Phalguni Soni

The stock prices of Target and CVS Health rose seven sessions in a row, from June 15–June 23. The pharmacy sale announcement by both companies resulted in a positive reception by the markets.

In 2013, the company had 117 factory-house stores and 6 brand stores in North America. Store rollout is up and is expected to be stronger going forward.

Dr. John Williams, president and CEO of the San Francisco Fed, spoke on the normalization of monetary policy and monetary tightening in a presentation to the Association of Trade & Forfaiting in the Americas in San Francisco on Thursday, May 22.

Besides the upbeat earnings, Home Depot (HD) also significantly increased its returns metrics.

Nike and VF Corporation (VFC) have been affected more than most other US players in the athletic gear industry due to higher overseas exposure.

After posting adjusted EPS growth rates exceeding 20% in the first three quarters of fiscal 2016, the earnings expectations for Nike (NKE) in the fourth quarter are modest.

Nike (NKE) is expected to post sales of $8.3 billion in fiscal 4Q16, an increase of 6.4% year-over-year, according to the Wall Street analysts’ consensus.

In fiscal 2017, Foot Locker’s management expects the company to post double-digit growth in EPS (earnings per share). Wall Street analyst consensus is adjusted EPS of $4.73.

Foot Locker posted record earnings in the first quarter of the current fiscal year but missed Wall Street analyst consensus estimates for revenue.

Foot Locker’s revenue growth is projected to come from sales (FXD) growth in key categories such as women’s, kids, European expansion, and web sales.

Foot Locker (FL) has several key strengths. It’s the largest specialty retailer (XRT) of sporting goods in terms of US store count.

Foot Locker (FL) stock has been one of the strongest performers in the retail industry group. The company has generated total annualized returns of 20.5% over the past five years.

Foot Locker (FL) has earned above-average returns on its capital investments over the past five years.

Over the last five years, Foot Locker’s (FL) capex (capital expenditures) has risen as the company has focused on growth (IWF) initiatives.

As part of its long-term plan, Foot Locker (FL) has been concentrating on enhancing its profitability margins and focusing on store remodels and improved service and product assortment.

In recent quarters, Foot Locker (FL) has made inventory management a priority. The retailer is targeting faster inventory turns.

Foot Locker’s distribution and supply chain includes five distribution centers around the world. It owns two of them and leases three.

Foot Locker (FL) made about 28.4% of its sales, or $2.1 billion, from outside the United States in fiscal 2016.

Foot Locker (FL) operates several e-commerce websites under the Foot Locker and other store banners. It reports e-commerce sales under the direct-to-customer segment.

Foot Locker’s (FL) emphasis on growing (IVW) its women’s business will likely be tied to the growth of its apparel products.

Foot Locker has been steadily closing down or converting its existing Lady Foot Locker stores to the new SIX:02 concept. Currently, there are 30 SIX:02 stores in FL’s retail base.

In fiscal 2016, Foot Locker made $5.3 billion in US sales, representing 71.6% of its total revenue. In contrast, international revenue came in at $2.1 billion.

Foot Locker is primarily a mall-based athletic goods specialty retailer. The company operates several store formats, depending on the product, customer demographic, and geography.

It’s easy for customers to switch between sporting goods retailers. Specialty retailers (XRT) compete on product exclusives, assortment, price points, and customer experience.

In this part, we’ll look at industry forces affecting sporting goods retailers. We’ll also look at Foot Locker’s competitive positioning based on Porter’s Five Forces

In this series, we’ll analyze Foot Locker’s business, market positioning, and revenue and expense outlook. We’ll also look at investments being made to spur growth.

Skechers’ performance is typically unevenly distributed during the year due to seasonal factors. Its first and third quarters are usually its strongest.

Skechers (SKX) expects to open around 55–65 company-owned retail (XRT) stores in 2016, including 20–25 new store openings in China.

Skechers is quickly establishing its presence in international markets. It made $3.1 billion in sales in 2015, of which 40.4% stemmed from overseas markets.

After being a loss-making company in 2011, Skechers (SKX) has engineered a resurgence in financial performance from 2012 to the present.

Skechers has been able to steadily increase its profitability and margins over the past five years. The company’s net income margin rose to 7.4% in 2015.

Skechers grabbed the number two spot in the US footwear market last year. The company’s brands were also ranked number one in walking and work footwear.

China has been an important element in Skechers’ success in international markets. Sales from China rose to $220 million in 2015 from $86 million in 2014.

Between the start of 2012 and the end of 1Q16, Skechers added 114 net new stores in the United States and 81 in international markets.

