Welcome to the JCPenney call to discuss monthly sales. I am Kristin Hays, Manager of Investor Relations.
First, please note that this call includes forward-looking statements within the meaning of the Private tiffany earrings Litigation Reform Act of 1995, which reflect the Company’s current view of future events and financial performance. The words expect, plan, anticipate, believe and similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties and the Company’s future results of operations could differ materially from historical results or current expectations. For more details on these risks, please refer to the Company’s Form 10-K and other SEC filings. Also, please note that no portion of this call may be republished, reproduced or rebroadcast in any form without the prior written consent of JCPenney.
Now, let’s discuss our sales results for the month of August. For the four weeks ended August 30, 2008, comparable store sales decreased 4.9%, which was in line with the Company’s guidance for a mid-single-digit decrease. In last year’s August period, comparable store sales decreased 2.4%. For the month, total Company sales decreased 3.2% and Internet sales through jcp.com increased 7.6%. For August, the Central and Northwest regions performed the best, while the Southeast region experienced the weakest results. Women’s apparel and family shoes were the best-performing merchandise divisions during the month, with home and fine jewelry recording the weakest results.
Regarding the back-to-school performance, while business overall has been challenging compared to last year, tiffany pendants are continuing to respond well to our new and enhanced back-to-school offerings, including new brands Decree, Fabulosity, Whitetag and Dorm Life. Our new Linden Street brand in home has also been well-received.
As to weekly sales trends, sales were softest during the first week of the August reporting period. Sales improved during the last three weeks, as customers chose to shop later in the back-to-school season. The trend of customers delaying their appointment shopping until closer to the actual calendar event is consistent with the pattern the Company has experienced with other events over the last year. Overall, mall traffic continued to experience mid-single-digit declines, with JCPenney’s mall locations seeing smaller declines than the rest of the mall. The Company’s off-mall stores continued to see stronger traffic trends than mall locations.
During the month, AUR increased slightly, transactions were about flat and total units and units per transaction decreased. With respect to inventory, the Company continues to expect that total inventory will be below last year’s levels at the end of the back-to-school shopping season.
With that, let me turn to management’s outlook for September sales. Management’s guidance for the month of September is for comparable store sales to decrease mid to high single digits, compared to a 3.7% decrease during last year’s September period. The Company expects some negative impact in sales results from disruptions due to hurricanes affecting the Southeast region. JCPenney will release its September sales results before the market opens on Wednesday, October 8, 2008, one day earlier than originally scheduled date of October 9, which coincides with the observance of Yom Kippur. The related sales recording will be available at the same time as the sales release on October 8. As a reminder, JCPenney’s Chairman and CEO Mike Ullman will be presenting at 10:25 a.m. Eastern Time today, September 3, at the Goldman Sachs Global Retail Conference in New York City. A webcast link to Mr. Ullman’s presentation at the conference is available on the JCPenney investor relations page at JCPenney.net.
Thank you for listening to the August 2008 JCPenney sales call.
[Thomson Financial reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes.
In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-tiffany bracelets statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSON FINANCIAL OR THE APPLICABLE COMPANY OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.]
[Copyright: Content copyright 2008 Thomson Financial. ALL RIGHTS RESERVED. Electronic format, layout and metadata, copyright 2008 ASC LLC (www.ascllc.net) ALL RIGHTS RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Thomson Financial's or ASC's copyright or other proprietary rights or interests in the material; provided, however, that members of the news media may redistribute limited portions (less than 250 words) of this material without a specific license from Thomson tiffany cufflinks and ASC so long as they provide conspicuous attribution to Thomson Financial and ASC as the originators and copyright holders of such material. This is not a legal transcript for purposes of litigation.]
The Kroger Co. (NYSE: KR) today reported total sales of $18.1 billion for the second quarter ended August 16, 2008, an increase of 11.9% over the same period last year. Identical supermarket sales increased 9.7% with fuel and 4.7% without fuel compared with the same quarter last year.
Net earnings in the second quarter totaled $276.5 million, or $0.42 per diluted share. Net tiffany earrings in the same period last year were $267.3 million, or $0.38 per diluted share.
“Kroger’s second quarter results were strong. Our Customer 1st strategy allows us to create value for our shareholders and deliver a value proposition that serves our customers,” said David B. Dillon, Kroger chairman and chief executive officer. “We continue to generate cash flow to sustain our strong capital program and reduce outstanding shares. At the same time, we are investing in improving our customers’ overall shopping experience. Our ability to balance these objectives is fundamental to our success, particularly in today’s challenging economic environment.”
FIFO Gross Margin
Including Kroger’s retail fuel operations, FIFO gross margin (Table 1) was 22.31% of sales, a decline of 163 basis points compared to the second quarter last year. Excluding retail fuel operations, FIFO gross margin declined 51 basis points.
LIFO
The Company recorded a $46.2 million LIFO charge during the quarter, an increase of $6.5 million over the prior year. Excluding retail fuel sales, the LIFO charge increased 3 basis points as a rate of sales compared to the prior year.
