The bulk of the retail industry will file quarterly financial reports in November, but a select group has already filed. With so much riding on retail performance in 2010 RIS examines these early reports to determine what to expect from those coming out next month. See what trends emerge by analyzing the top winners and losers, including Costco, Family Dollar, A&P, RadioShack and more.
Top 5 Losers
1-800-FLOWERS.COM: The world's leading florist and gift shop reported revenues of $104.5 million, down 3.5%, for the recently ended quarter compared to $108.3 million in the prior year. The EBITDA loss from continuing operations was $3.1 million compared with a loss of $2.8 million in the prior year. Average online order value was up to $62.67 compared to $59.93 in the prior year, which was a good sign. But on the downside there were fewer purchases and purchasers of gifts due to the economic downturn.
A&P: The Great Atlantic & Pacific Tea Company reported sales of $1.9 billion, down from $2.1 billion in the same period last year. Comparable store sales decreased 6.6% year-over-year. EBITDA was $8 million compared with $65 million last year. As with Supervalu (see below) the grocery environment is under pressure from a lengthy cycle of price deflation. However, A&P has been a troubled company for several years and is in the process of selling and closing stores, renegotiating loans and opening talks with labor unions to reduce costs.
bebe stores: Hip, body-conscious, female fashion retailer bebe reports retail sales of $111.9 million for the fiscal quarter ended October 2, 2010, a decrease of 6.8% compared to sales of $120.1 million for the fiscal quarter ended October 3, 2009. Same store sales for the period decreased 4.7% compared to a decrease of 25.7% in the prior year. Is bebe an indicator of where fashion sales are heading? Probably not. Its performance has been slipping for several years, and it has yet to achieve pre-recession success.
Danier Leather: Danier Leather is on the right track with rising sales, but it is still finding it difficult to turn a profit. Losses improved from $3.4 million a year ago to $2.8 million last quarter, but this is occurring in a Canadian retail market that expects to be up more than double the year-over-year rate of increase in the U.S. However, at least Danier is trending the right direction. Sales increased by 17% to $23.4 million compared with $20.0 million last year, and comparable store sales increased by 18%.
Supervalu: Mega-grocer and food wholesaler Supervalu posted a loss of $1.47 billion last quarter, partly due to charges tied to a labor dispute at its Shaw's chain. The supermarket operator also cut its full-year guidance. Revenue fell 9% to $8.66 billion. Same-store sales fell 6.5%. "Our sales performance continues to reflect a difficult operating environment," says CEO Craig Herkert. Price deflation forces continue to batter the grocery segment.
Top 5 Winners
Costco: Net income for the quarter came in at $1.3 billion compared to $1.1 billion in the same period last year. Comparable store sales increased 6%, with 4% in the U.S. and 14% internationally. Although Costco sells a wide range of products its principle category is food/grocery, where it is feeling the downward pricing pressure that is taking a toll on A&P, Supervalu and others. But Costco is a warehouse/membership club and it continues to post stronger financial numbers that pure grocers. This bodes well for the warehouse/membership club segment as a whole.
Family Dollar: Family Dollar Stores Inc. reported 11% quarterly increase in revenue to $1.956 billion. Net income increased 23.0% to $358 million compared with fiscal 2009. Revenue at stores open at least a year climbed 6.1 percent. Strong discount purchasing, driven by the economic downturn, is at the heart of Family Dollar’s success, and it is fueling an aggressive growth strategy. The chain will open about 300 new stores in fiscal 2011, which is 50 percent more than it opened in fiscal 2010.
RadioShack: RadioShack Corporation, a national retailer of mobile and technology products, services and accessories,reported net sales for the 2010 third quarter increased 6.2% to $1.05 billion compared to $990 million a year ago. Net income increased 23% to $46 million compared to $37.4 million last year. Comparable store sales for company-operated stores and kiosks increased 6.2%. Electronic products remain a hot category and help provide favorable conditions for RadioShack to continue its transition to becoming a more contemporary retail operation.
Select Comfort: Profit has now improved for the retailer of Sleep Number beds for seven consecutive quarters. In the last quarter it reportedd net income of $10.5 million, which compares to $6.9 million a year earlier. Revenue climbed 9 percent to $160.1 million from $147.5 million, and comp store sales growth increased 16%. To achieve these strong numbers the company closed 85 stores and withdrew from 740 specialty bedding stores. This resulted in an increase in average sales per store of 27% to $1.25 million on a trailing 12-month basis.
Tractor Supply: Farm and ranch supply retailer Tractor Supply Co. reported profit for the third quarter rose 46% to $32 million, compared with earnings of $22 million a year ago. Net sales rose 11% to $829.1 million, from $747.7 million. Same-store sales rose 5%. Tractor Supply suffered during the recession, especially in product lines with big-ticket items. A shift to lower-priced items and pet/animal products are at the heart of current gains.