Retail & Wholesale

The top three drugstore chains in the US are in the process of forming new associations through mergers and acquisitions to create a more diversified portfolio and protect themselves from the growing online threat.

During fiscal 4Q18, Walmart’s US segment reported sales of $86.6 billion, up 3.4% on a year-over-year basis.

Urban Outfitters is also trying to boost its top line through overseas expansion.

In March 2017, Black-and-White Capital sent a letter to Etsy’s board of directors, noting that the company had a variety of execution and corporate governance issues.

Etsy (ETSY) reported strong 3Q17 results and ended fiscal 2017 with its stock price rising 73.6%. This increase beat the S&P 500 Index’s (SPY) gain of 19.4%.

Target (TGT) stock was trading at a forward PE ratio of 14.8x on January 9, 2018, which seems compelling when compared to the peer group average of 24.5x.

For RPM International, 54% of the analysts recommended a “buy,” 46% recommended a “hold,” and none of the analysts recommended a “sell.”

Toy makers in the United States (SPY) are facing near-term disruptions affecting their top-line performance. Toys “R” US, one of the leading distribution partners for US toy companies, filed for bankruptcy.

Best Buy (BBY) has managed to deliver higher same-store sales for three consecutive quarters. This growth came amid tough retail market conditions and heightened competition from online retailers like Amazon (AMZN).

After reaching a lifetime high in October 2017, the ISM (Institute of Supply Management) non-manufacturing index fell 2.7 percentage points to 57.4%.

JCPenney (JCP) has been undertaking several strategic actions to improve its sales amid a challenging retail environment.

Amazon (AMZN) has finally launched its Prime membership in Singapore, thus expanding its reach in the fastest growing region of Southeast Asia.

Valuation multiples help investors determine market values for comparable companies. For our analysis, we consider forward PE (price-to-earnings) multiples due to high visibility in Home Depot (HD) and Lowe’s Companies’ (LOW) earnings.

Walmart (WMT) reported sales of $123.2 billion in fiscal 3Q18, which easily exceeded analysts’ expectation of $121 billion, rose 4.2% YoY (year-over-year).

During the last reported quarter, the Walmart U.S. segment’s sales rose 3.3% year-over-year to $78.7 billion, reflecting a 1.8% increase in comps.

Across the five moat sources (network effect, intangible assets, cost advantage, switching costs, and efficient scale), efficient scale is the most likely to drive a “narrow moat” rating from Morningstar.

In August 2016, Walgreens announced a long-term strategic alliance with Prime Therapeutics, America’s fourth-largest PBM.

The US is Walgreens’ largest market and accounts for more than 70% of its total sales and operating income.

The US drugstore market is dominated by two major players—CVS Health (CVS) and Walgreens Boots Alliance (WBA). CVS and WBA accounted for ~29% of the country’s prescription dispensing revenues in 2016.

Home Depot (HD) posted SSSG of 6.3%, while its US stores posted SSSG of 6.6%. Its stores in Mexico and Canada also posted positive SSSG.

Rite Aid’s shareholders have been the real losers from the delay and eventual termination of the deal between Rite Aid (RAD) and Walgreens Boots Alliance (WBA) in October 2015.

Kroger’s (KR) 2Q18 results invited a host of negative reactions from Wall Street.

Amazon (AMZN) announced the acquisition of premium organic and natural food retailer Whole Foods Market on June 16, 2017. The deal sent tremors across the food retail sector.

The story behind Kohl’s rising yield Department store retailer Kohl’s (KSS) saw its sales fall 3% in 2016, driven by lower comparable sales, after recording growth in 2015. Like Macy’s, it was impacted by online competition, store closures, discounts, and advertisements. Its operating income fell 8% in 2015 and 24% in 2016, while its operating […]

The story behind Macy’s attractive yield Macy’s (M) operates Macy’s and Bloomingdale’s stores. The company’s sales fell between 2013 and 2016. Revenue fell 5% in 2016, compared with 4% in 2015. Online shopping and discount stores have wreaked havoc on brick-and-mortar stores, leading to store closures. Narrowing gross margins and rising impairments, store closing costs, and […]

Tencent posts record earnings and revenue Tencent Holdings (TCEHY), China’s biggest gaming and social media company by revenue, reported its fiscal 2Q17 results on Wednesday, August 16. The Shenzhen-based company beat forecasts and reported its best-ever quarterly results. Its strong results were driven by higher income from its popular Honor of Kings mobile game, triple-digit growth […]

Dollar General (DG) saw its top line rise 8.1% YoY (year-over-year) to $5.6 billion, driven by an 8.9% rise in demand for consumables.

Luxury home furnishings retailer RH (RH) will announce its 2Q17 earnings after the market closes on September 6, 2017.

Ulta Beauty (ULTA) stock fell 9.1% to $212.36 on August 25, 2017, in reaction to the company’s results for fiscal 2Q17, which ended on July 29, 2017.

Nabors Industries’ (NBR) CFO (cash from operating activities) turned positive in 2Q17, compared with its negative CFO in 1Q17.

Gap (GPS) reported total revenues of $3.8 billion in 2Q17 and beat the consensus by $30 million. On a YoY basis, the company’s top line fell 1.4%.

Amazon sold bonds to finance Whole Foods acquisition On August 15, Amazon (AMZN) sold $16 billion in bonds to fund its acquisition of Whole Foods (WFM). The bonds were met with robust demand from investors, as the tech giant rarely visits the bond market. Amazon is taking advantage of a good borrowing environment. Amazon’s bond sale is the […]

Target’s (TGT) sales for 2016 fell 6.0% due to lower comparable store sales and weak store traffic.

Genuine Parts (GPC) recorded a marginal growth in its 2016 net sales, driven by its Automotive and Office Products segments.

SFM’s top line is expected to grow 13%–14% based on its sales comp growth of 1.5%–2.0% and 32 new store openings.

Phoenix, Arizona–based Sprouts Farmers Market (SFM) reported its 2Q17 results on August 3. Total sales for SFM increased 15% year-over-year to $1.2 billion, $17.0 million more than consensus estimates.

In fiscal 4Q17, Alibaba’s international commerce retail business generated $353.0 million in revenues, up 312.0% YoY.

VFC is covered by 21 Wall Street analysts. It has received a 2.7 rating on a scale where one is a “strong buy” and five is a “strong sell.”

In this series, we’ll explore the trends in consumer spending in recent months and try to shed some light on the retail sales data that will be released on July 14.

Consumer Discretionary Select Index sales, earnings, and dividends have grown at a CAGR (compound annual growth rate) of 6%, 7.2%, and 10.7%, respectively between 2012 and 2017.