Operating, General & Administrative (OG&A) Costs
Including Kroger’s retail fuel operations, OG&A costs were 16.37% of sales, a decline of 114 basis points compared to the second quarter last year. Excluding retail fuel operations, OG&A decreased 28 basis points. The prior year OG&A rate included pre-opening and transition costs associated with the Scott’s and Farmer Jack acquisitions. The current year rate benefited from the absence of these costs. The current year rate also benefited from strong sales leverage and lower incentive compensation, which offset inflationary pressures in tiffany bracelets areas, including credit card fees, utilities, and store supplies.
Rent and Depreciation
Including Kroger’s retail fuel operations, rent and depreciation expense were 2.65% of sales, a decrease of 20 basis points compared to the second quarter last year. Excluding retail fuel operations, rent and depreciation expense declined 6 basis points as a rate of sales.
Capital Investment
Capital investment, excluding acquisitions, totaled $478.1 million for the second quarter, compared with $480.9 million in the prior year. Capital projects during the second quarter included 9 new, expanded, or relocated stores and 51 remodels. The Company is on track to open, expand or relocate 70 to 80 stores and complete between 175 and 200 store remodels during fiscal 2008.
Free Cash Flow
The Company manages its use of free cash flow to maintain a leverage ratio that supports its solid investment grade rating. On a rolling four-quarters basis, Kroger’s net total debt (Table 5) to EBITDA ratio was 1.90, compared with 1.81 during the same period last year. Total debt was $7.6 billion, an increase of $1 billion from a year ago. Total debt decreased $176.2 million from the first quarter of fiscal 2008.
During the quarter, Kroger repurchased 5.6 million shares of stock at an average price of $28.14 per share for a total investment of $157.7 million. At the end of the second quarter, approximately $540.9 million remained under the $1 billion stock repurchase program announced in January 2008.
Fiscal 2008 Year-to-Date Results
During the first two quarters of fiscal 2008, total sales increased 11.7% to $41.2 billion. For the same period, identical supermarket sales, excluding fuel, increased 5.3%.
The Company’s operating margin for the first two quarters of fiscal 2008 decreased 14 basis points. Excluding fuel and charges for labor unrest in the first quarter of 2007, Kroger’s operating margin for the first two quarters of fiscal 2008 decreased 8 basis points, of which 6 basis points is a result of the higher LIFO tiffany rings. For fiscal year 2008, the Company expects a flat to slightly improved operating margin.
Net earnings for the first two quarters of fiscal 2008 were $662.5 million, or $1.00 per diluted share. Net earnings for the same period last year were $603.8 million, or $0.85 per diluted share.
“Our year-to-date performance demonstrates Kroger’s ability to deliver sustainable results today while we continue to invest for the future,” said Mr. Dillon. “We know market conditions will continue to be a challenge and we believe our strategy works well in good times and bad. Kroger’s team and our overall strategy clearly stand out in the current environment.”
Fiscal Year 2008 Guidance-Before effect of Hurricane Ike
Based on Kroger’s year-to-date results and management’s outlook for the remainder of the fiscal year, the Company raised the low end of its range for annual identical sales guidance to 4.5%. Kroger now expects identical sales growth of 4.5% to 5.5%, excluding fuel, for fiscal 2008.
The Company confirmed its fiscal 2008 earnings guidance of $1.85 to $1.90 per diluted share. This range reflects 9% to 12% growth over fiscal 2007 earnings of $1.69 per diluted share. Kroger expects that its full-year earnings per share growth will be driven by a combination of strong identical sales, a flat to slightly improved operating margin, excluding fuel, and fewer shares outstanding. Kroger’s dividend yield of more than 1% further enhances shareholder return.
For the second half of fiscal 2008, Kroger expects solid results from its core grocery operations. As stated in previous guidance, the Company anticipates that its lowest year-over-year earnings per share growth rate will occur in the third quarter. Third quarter results in fiscal 2007 included a $40 million tax benefit that was somewhat offset by low fuel margins and incremental investments in Kroger’s Customer 1st strategy, resulting in a net benefit of approximately $0.02 to $0.03 per diluted share. As a result, the Company anticipates its third quarter 2008 earnings per share results will range from slightly below to slightly above prior year results. After adjusting for the prior year net benefit, this would represent an increase in this year’s expected third quarter earnings per share.
As stated in previous guidance, Kroger expects its fourth quarter earnings per share growth rate will be higher than its annual growth rate.
The Company’s expectations for the second half of 2008 exclude any impact from Hurricane Ike. The hurricane and its remnants affected Kroger operations in Texas and several inland states particularly Indiana, Kentucky and Ohio. The financial impact of the hurricane will not be significant enough to cause Kroger to alter its strategy. The final result of the damage and disruption from the storm could affect much of the guidance contained in this release. A more detailed description of the potential impact on Kroger’s guidance is included in the 8-K the Company filed today.
“Associates in every area of our business are focused on executing our Customer 1st strategy to meet the changing needs of today’s shoppers. As a Company, we are committed to delivering the results we have forecasted for the year,” Mr. Dillon said.