In recent years, Skechers has reported improved working capital metrics. The company’s inventory turnover (or ITR) rose from 2.9x in 2013 to 3.2x in 2015.

Skechers designs footwear with its own in-house design team. However, it doesn’t own or operate any factories in which to conduct its manufacturing.

The retail (XRT) segment is Skechers’ (SKX) smallest-reporting segment, accounting for 26.5% of the company’s sales, or $833 million, in 2015.

Athletic footwear brand Skechers operates around 525 company-owned retail stores around the world. Of these, around 395 are located in the United States.

Skechers (SKX) products are sold in about 160 countries. The company’s international wholesale segment was its fastest-growing segment from 2011 to 2015.

Athletic and casual footwear company Skechers (SKX) derived $1.2 billion in sales (RTH) from its domestic wholesale segment in 2015.

In 2015, Skechers became the second-largest footwear company in the United States, trailing global market leader Nike (NKE).

To maintain its market share and drive sales, Skechers spends considerable time and effort in marketing activities to promote its footwear globally.

Since the launch of its first line in 1992, Skechers has diversified into several new lines, targeting different demographics and different activities.

In this series, we’ll analyze Skechers’ business model, its competitive positioning, its financials, and its stock price performance and returns.

Lululemon Athletica’s guidance assumes a slightly higher tax rate compared to the prior year and no share repurchases in fiscal 2017.

Based on Lululemon Athletica’s (LULU) healthy sales performance in fiscal 1Q17, the company has raised its sales and earnings per share outlook for the year.

In fiscal 1Q17. Lululemon’s (LULU) e-commerce sales rose by 16.7% to $97.6 million in the quarter, representing 19.7% of its revenue.

Lululemon Athletica (LULU) posted revenue of $495.5 million for fiscal 1Q17. Revenue grew by almost 17% over fiscal 1Q16.

Walmart (WMT) hopes to leverage its Yihaodian e-commerce business in China, which could drive higher sales for its clubs and superstores. So far, the company lacks broad-based retail penetration in China.

Walmart (WMT) has operations in the US and 27 other countries around the world, and it operates e-commerce sites in 11 countries.

Walmart’s (WMT) Neighborhood Markets format stores, which average 42,000 square feet in size, have shown considerable resilience and sales traction over the past few years.

Supercenters are more likely to double as fulfillment centers as Walmart widens its omni-channel capabilities. They are likely to provide the company with economies of distribution.

Walmart (WMT) is projecting revenue growth of $45 billion–$60 billion on a constant-currency basis from fiscal 2017 to fiscal 2019.

Lululemon Athletica’s (LULU) management expects its fiscal 2017 diluted earnings per share to come in at $2.05–$2.15, an implied growth rate of 10.2%–15.6% year-over-year.

In fiscal 1Q17, LULU expects revenue ranging from $483 million–$488 million, an implied growth rate of 14%–15.2% over fiscal 1Q16.

Costco Wholesale (COST) reported earnings per share (or EPS) of $1.24 in fiscal 3Q16, up by nearly 6% compared to the $1.17 reported in fiscal 3Q15.

Costco also reported better-than-average growth in e-commerce sales. Costco’s online sales grew by 14% year-over-year on a reported basis and by 13% on a comparable basis.

On May 25, 2016, Costco Wholesale (COST) declared its results for fiscal 3Q16. Although Costco’s performance was mixed, the retailer beat the consensus Wall Street analysts’ adjusted EPS estimate by $0.02, or 1.6%.

Walmart’s (WMT) Sam’s Club segment also performed better than expected in fiscal 1Q17. Its sales rose 1% to $13.6 billion in the quarter.

Home Depot’s EPS growth for fiscal 2017 is expected to be 14.8%, which is higher than the 12%–13% expected earlier.

Home Depot offers its customers several omnichannel options. The strong execution across channels is a valuable differentiator for the company compared to the competition.

Home Depot (HD) declared its results for fiscal 1Q17 on May 17, 2016. The quarter ended May 1, 2016. The results surpassed expectations.

Activewear companies are looking to increase sales (XRT) from specific demographic segments, particularly women and young athletes.

Consumer demand for activewear is increasing, and competition among apparel retailers has intensified with many e-retailers stepping into the game.

The growing trend toward more casual apparel at work, higher sports participation, and more fitness activities for women is fueling a boom for activewear.

The athleisurewear category has had a boost from higher interest in physical well-being globally and by increased participation by women in sports and other fitness activities.

The growth rate in activewear or athleisurewear has outpaced the overall clothing market, with a double-digit CAGR over the past five years.

Under Armour raised the higher end of its 2016 operating income estimate to $503 million–$507 million, implying a growth rate of 23.1%–24.1% over 2015.

