EVENTS TO WATCH
- TCS - Earnings Call: 4:30pm
- FDO - Earnings Call: 10:00am
- PSMT - Earnings Call: 12:00pm
ICSC - Chain Store Sales Index
Takeaway: Another solid data point from the ICSC numbers this week - sales up 3.3% on top of a 2.9% number last year. While numbers have climbed steadily since the 13th week of the year, we'd point to WMT's US CEO Bill Simon's comments from this morning quoted in the story below. Not exactly a clean bill of health for the median US consumer.
WMT - U.S. job rebound not spurring spending, Wal-Mart's Simon says
- "In an interview with Reuters, Bill Simon, the president and chief executive officer of Wal-Mart U.S., said the improving employment picture had so far failed to raise cash register receipts at the retailer's U.S. stores. 'It's really hard to see in our business today … that it's gotten any better,' he said."
- “'We’ve reached a point where it’s not getting any better but it’s not getting any worse – at least for the middle (class) and down.'"
- "Simon said Wal-Mart's lower- and middle-income customers appeared to have made a number of changes to their shopping habits that were 'not the best thing in the world for a retailer,' splurging on events like back to school and holidays like the Fourth of July, but pulling back spending in between. 'They’re adapting to what has been a difficult macroeconomic situation,' he said."
Takeaway: Nothing earth shattering here, but when WMT talks about the US consumer we listen. The company has over 30 petabytes of shopper data to draw conclusions from. All in, this is not a ringing endorsement for the median consumer in America. And it doesn’t bode well for our two least liked names in this space - TGT and KSS. When we looked at shopping intent over the last 3 quarters, WMT was the only retailer in the space with positive readings, so if it is still feeling the macro heat then that pain is being felt across the rest of the industry. Yes, one could argue that WMT is more exposed to the lower end consumer than most of the names in the chart below, more TGT than KSS. But we'd argue that TGT's brand transformations over the past 5 years (P-Fresh, RedCard, etc.) has only increased its exposure to the lower end shopper.
TGT - Target Appoints Three New Officers, Spanning Information Technology, E-commerce and Digital Product Teams
- "Jim Fisher joins Target as senior vice president, Infrastructure and Operations, Target Technology Services, where he will oversee Target’s technical infrastructure and operations."
- "Alan Wizemann joins Target as vice president, Target.com and Mobile Product, where he will oversee digital product teams."
- "David Weissman joins Target as president of DermStore, based in El Segundo, Calif., which Target acquired last year."
Takeaway: Kudos to TGT on these hires. We don't have any edge on any of these 3 personally, but the fact is that TGT has one of the worst performing e-commerce businesses in the industry. Clearly new blood is needed in order to innovate and implement the type of changes that need to be made. We feel like a broken record saying this, but…those changes won't be cheap.
BBBY - Bed Bath & Beyond Inc. Board of Directors Authorizes New $2.0 Billion Share Repurchase Program
- "The Company expects that the new share repurchase program will commence after the completion of its existing share repurchase program, which, as of May 31, 2014 had approximately $861 million remaining."
PETM - PetSmart Shareholder Longview Joins Call for Company to Consider Sale
- "Longview Asset Management LLC, which owns about 9% of PetSmart and has been an investor since 2005, asked the company to consider a potential sale or other strategic alternatives in a letter to PetSmart's board Monday."
CA - Carrefour to Close Stores in India
- "Carrefour SA said Monday it would close its five cash & carry stores in India, effective at the end of September."
- "Carrefour, the world’s second-largest retailer behind Wal-Mart Stores Inc., has been represented in India since 2010."