Kroger, one of the nation’s largest retail grocery chains, is honored to celebrate its 125th tiffanys in 2008. The Company’s more than 320,000 associates serve customers in 2,476 supermarkets and multi-department stores in 31 states under two dozen local banners including Kroger, Ralphs, Fred Meyer, Food 4 Less, Fry’s, King Soopers, Smith’s, Dillons, QFC and City Market. Kroger associates also serve customers in 779 convenience stores, 393 fine jewelry stores and 737 supermarket fuel centers the Company operates. The Company also operates 41 food processing plants in the U.S. Headquartered in Cincinnati, Ohio, Kroger focuses its charitable efforts on supporting hunger relief, health and wellness initiatives, and local schools and grassroots organizations in the communities it serves. For more information about the Company, please visit our web site at www.kroger.com .
This press release contains certain forward-looking statements about the future performance of the Company. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. Such statements are indicated by words such as “anticipates,” “on track” and “expects.” Increased competition, weather, including Hurricane Ike, and economic conditions, interest rates, goodwill impairment, the success of programs designed to increase our identical supermarket sales without fuel, and labor disputes, particularly as the Company seeks to manage increases in health care and pension costs, could materially affect our expected identical supermarket sales growth, earnings per share, and earnings per share growth. These same factors could affect the extent to which we are successful in generating free cash flow to maintain a leverage ratio that supports a solid investment grade rating. Earnings per share and earnings per share growth also will be affected by the number of shares outstanding, our success in reducing the number of shares outstanding, and volatility in the Company’s fuel margins. The number of store projects that we complete could vary from our expectations if we are unsuccessful in acquiring suitable sites for new stores or store projects are not completed in the time frame expected due to weather, including Hurricane Ike and its remnants. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially. We assume no obligation to update the information contained herein. Please refer to Kroger’s reports and filings with the Securities and Exchange Commission for a further discussion of these risks and uncertainties.
Note: Kroger’s quarterly conference call with investors will be broadcast live via the Internet at 10 a.m. (ET) on September 16, 2008 at www.kroger.com and www.streetevents.com. An on-demand replay of the webcast will be available from approximately 1 p.m. (ET) today through September 26, 2008.
LVMH Moet Hennessy Louis Vuitton said “remarkable” sales at its workhorse Louis Vuitton discount tiffany helped lift revenues in the third quarter despite the turmoil engulfing financial markets.
Nonetheless, the reported 6 percent organic revenue growth in the three months through September was well below the 15 percent organic growth LVMH reported in the same quarter last year.
The positive results underscore the resilience of the European luxury sector, even as share prices continue to tumble and analysts warn of a looming economic pinch over the holiday selling period.
The French luxury group, owner of brands from Fendi to Dom Perignon, did not provide a breakdown of sales for the third quarter alone. It said sales in the nine-month period gained 4.5 percent to 11.96 billion euros, or $17.94 billion.
Based on calculations, sales in the three months improved 3 percent to 4.16 billion euros, or $6.24 billion, from 4.03 billion euros, or $6.05 billion, last year, broadly in line with analysts’ expectations. Dollar figures are converted at average exchange rates.
LVMH called the performance “even more noteworthy in view of the high comparative figures seen in the third quarter.” The firm confirmed its goal for “a tangible increase in results in 2008.”
The luxury group, which will host a conference call to discuss the results today, said Vuitton scored double-digit organic growth in the period thanks to strong sales of its Damier Graphite and Monogram line, which LVMH said is “still enjoying exceptional momentum.”
The firm said accessories continued to “see strong progress” and that brands Fendi, Donna Karan, Tiffany Bracelets Jacobs and Givenchy sold well in the period.
For the nine months through September, sales of fashion and leather goods improved 5 percent to 4.24 billion euros, or $6.36 billion. Sales of perfumes and cosmetics in the period grew 6 percent to 2.08 billion euros, or $3.12 billion, spurred by Dior Homme Sport men’s fragrance and the continued success of Dior’s Escale a Portofino scent. BeneFit and Guerlain performed equally well, LVMH said.
Watches and jewelry sales advanced 11 percent to 656 million euros, or $984 million, thanks to the move upmarket by the Tag Heuer brand. LVMH said Hublot grew strongly in all regions and that the Zenith brand recorded “particularly strong growth in the Middle East.”
“De Beers saw a high level of growth in revenue, including in the U.S.,” the company added.
Sales of wines and spirits declined 2 percent to 2.04 billion euros, or $3.06 billion. LVMH highlighted strong growth in emerging markets, particularly China and Russia, but “a more contrasting situation” in the rest of the world.
In the selective retailing branch, sales in the nine months grew 5 percent to 3.01 billion euros, or $4.5 billion, thanks to growth in China, Macau and Abu Dhabi.
LVMH released the figures after the close of the market. The French firm’s shares closed down 1.8 percent to 51.03 euros, or $69.40. LVMH’s stock was trading above 70 euros, or $95, in early September.
Other French luxury and retail firms also continued to slide Thursday. PPR shares closed down 4.5 percent to 47.96 euros, or $65.22, while Carrefour SA shares fell 3 percent to 28.11 euros, or $38.23. Shares in Hermes International fell 3.5 percent to 98.55 euros, or $134.02.
