely stroll around
the sales floor.”
Target completed 56 remodels
in the first quarter, he said, and
the company expects to complete
another 100 upgrades in the cur-
rent quarter.
Target is seeing a sales lift in
the 2% to 4% range at remodeled
stores, driven by additional traf-
fic as the new environment in-
vites guests to visit more often,
Mulligan said.
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