The U.S. economy's growth numbers for the quarter provide a good context for the earnings performance of many retailers in Q1. With respect to the economy, more recent economic data is pointing towards improved growth momentum from Q2 onwards, even though the pathway to the more aggressively optimistic GDP growth estimates is unclear at this stage, according to NASDAQ reports.
One segment that continues growth is e-commerce. Estimates of Q1 2014 U.S. digital commerce sales saw desktop e-commerce spending rise 12% year-over-year to $56.1 billion and m-commerce spending on smartphones and tablets up 23% from a year ago, adding $7.3 billion for the quarter – a digital commerce spending total of $63.4 billion in the first quarter, according to comScore reports.
RIS News has gathered data on the net sales revenues for more than 50 retailers in a range of verticals and compared them with the figures for the same quarter in 2013, measuring the percentage change between them. Using this calculation, RIS has determined the top five and bottom five retailers in terms of percentage revenue change for Q1 2014:
Top 5 Retailers of Q1 (based on net sales for Q1 2014 compared to Q1 2013):
|Advance Auto Parts||+47.3%|
|Tiffany & Co.||+13%|
While Amazon continues to anchor itself among the Top 5 Retailers each quarter, this quarter's 23% gains weren't enough to steal the top spot. In Q1 2014, Office Depot/Max reappears as the top contender with a 60% increase in net sales – an increase that is expected to continue into 2014.
"We are pleased with our first quarter performance. With our new organizational structure established and leadership team largely in place, the execution on our critical priorities is improving, and we are delivering merger integration synergies more quickly than anticipated," said Roland Smith, CEO for Office Depot, Inc.
Following its single-digit growth over the past two years, Advance Auto Parts staked its claim in the number two spot with a 47.3% increase. "The General Parts acquisition coupled with strong execution from our Team Members delivered an increase in comparable store sales of 2.4% in the quarter. We are off to an encouraging start to the year and remain focused on our core business outcomes while making positive progress with our integration of General Parts," said Darren R. Jackson, CEO. "Together, our operational and integration momentum position our business for a strong 2014."
Of the more than 50 retailers gathered, 32 reported positive gains for the third quarter. Among those that reported a positive sales increase and just missed the Top 5 were Williams-Sonoma (9.7%), Hibbett Sports (9.1%) and O'Reilly Automotive (9%).
Bottom 5 Retailers of Q1 (based on net sales for Q1 2014 compared to Q1 2013):
While 19 of the retailers researched showed negative results, the question is if those retailers can turn it around in 2014. Aeropostale (-12%) has recorded significant downfall over the past year, struggling to better connect with consumers. In an effort to restructure the company and reposition the brand, the retailer will close nearly 300 stores, including 125 of its P.S. brand locations.
For the first time, Cabela's has slipped into the Bottom 5 with a 9.6% decrease in net sales. This is interesting following the retailer's double-digit growth three of the four quarters in 2013. It is evident that this year the retailer will face the harsh reality of last year's ammunition surge, however the retailer is prepared to leverage its core values to power through the ebb and flow of the industry, "As we cycle through the unprecedented comparisons from 2013, we are encouraged by our strong fundamentals. Specifically, these include: excellent new store performance, increased penetration of Cabela's branded softgoods and growth in our Cabela's CLUB loyalty program," noted Tommy Millner, Cabela's CEO.
Another surprising addition to the Bottom 5 is Family Dollar with a 6.9% decrease for the quarter. During Q1 2013, the retailer noted a 17.7% increase in net sales. This year, it faced a challenging holiday season with a more promotionally competitive environment and a more financially constrained consumer.
"Notwithstanding the macro-economic pressure, competitive environment and severe weather, we are not satisfied with our results, and we hold ourselves accountable for improving our performance," commented Family Dollar CEO Howard Levine. "To that end, we have initiated an in-depth business review to identify opportunities to strengthen our value proposition, increase operational efficiencies and improve financial performance."