Meanwhile, Italy followed the U.K. and Spain Thursday in offering funds to prop up its banks, where necessary. But despite government vows to prevent any lender from failing, the S&P/MIB Index continued to fall, losing 1.8 percent. The bailout pledge offered little respite for Italian luxury stocks — with only IT Holding and Safilo making up significant ground — as the overall pessimism in the Italian economy continued.
Debt-laded IT Holding SpA recovered 6.4 percent to 0.24 euros, or 33 cents at current exchange, after losing 14 percent on Wednesday. Eyewear manufacturer Safilo Group SpA gained 6.3 percent to 0.65 euros, or 88 cents. Despite the government assurances, Bulgari SpA declined for the seventh day, falling 6 percent to 4.78 euros, or $6.52.
Swiss bank Vontobel said in a report: “European luxury goods companies underwent a partial correction from their negative performance since the beginning of the year thanks to solid first-half results. However, share prices have tumbled since the beginning of September due to the growing uncertainty regarding consumer confidence. We assume that nine-month sales figures will remain solid but that the economic pinch will be felt this Christmas season.”
The bank also assumed the financial crisis and the related weakening in consumer sentiment will continue to Tiffany Rings the fashion and luxury goods sector next year.
“Our assumptions are now based on zero growth in the U.S., Europe and Japan. For Asia, excluding Japan, we expect growth of about 10 percent,” Vontobel analysts Rene Weber and Claudia Lenz wrote.
Credit: Andrew Roberts; By Robert Murphy With contributions from Andrew Roberts, Milan
Retailers across Clark County are still digging out from December’s storm, which dealt a blow to sales and has left business owners looking for ways to recover.
Statewide, December sales dropped an estimated 8 percent to 12 percent, according to retailers and economists.
“Our expectation was that people were going to shop late for the holidays,” said Mike Merrill, owner of Pro Golf of Vancouver. “Then we got hit with a 40-year snowstorm on the 20th. It absolutely wiped out our holiday season.” Year-over-year sales for the second half of December fell 30 percent at his store, he said.
The storm also apparently kept people away from Clark County’s largest retail hub, earrings Vancouver mall.
At Lexies, a mall shoe store in its second year, December sales were flat after three months of sales growth, said owner Jerry Chen.
“After Christmas has been a little better than anticipated,” said Chen, who said that as a newer business he has room to grow as he builds customer loyalty.
Other than during the worst weather, foot traffic at the mall has been steady until this week, said Stacy Moore, owner of Gromshop, which sells snowboarding and skateboarding apparel and accessories for children.
But shoppers did not always translate into sales.
“We’re new in the mall, so we can’t compare to last year, but sales were quite a bit less than I expected,” she said. “We have a store in Gresham (Ore.) too, and sales there were down about 30 percent.”
Gromshop moved into the mall the Saturday after Thanksgiving, and Moore said necklaces-than-forecast sales may be partly because she was still very new to the mall during the peak shopping season.
Anchor stores are key to a mall’s health, but Sears and Nordstrom managers declined to answer questions about local results, and J.C. Penney employees did not return a phone call. Repeated calls to mall management were not returned.
Nationally, Penney’s is expected to report a 10.3 percent same-store sales decline, and Nordstrom is likely to report a 13 percent sales decrease, according to insider forecasts reported by the L.A. Times on Wednesday.
Some optimism remains
Despite those department store forecasts, employees at the Columbia Tech Center J.C. Penney are remaining optimistic.
“All businesses were quieter because of snow, but we were open every single day with normal hours,” said Sarah Galloway-McClure, manager of the department store, which opened in 2008. “Shoppers didn’t come in crowds, but they were definitely there,” Galloway-McClure said. “and we saw a dramatic increase in traffic and sales once the weather lifted.”
The Target Vancouver Plaza hired about 10 percent fewer seasonal workers as it prepared for the holiday shopping rush, said executive team leader Brian Terjak. He declined to comment on December store sales.
“We’ve had a lot of transactions, and so far 2009 is looking good,” Terjak said. Target, like tiffanys, has been using discounts to lure post-holiday shoppers. Sears, Gromshop and Pro Golf of Vancouver are all cutting prices.
Sparks Home Furnishings in Vancouver has lowed prices on sofas and started offering lower-cost furniture in response to a year-long sales slump, said Tom Craig, president.
These strategies don’t always benefit stores, said Arun Raha, executive director of the state Economic and Revenue Forecast Council. “Sometimes you lower prices and sell more, but you actually end up with lower revenues because of the discounts,” Raha said.
Because tax collections lag sales, retail sales results for Washington only go through October. State sales tax collections dropped 12 percent that month, and through October year-over-year sales had fallen for 10 out of the previous 11 months.
“We were expecting a weak holiday sales season,” Raha said. “I am now apprehensive that it might turn out to be even worse because of the bad weather.”
“Economists are saying that they have never seen a situation like this,” said Jan Teague, president of the Washington Retail Association. “Consumers actually have money to spend, but they are afraid,” she said. “We don’t know how long consumer confidence will be this low.”
That uncertainty is making it difficult for business owners to plan ahead.
“Retail has to order inventories far in advance, which puts financial obligations on the books bangles they don’t know if consumers will buy the product,” Teague said.
“Managing their orders is going to be very strategic as they weather this low consumer interest.”
