Loblaw Companies Raises Quarterly Dividend, Beats Third-Quarter Profit Expectations 

Loblaw Cos Ltd beat analysts’ estimates for quarterly revenue and profit on November 12, boosted by online sales as stuck-at home consumers spend more on groceries during the COVID-19 pandemic. Loblaw said it would invest more to expand the pick-up and delivery operation while aiming to reduce costs amid the coronavirus crisis. 

Loblaw chief financial officer Darren Myers said while in-store traffic decreased, the “food retail basket size” remained high for the quarter. “At the height of the pandemic, there would have been the panic buying,” Davis said during a conference call with investors. “But I would say now, through Q2 and Q3, it’s stabilized and people are just buying bigger-size packs.”

Loblaw’s e-commerce sales were up 175% in the quarter. The pandemic has contributed to shoppers buying online more often: 31.3% of Canadians have ordered groceries either for home delivery or curbside pickup in the past six months, according to a survey of 7,290 people released on November 12 by Dalhousie University’s Agri-Food Analytics Lab.

The survey found more people are regularly ordering food online now compared with before the pandemic, suggesting that shoppers could be forming longer-term habits that will continue even after concerns about the coronavirus have passed. In the survey, convenience was cited most often as the reason for buying food online, while COVID-19 concerns was the next most popular reason.

Net earnings attributable to its shareholders rose to $345 million, or 96 cents per share, in the quarter ended Oct. 3, from $334 million, or 90 cents per share, a year earlier. Excluding one-time items, Loblaw earned $1.30 per share, beating the average analyst estimate of $1.26 per share, according to IBES data from Refinitiv. Loblaw, a subsidiary of the biggest Canadian retail group George Weston, posted revenue of $15.67 billion, a 6.9% rise from a year earlier and above analysts’ estimate of $15.61 billion.

Source: Toronto Star
Source: Financial Post
Source: Globe and Mail

Canadian Tire Raises Quarterly Dividend, Reports Third-Quarter Profit and Sales up From Year Ago 

As the annual Black Friday sales period approaches, Canadian Tire Corp. Ltd. is taking a “more cautious approach” about holiday promotions, saying that it needs to smooth out surges in traffic to maintain physical distancing in stores.

The Toronto-based retailer signalled that others in the industry are likely to take the same approach, to try to mitigate the intensity of holiday shopping patterns around the end of November. It is one more sign of a Christmas shopping season that will be unusual for stores: both retailers and package carriers such as Canada Post have implored people to shop early as they brace for a glut of e-commerce ordering this year. Canadian Tire, like others, has been readying its website for the surge in traffic. But managing store traffic will be another challenge, as shopping behaviour increases while public health authorities are continuing to battle the spread of the COVID-19 pandemic.

“We can’t handle the traffic patterns into the store effectively and safely, even at last year’s numbers   … the lineups would be completely out the door,” said Canadian Tire president and CEO Greg Hicks on November 5.

While the company is planning to be “very competitive” during the holidays, Mr. Hicks added that “big-demand events” will be staggered over longer periods of time, rather than concentrated in the four- to five-day period around the popular Black Friday and Cyber Monday sales events.

Holiday sales have already begun to ramp up, Mr. Hicks said. Canadian Tire has benefitted from sales trends during the global pandemic, as Canadians forced to stay at home have been spending money to spruce up their backyards and gardens; cooking at home more; and shopping for camping gear, bicycles and exercise equipment.

The retailer reported its third quarter revenue grew by 9.6% to nearly $4-billion, driven by strong sales increases at its flagship stores and e-commerce demand. Comparable sales — an important metric that tracks sales growth not counting the impact of store openings — grew 18.9% in the 13 weeks ended Sept. 26.

Canadian Tire’s seasonal business was strong this year, as shoppers spent more on gardening and backyard items, as well as camping gear. Kitchen wares and tools also remained strong, contributing to 25.1% comparable sales growth at the flagship stores.

Hicks said COVID-19 has also encouraged more one-stop shopping and a larger “basket size” as shoppers stock up to avoid multiple trips to the store. “We believe that the macro trend with respect to the one-stop shop is here to stay, at least over the winter and while the pandemic is ongoing,” Hicks said.

E-commerce demand has continued to grow. So far this year, Canadian Tire Corp’s e-commerce sales have reached $1-billion, representing $700-million more than the same period last year. While e-commerce growth has slowed somewhat since the surge in demand earlier in the pandemic, it was still up by 132% in the third quarter.

Canadian Tire’s financial services business declined as people charged less to their credit cards, pushing receivables down by 7.1% in the quarter. Customers have been paying down their credit card balances through COVID-19. However, purchases have begun to ramp up again: in September, credit card sales were roughly flat compared to the same month last year, for the first time since the pandemic began affecting consumer habits in March.

The retailer reported net income of $326.3-million, or $4.87 per share in the third quarter, compared to $227.7-million or $3.20 per share in the same period last year.

The company has been paying down debt, and continues to cut costs, saying it is on track with a previously-announced program to find more than $200-million in annual cost savings by 2022. Canadian Tire increased its annual dividend paid to shareholders by 3.3%, from $4.55 to $4.70 per share.