Under Armour (UA) has increasingly looked to “premiumize” its product line. Its signature Curry Two shoe retailed $10 higher than the Curry One and still experienced very strong sell-through.

Under Armour has added 250 shop-in-shops in Europe with retail partners as well as points of distribution in north and south Africa, the Middle East, and Turkey.

Under Armour’s (UA) international sales grew 55.6% to almost $150 million in 1Q16. Sales growth in overseas markets came in at 64.6% in currency-neutral terms.

Under Armour’s (UA) footwear business registered an impressive 64.2% growth (VUG) rate in 1Q16 versus 1Q15. Footwear sales came in at $264 million in the quarter.

Under Armour (UA) grew revenue by 30% to $1.05 billion in 1Q16. This was the company’s 24th straight quarter of more than 20% growth in its top line.

According to the Wall Street analyst consensus, Under Armour is expected to post revenues of $1.04 billion in the quarter, an increase of 28.8% over 1Q15.

Target’s business model has been tested over several economic cycles. Even during the recession in 2008–2009, it managed to raise its dividend per share.

Target’s flexible and smaller format stores could prove a cost-effective and capital-efficient way for it to reach customers in new markets.

Target’s stock has risen 15.1% year-to-date to $83.60 as of March 30, 2016. Its stock price reacted positively to its fiscal 2016 earnings release.

Target’s (TGT) adjusted earnings per share (or EPS) came in at $4.69 in fiscal 2016, up 11.3% year-over-year (or YoY).

Target (TGT) spent $1.4 billion on capital expenditure in fiscal 2016, representing about 2% of sales.

Target (TGT) has had one of the most consistent profitability records among consumer discretionary (XLY) companies.

Target (TGT) has been making improvements in its supply chain to cope with the additional demand posed by e-commerce and omni-channel retailing (RTH).

Target (TGT) reported ~$2.5 billion in e-commerce sales (FXD) in fiscal 2016. This represented 3.4% of the retailer’s total revenue.

Target operates 1,792 stores in the United States under multiple store formats. Its merchandise assortment differs by store, store location, and store size.

Target (TGT) has several marketing programs designed to attract higher store (XRT) (RTH) traffic and higher customer loyalty.

In fiscal 2016, Target’s (TGT) performance was upbeat for all merchandise categories with the exception of hardlines.

Target has identified four signature categories it’s concentrating on to provide higher store and web traffic and sales: Baby, Style, Wellness, and Kids.

Target opened 15 new stores in fiscal 2016. Its same-store sales rose 2.1%, with customer traffic at stores up 1.3%.

It’s relatively easy to open a competing business like Target’s, though it’s harder to do it on the scale that the retailer presently enjoys.

Minnesota-based Target (TGT) is the world’s 11th-largest retailer in terms of sales, according to the National Retail Federation.

Lululemon (LULU) stock rose 10.7% to $67.80 on March 30, 2016, the day the company declared its fourth quarter results. The stock has risen more than 29% year-to-date.

Over the next five years, Lululemon Athletica (LULU) is aiming to double its revenue to $4 billion with an expected mid-single-digit growth rate in store comps.

In fiscal 2017, Lululemon Athletica (LULU) expects to grow revenue 10.9%– 13.3%, or $2.29 billion–$2.34 billion. Same-store sales growth is expected in the mid-single-digit range.

E-commerce was one of the reasons Lululemon Athletica (LULU) had an upbeat performance in fiscal 2016. It posted e-commerce sales of almost $402 million, a 25% increase year-over-year.

Lululemon Athletica’s (LULU) revenue grew by 14.7% year-over-year to $2.1 billion, a new milestone for the company. In fiscal 4Q16, Lululemon’s sales grew 16.8% to $704 million.

Lululemon (LULU) stock rose 10.7% to $67.80 on March 30, 2016, the day the company declared its fourth quarter results. The stock has risen more than 29% year-to-date.

Growth company Lululemon Athletica (LULU) has revised its fourth quarter (fiscal 4Q16) and full-year (fiscal 2016) revenue guidance upwards.

Nike’s profitability in fiscal 3Q16 was helped by better-than-average performance in North America and Greater China, two of its most profitable segments.

Nike saw $1.2 billion in e-commerce sales in fiscal 2015. It grew its e-commerce sales by 56% in fiscal 3Q16, reporting higher traffic and conversion rates.

Innovation has been the cornerstone of Nike’s growth across the globe. It’s why the company has been able to sell more at higher prices.

In order to mitigate the impact of these higher costs, Walmart is investing considerably in pricing via its everyday low prices and everyday low costs loop.