“We’re trying not to buy as much inventory and holding back on our orders for spring, because it’s hard to pre-plan,” confirmed Moore at Gromshop. “Normally we would go off numbers from last year, but we can’t do that now. It is confusing.”
Holding steady is good
In this tough retail environment, businesses that saw steady sales or only a slight decline over the Christmas shopping season are celebrating.
“If you compare this year to the previous year, numbers-wise, we were down,” said rings Hoff, an accredited jewelry professional at Runyan’s Jewelers in Camas. “But for as bad as we keep hearing it is, we had a very decent year.”
Snow may actually have benefited Runyan’s, which stayed open through the storms.
“Our worst weather days were our best sales days of the year,” Hoff said. “I wonder if weather kept people shopping locally, rather than going out for gifts.”
BJ’s Wholesale Club, Inc. (NYSE:BJ) today reported that sales for August 2009 decreased by 1.9% to $757.6 million from $772.6 million in August 2008. On a comparable club basis, sales for August 2009 decreased by 6.0%, including a negative impact of 8.2% from lower gasoline prices and discount tiffany versus last year. Excluding gasoline, merchandise comparable club sales increased by 2.2%. A calendar shift in the timing of Labor Day weekend had a negative impact on comparable club sales of approximately 2%, and the elimination of an annual tax-free weekend in Massachusetts had a negative impact of approximately 0.8%.
The Company provided the following additional information regarding comparable club sales for August 2009:
– Including the negative impact of lower gasoline prices and volumes versus last year, comparable club sales decreased in all four weeks. Excluding gasoline, merchandise comparable club sales increased in weeks one, two and three and decreased in week four. The decrease in week four reflected a calendar shift in pre- Labor Day sales from August last year to September this year.
– By major region, sales increased in Metro New York and decreased in all other Return to Tiffany heart tag Charm and bracelet. Excluding gasoline, sales increased in all major regions, with the highest increase in Metro New York.
– Excluding sales of gasoline, traffic increased by approximately 4% versus last year and the average transaction amount decreased by approximately 2%.
– Sales of food increased by approximately 4% and reflected significant price deflation in a number of perishable departments, including dairy, eggs, fresh meat, milk and produce. Sales of general merchandise were approximately flat to last year.
– Departments with the strongest sales increases compared to last year included air conditioners, breakfast needs, candy, cigarettes, computer equipment, frozen, health and beauty aids, household chemicals, housewares, paper products, pet food, prepared foods, produce and small appliances.
– Departments with weaker sales compared to last year included apparel, electronics, jewelry, meat, Return to Tiffany Heart tag ring, pre-recorded video, sporting goods, storage, televisions and tires.
The Company currently operates 184 BJ’s Wholesale clubs and 103 gasoline stations in 15 states. BJ’s introduced the wholesale club concept to New England in 1984 and has since expanded to become a leading warehouse chain in the eastern United States. BJ’s press releases and filings with the SEC are available on the Internet at www.bjs.com.
The comments on reported results in this summary relate to Target Corporation sales for the five-week period ended October 3, 2009, compared to the five-week period ended October 4, 2008. These sales results are included in the table of our sales release issued on October 8, 2009.
For the fiscal September period, reported comparable store sales decreased 1.7%. This decline was discount tiffany by a decrease in average transaction size, partially offset by an increase in comparable store transactions. Comparable store sales in September 2008 decreased 3.0%.
The current month’s sales release quotes Gregg Steinhafel, Chairman, President and Chief Executive Officer of Target Corporation, as saying, “Sales for the month of September exceeded our expectations as the trend in our comparable transactions continued to improve. As a result of stronger than expected retail segment EBIT margin, combined with this improved sales trend, we expect our third-quarter EPS performance to exceed the current median First Call estimate of $0.43.”
“In addition, we continue to experience credit card segment results in line with our expectations. While our outlook for the third quarter has improved, we remain cautious in our expectations for fourth-quarter results in both of our business segments.” Earnings per share figures refer to diluted earnings-per-share.
Within our merchandise assortment, sales performance in commodity categories continued to be strong led by healthcare, household, personal, baby and beauty which experienced comparable store sales increases from the low single digits to the low double digits. Comparable store sales in food were essentially flat as retail price declines offset continued strength in unit sales.
September comparable store sales results in hardlines categories were slightly below company performance with stronger than average performance in electronics and weaker than average performance in entertainment. Comparable store sales performance in apparel was slightly better than the Company overall led by intimate, hosiery, performance, jewelry, accessories and shoes, each of which experienced comparable store sales increases and weaker than average in newborn, infant, toddler and women’s apparel. Comparable store sales in home were down in the high single digit range with stronger performance in decorative home and weaker performance in domestics.
September comparable store sales performance was better than average in Northern California and a tiffany jewelry sale set of Northeast and mid-Atlantic states. Comparable store sales performance was weaker than the rest of the chain in Texas, Southern California and Florida. At month end, our inventory was in very good condition. For the month of October, our comparable store sales results will compare the four weeks ended October 31, 2009, to the four weeks ended November 1, 2008. We expect comparable store sales in this period to decline in the low single digit range.