Source: Toronto Star
Source: Globe and Mail

Amazon Blows Away Analysts’ Revenue and Profit Expectations, as Online Shopping Continues to Surge

On October 29, Amazon released financial date for the third quarter ended September 30, 2020. The highlights include:

  • Net sales increased 37% to $96.1 billion in the third quarter, compared with $70.0 billion in third quarter 2019. Excluding the $691 million favourable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 36% compared with third quarter 2019.
  • Operating income increased to $6.2 billion in the third quarter, compared with operating income of $3.2 billion in third quarter 2019.
  • Net income increased to $6.3 billion in the third quarter, or $12.37 per diluted share, compared with net income of $2.1 billion, or $4.23 per diluted share, in third quarter 2019.

Amazon continues to be one of the biggest beneficiaries of the pandemic, as consumers flock to the site for essential goods, groceries and household items. The cost of shipping those goods to customers rose during the third quarter, with expenses up 57% from a year earlier to $15.1 billion. Amazon is expected to face even greater demand heading into the holiday season, with shoppers likely to do the bulk of their gift buying online instead of making trips to the store.

Amazon CEO Jeff Bezos said in a statement that the company is seeing a record number of shoppers. “We’re seeing more customers than ever shopping early for their holiday gifts, which is just one of the signs that this is going to be an unprecedented holiday season,” Bezos said in the earnings statement.

The lockdown-driven demand increase is expected to continue through the holiday season, as Amazon gave revenue guidance in the range of $112.0 billion to $121.0 billion, above analyst expectations of $112.7 billion. 

But Amazon said operating profits are likely going to take a hit in the fourth quarter, as it expects to spend approximately $4 billion on COVID-related costs. Amazon said its fourth-quarter operating profits will fall between $1.0 billion and $4.5 billion, below the $5.81 billion Street estimate.

Amazon Web Services had $11.6 billion in sales, up 29%, which is in line with Street expectations. Amazon’s “other” segment, which is mostly comprised of its advertising business, reported $5.4 billion in sales, a 51% jump from the year-ago period. Physical store sales, meanwhile, dropped 10% to $3.78 billion.

Amazon is one of the few companies that has continued to grow its headcount amid a broader economic downturn due to the coronavirus. Amazon’s total employee count grew 50% from last year, and now stands at 1.13 million, the first time it crossed the 1 million mark.

Source: Amazon
Source: Business Insider
Source: CNBC

Home Depot Continues to Capitalize on Home Renovations During the Pandemic, With Fiscal Third-Quarter Sales Surging 23%

Home Depot logo

As the year comes to a close many people are still stuck at home and that has led to an explosive year for Home Depot. The most recent quarter is no exception.

Third-quarter sales surged 23% and the home improvement chain beat expectations by almost any measure. Revenue totalled $33.54 billion for the three months ended Nov. 1, topping the $31.83 billion that analysts polled by FactSet predicted.

“We saw the continuation of outsized demand for home improvement projects, which has led to sales growth of more than $15 billion through the first nine months of the year,” Chairman and CEO Craig Menear, said in a prepared statement.

Sales at stores open at least a year, a key gauge of a retailer’s health, climbed a stunning 24.1%, topping even the lofty projections for a 17.2% increase on Wall Street. In the U.S., those sales jumped 24.6%.

While home owners have been hunkering down, home sales have been among the bright spots economically during the pandemic. Whether buying a new home, or improving an existing one, home owners continue to head to Home Depot at a healthy pace. U.S. home construction rose a solid 1.9% in September and applications for building permits, a good barometer of future activity, rose an even stronger 5.2%.

The pandemic has led to a vast shift in spending patterns. At least some of the money once spent on movie tickets, travel, restaurants, amusement parks, sporting events or concerts, is coming back home. While those industries have been devastated, the housing market, and Home Depot, have grown stronger.

Sales of big-ticket items like riding mowers and outdoor power equipment remained strong through the quarter, Chief Operating Officer Ted Decker said. He added that the company hosted its “most successful Halloween event” this year, with the company’s notorious 12-foot skeleton selling out before October. The company said it was continuing to benefit from the stay-at-home spending patterns through the beginning of November.

However, Decker noted that the continued increase in demand has pressured supply chains. He said the company is adapting by introducing new products, adjusting assortments and “in some cases, reducing the number of [stock keeping units] in certain categories to focus on the highest demand products.”

“As a result of all these actions, we have seen reduced product lead times and continued improvement in our in-stock positions,” he said. “While we are pleased with these results, we are not at pre-pandemic levels.” Still, Decker said the company is “in a great position” heading into the holiday season.

The Atlanta home improvement retailer earned $3.43 billion, or $3.18 per share, compared with $2.77 billion, or $2.53 per share, a year earlier. The performance beat the $3.05 per share projected by analysts surveyed by FactSet.

Home Depot Inc. also said on November 17 that it’s making temporary financial support programs for its frontline, hourly employees permanent. The value of that program is being put at about $1 billion on an annualized basis.