Target’s current sales disclosure practice includes a sales recording on the day of our monthly sales release. Our next sales recording is expected to be issued on Thursday, November 5, 2009, and may be accessed by calling 612-761-6500.
The statements on expected sales and EPS performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date they are made and are subject to risks and uncertainties which could cause the Company’s actual results to differ materially. The most important risks and uncertainties are described in item 1A of the Company’s Form 10-K for the fiscal year ended January 31, 2009.
[Thomson Financial reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes.
In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSON FINANCIAL OR THE APPLICABLE COMPANY OR THE APPLICABLE COMPANY ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.]
[Copyright: Content copyright 2009 Thomson Financial. ALL RIGHTS RESERVED. Electronic format, layout and metadata, copyright 2009 ASC LLC (www.ascllc.net) ALL RIGHTS RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon Thomson Financial's or ASC's copyright or other proprietary rights or interests in the material; provided, however, that members of the news media may redistribute limited portions (less than 250 words) of this material without a specific license from Thomson Return to Tiffany heart tag Charm and bracelet and ASC so long as they provide conspicuous attribution to Thomson Financial and ASC as the originators and copyright holders of such material. This is not a legal transcript for purposes of litigation.]
The 2nd Annual Merriment in Georgetown (http://merrimentingeorgetown.com/), Washington D.C.’s most frank gehry holiday shopping and family event, will usher in the season for residents and visitors alike with special sales and events, seasonal festivities, live entertainment, children’s activities, and culinary treats. Set within the heart of historic Georgetown at the fabled intersection of Wisconsin Avenue and M Street, this annual holiday celebration will showcase the neighborhood’s fashionable boutiques, specialty stores and popular restaurants.
Evoking the true spirit of the season, the Georgetown community will come alive with Santa’s arrival on a horse-drawn carriage, traditional and modern holiday performances by community choral groups and a special appearance by popular kids’ rock band, Milkshake. Throughout the afternoon, guests will enjoy traditional holiday beverages, complimentary carriage rides, photos with Santa, among other yuletide activities.
Merriment in Georgetown will welcome children’s author, Valerie Tripp, who will be reading and signing books from her popular series for American Girl. Young girls and tweens are invited to meet the author and to bring their favorite doll to a special girls’ activity area, which will include jewelry making and cupcake decorating with Georgetown Cupcake. Attendees will also have a chance to enter a raffle to win one of five American Girl dolls with all proceeds benefiting the Prevention of Blindness Society.
Merriment in Georgetown culminates with a candlelight community caroling followed by the 4th Annual Tree tiffany bracelets at Washington Harbour and the Annual Boat Parade of Lights. This event is being underwritten by the Georgetown Business Improvement District (BID) in partnership with the Citizens Association of Georgetown and Georgetown Business Association.__
Washington, D.C. residents, those living nearby in Maryland and Virginia, and business and leisure travelers from far and wide are invited to visit Georgetown. This hip and historic neighborhood features world-class hotels and restaurants, gourmet shops, fashionable boutiques, high-end home furnishings stores, spas and salons, and popular nightspots.
For more information about Merriment in Georgetown, visit http://merrimentingeorgetown.com/
This event is sponsored by the Georgetown BID, a non-profit organization dedicated to protecting and tiffany on sale the accessibility, attractiveness and overall appeal of Georgetown.
Shoppers gave their credit cards a workout Friday, using them to scrape frost from their windshields before hitting the stores for Black Friday sales.
Retailers across the Coast reported bigger crowds than last year and shoppers eager to buy. Many shoppers were using the reduction in big-ticket items like televisions and computers to buy for themselves rather than to give for Christmas.
“This is for me,” said Brian Lewinsky, who was already carrying his new big-screen TV to the car before half the people waiting in line at Target made it inside. He arrived at 3:20 a.m. and said there were 200 chilly bargain seekers in front of him. D’Iberville police said it took 17 minutes to get everyone in line into the store at The Promenade when it opened at 5 a.m.
Target advertised $160 off a 32-inch TV and $150 savings on a Global Positioning System. Manager Dean Warren said televisions and cameras were the biggest sellers Friday.
Laptop computers also brought out the crowds for Black Friday shopping. D’Iberville Police Capt. Bruce Dubisson said shoppers camped out at Best Buy at The Promenade before noon Thursday. Steve and Tina Stanley of St. Martin stood in line for 12 hours to save nearly $400 on a laptop computer at Best Buy.
“This is the first and most likely the last time we do so,” said Steve Stanley. Like many people this year, they are Christmas shopping on a budget and said the savings would stretch that budget. Employees brought out coffee and donuts during the night along with tickets for the Best Buy doorbusters. When the doors opened, there was a limit of 50 people allowed in the store at a time.
“Today’s one of our busiest days of the year,” said Laura Fleming, sales leader at Pier 1 Imports at Crossroads shopping center in Gulfport.
Black Friday brings more shoppers than browsers, she said, and she expects a Disney vacation contest at Pier 1 stores nationwide to attract customers.
Opening times were staggered at stores across the Coast, with Prime Outlets in Gulfport welcoming shoppers at midnight for the Pajama Jam. More than 300 people waited in line to get in the Coach outlet for an extra 10 percent savings.
“It’s really a good time to buy,” said Prime Outlets marketing manager Rhonda Roberts, and sales continue through the weekend. Stores did more this year to attract customers, she said, with the Tommy Hilfiger store increasing the storewide discount from 40 percent to 50 percent just before midnight.
At Stein Mart in Biloxi, manager Ralph Speede said the store drew customers from neighboring Wal-Mart, which opened an hour before Stein Mart at 5 a.m. Traffic is better this year, he said, even without the giveaway of gift cards offered to the early shoppers in 2008. This year Stein Mart advertised 50 special sale items and he said people were buying more gifts than clothes.
“They’re looking for value. They want to see a sales sign on top of it,” he said.
Most of the department stores at Edgewater Mall in Biloxi and Singing River Mall in Gautier opened at 4 a.m.
“We’re very happy with early sales,” said Melody Jones, manager of the Biloxi Belk. “Boots and shoes and jewelry were the big items for us.”
Marsha Langlinais of Ocean Springs decided to shop at Edgewater Mall, where all the stores she wanted to visit were at one location. Langlinais said she had to choose between tools or boots to get the best deals.
She chose to start her shopping in the crowded tool department at Sears and saved $150 there and more than $250 at Belk.
She intends to spend slightly more this Christmas and said she’ll be back to shop the sales every week.
“I’ll also be out here the day after Christmas getting the even bigger buys,” she said.
Those after-Christmas sales and gift cards may not be as attractive this year as in the past, with national retailers saying inventory is limited.
One of the hardest things for the stores to keep in stock this year will be Zhu Zhu interactive pet hamsters, the must-have toy of the season. The electronic critters sell for around $10 and the demand is pushing prices much higher on the Internet.
It’s not just the toys that squeak and chirp, but the parents who can’t find them for their kids. Zhu Zhu and the other top selling toys nationwide are also the favorites at Target in D’Iberville and Warren said the company has been good about keeping the most popular gifts stocked.
“We get trucks every day,” Warren said.
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JEFF ELLIOTT, ASSISTANT VP – FINANCIAL PLANNING & IR , COSTCO WHOLESALE CORPORATION: Good morning, and thank you for calling Costco Wholesale Corporation. I’m Jeff Elliott, AVP of Finance and Investor Relations. And this morning, I will review with you our sales results for the five-week retail tiffany on sale of December, which for us started on Monday, November 30 and ended on Sunday, January 3. For comparable sales results, this five-week period is compared to the same five-week period last year, specifically, Monday, December 1, 2008 through Sunday, January 4, 2009.
Before I begin, let me start by stating that the following discussions will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For these purposes, forward-looking statements are statements that address activities, events, conditions, or developments that the Company expects or anticipates may occur in the future. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks and uncertainties include but are not limited to domestic and international economic conditions, including exchange rates, the effects of competition and regulation, uncertainties in the financial markets, consumer and small-business spending patterns and debt levels, conditions affecting the acquisition, development, ownership or use of real estate, actions of vendors, rising costs associated with employees, including health-care costs, geopolitical conditions and other risks identified from time to time in the Company’s public statements and reports filed with the SEC.
The Company does not undertake any obligation to update any discussions due to subsequent events or tiffany sale.
Now with regard to sales, as reported today in our press release, December net sales came in at $8.26 billion for the five weeks ended January 3, 2010, up 11% compared to the $7.41 billion reported for the same five-week period of the prior fiscal year. The five-week period for both years included 33 days of sales, reflecting the closure of two business days for the Christmas and New Year holidays.
For the 18 weeks of the reporting period ended January 3, 2010, sales were $26.83 billion, up 8% from the $24.93 billion reported during the similar period last year.
Comparable sales results for the five-week retail reporting month of December and the 18-week reporting period ended January 3, were as follows — US, five weeks, plus 5%; US 18 weeks, plus 2%. International, five weeks plus 25%; international, 18 weeks plus 17%. Total Company, five weeks plus 9%. Total Company, 18 weeks plus 5%.
Inflation and gasoline prices relative to the prior year and the strengthening of foreign currencies relative to the US dollar had a positive impact on December’s comparable sales.
Comparable sales results for the five-week period and 18-week year-to-date periods, including the positive impact from gasoline price inflation and foreign exchange were as follows — US, five weeks, plus 2%. US, 18 weeks plus 2%. International, five weeks plus 10%; international, 18 weeks plus 8%. Total Company, five weeks plus 4%. Total Company, 18 weeks plus 3%.
In terms of regional and merchandising categories, the general highlights are as follows. On a regional and country basis, the US regions with the strongest results were the Midwest, Southeast, Northeast, and Texas. On an international basis, in local currencies, we saw the strongest results in Korea, Canada, and Taiwan.
Moving on to merchandising categories, within food and sundries, the specific categories of strength were in candy, cooler, and deli. Overall food and sundries unit sales continued to be strong, but experienced softer sales increases in dollars as we continue to be impacted by lower commodity prices and overall food deflation year over year.
Comparable sales for December continued to show improving results in the majority of non-food departments, consistent with results reported in the recent months. The strongest comp sales results within hard lines were toys and seasonal, sporting goods, and hardware. Majors, our largest category within hardlines, experienced a mid-single positive comp for December despite continued price deflation within the TV category.
As unit sales continued to be strong, up over 15% compared to last year, the negative in comp sales mid-single digit negative due to the lower average selling price of TVs versus last year. In addition, in the majors category, in department, we saw positive comp sales in computers and audio.
Better-performing departments within soft lines include small appliances, domestics, home furnishings and apparel. Jewelry showed positive mid-single-digit comps for the month.
Our fresh foods business has also posted mid-single digit positive comp for the month with deli, produce, and bakery showing the best results.
Within the ancillary businesses, gasoline, hearing aids, optical, and photo showed the best sales results. Comparable sales for gasoline business were very strong, largely due to the year-over-year price inflation of gasoline. The average sale price per gallon was up 60% compared to last year, $2.56 this year compared to $1.60 last year. Hence, gasoline inflation positively impacted total Company reported comp sales by approximately [265] basis points and positively impacted US reported comp sales by approximately 325 basis points.
Strengthening foreign currencies relative to the US dollar resulted in an overall benefit in our reported December comp sales of approximately plus 3%. Essentially, all international currencies strengthened relative to last year. Total international comps for the five-week period came in at plus 10% in local currencies, but resulted in a reported comp of plus 25% when converted to US dollars.
The average transaction in December was up plus 4%. That includes a lift from foreign exchange and gasoline. And traffic counts for December came in higher year over year by a little over 5%.
Cannibalization within existing markets negatively impacted their overall comp number by approximately minus 60 basis points.
Weather conditions in the Midwest and Northeast were difficult during the month, resulting in several partial sales days due to early closings. The estimated negative impact to comparable sales results from poor weather conditions is approximately minus 50 basis points.
To recap, our reported December comp sales results of plus 9% were positively impacted by a strengthening in foreign currencies by approximately 300 basis points and by gasoline inflation by approximately [265] basis points in total and approximately 325 basis points specific to the US.
Negatively impacting December comp sales were cannibalization, minus 60 basis points and poor weather conditions, approximately minus 50 basis points.
January sales, a four-week reporting month, will include 20 selling days, the same number of days of the prior year. The January reporting period will end Sunday, January 31 this year, which compares to Sunday, February 1 last year.
Costco currently operates 566 warehouses worldwide, including 413 in the US and Puerto Rico, 77 in Canada, 21 in the UK, seven in Korea, 9 in Japan, 6 in Taiwan, 32 in Mexico, and 1 in Australia.
(technical difficulty). If you have any questions regarding our December sales results or any other Investor Relations question, please do not hesitate to call Richard Galanti at 425-313-8203; Bob Nelson at 425-313-8255; or you can call me, Jeff Elliott, at 425-313-8264.
This recording will be available until 5 PM Pacific Time Friday, January 8. Thanks for calling Costco Wholesale Corporation, and make it a great day.
[Thomson Financial reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes.
In the conference calls upon which Event Transcripts are based, companies may make projections or other tiffany jewelry on sale-looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more specifically identified in the companies’ most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized.
“Barbara is an accomplished sales operations professional with a proven record of sales successes. Her strong sales experience and commitment to customer satisfaction will help us better serve our marketing partners. We are very pleased that she has rejoined our team,” said Paul Miller, CEO, EE Times Group. “We are bangles to providing innovative offerings to help grow the electronics industry. Creating this new position and bringing Barbara onboard demonstrates our continued dedication to our customers and the marketplace.”
Couchois will be based in EE Times Group’s headquarters in San Francisco, CA and will report to Miller.
Previously, Couchois was Sales Executive at ON24 where she drove new business development in Fortune 1000 accounts. Prior, Couchois was Sales Director at PointRoll, National Sales Director for EDN Worldwide and EDN.com; Senior Internet Sales Director at Reed Electronics Group; and Strategic Account Manager at Reed Electronics Group. Earlier, Couchois was Strategic Account Manager at TechWeb and Regional Sales Director with EE Times Group.
About EE Times Group (http://www.eetimesgroup.com/)
EE Times Group, a division of United Business Media [LON:UBM], is the global leader in media and rings services for the electronics industry. We deliver results for the key influencers and decision makers involved in the design, development and commercialization of technology through our market leading brands. More than 1.1 million engineering professionals engage with the EE Times Network – EE Times, TechOnline, DesignLines, and Embedded.com – across the globe. The technology community comes to our market leading events to share, learn, discuss, and advance the critical issues and challenges facing the electronics industry. As well, EE Times Group provides end-to-end services ranging from next-generation marketing, integrated media and research.
About United Business Media Limited
UBM (UBM.L) focuses on two principal activities: worldwide information distribution, targeting and monitoring; and, the development and monetisation of B2B communities and markets. UBM’s businesses inform markets and serve professional commercial communities — from doctors to game developers, from journalists to jewelry traders, from farmers to pharmacists — with integrated events, online, print and business information products. Our 6,500 staff in more than 30 countries are organised into specialist teams that serve these communities, bracelets buyers and sellers together, helping them to do business and their markets to work effectively and efficiently. For more information, go to http://www.ubm.com.