The big profit numbers arrive a day after Home Depot said it was reuniting with former subsidiary HD Supply in a deal valued at about $8 billion. The home improvement chain said it would offer $56 per share in cash to HD Supply shareholders, a near 25% premium to the stock’s last close. It expects to fund the deal through cash on hand and debt.The acquisition will give Home Depot a stronger hand in the contractor and professional side of its business, which has boomed during the pandemic, like its more consumer facing, DIY sales.

Source: US News
Source: CNBC 
Source: Globe and Mail

Walmart Earnings Beat Estimates, Shares Rise on Higher Outlook Ahead of Holidays

A strong grocery business helped Walmart’s online sales grow 41% in the third quarter, the company said on November 27, fuelling an earnings beat and 21 quarters of growth in the U.S. Total sales in the period fell short of analysts’ expectations, but Walmart raised its annual earnings outlook — for the second time this year — ahead of the holiday season. Walmart shares were recently up about 1%, having climbed more than 30% this year. In Canada, operating income declined but both sales and same-store sales increased by 7.7%, while online sales soared by 177%.

Here’s what Walmart reported for its fiscal third quarter compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share: $1.16, adjusted, vs. $1.09 expected.
  • Revenue: $127.99 billion vs. $128.65 billion expected.
  • U.S. same-store sales: up 3.2% vs. growth of 3.1% expected.
  • Net income for the period ended Oct. 31 grew to $3.29 billion, or $1.15 a share, compared with $1.71 billion, or 58 cents per share, a year ago. Excluding one-time charges, Walmart earned $1.16 per share, topping expectations for $1.09 in a Refinitiv survey of analysts.
  • Total revenue grew 2.5% to $127.99 billion from $124.89 billion a year ago vs. $128.65 billion expected.

Sales online and at Walmart stores operating for at least 12 months in the U.S. were up 3.2%, topping estimates for growth of 3.1%. Walmart said the average ticket in the U.S. grew 1.9% compared with a 1.8% increase a year ago. Transactions were up 1.3% in the latest quarter, slightly lower than growth of 1.6% this time last year.

Strong growth in grocery
The company said e-commerce sales were up 41%, thanks to “strong growth” in online grocery. The company has been calling for U.S. e-commerce sales growth of 35% for the year, which would be slightly less than what it logged in fiscal 2019.

Walmart’s digital operations have come under fire, with tension brewing internally, as the company still loses money online for all the investments it has made to acquire brands and speed delivery. Walmart said its operating income during the third quarter fell 5.4% from a year earlier.

All year long, Walmart and Amazon have been neck and neck in a delivery war. Walmart has started testing delivering groceries directly to customers’ refrigerators in three cities. Its InHome grocery delivery membership program costs $19.95 a month. And making the most of its bricks-and-mortar stores, it has more than 2,700 grocery pickup locations for online orders across the United States. Walmart also now offers a “Delivery Unlimited” option from 1,400 locations, where customers can pay $98 annually, or $12.95 monthly, for unlimited grocery delivery.

Outlook moves upward
Looking to the full year, Walmart now expects adjusted earnings per share for fiscal 2020 to “increase slightly” compared with last year. Analysts have been calling for 0.3% growth. Excluding Flipkart, Walmart says annual earnings should be up a high single-digit percentage. 

Walmart shares are up more than 30% this year. The retailer has a market cap of about $347.6 billion, compared with Amazon’s $870.6 billion.

Source: CNBC

Lowe’s Shares Tumble as Earnings Fall Short Despite Robust Sales Gains

Lowe’s shares fell around 4% in early trading on November 18 after the home improvement retailer reported third-quarter earnings and a profit outlook slightly short of estimates, weighed down by higher labor costs and investments in its e-commerce business. Its same-store sales surged more than 30%, including a doubling of online sales. But investors largely shrugged off those gains, looking more toward the future and how the retailer will perform after the Covid-19 crisis abates.

Here’s how the home improvement company did during its fiscal third quarter compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share: $1.98, adjusted, vs. $1.99 expected
  • Revenue: $22.31 billion vs. $21.25 billion expected

For the quarter ended Oct. 30, net income fell to $692 million, or 91 cents a share, from $1.05 billion, or $1.36 per share, a year earlier. Excluding a $1.1 billion pretax loss on extinguishment of debt, the company earned $1.98 per share, a penny short of analysts’ estimates, based on Refinitiv data. 

Sales rose to $22.31 billion from $17.39 billion a year earlier, beating expectations for $21.25 billion. Same-store sales, which track sales online and at Lowe’s stores open for at least 12 months, surged 30.1%, topping estimates for 22.8% growth. Online sales rose 106%. Sales in all of Lowe’s merchandising departments rose over 15%, while all regions’ sales climbed more than 20%, president and CEO Marvin Ellison said. The company said lumber was its strongest category, driven by strong demand from both professionals and do-it-yourself customers.

“Strong execution enabled us to meet continued broad-based demand, as we delivered over 15% growth in all merchandising departments, over 20% growth across all geographic regions. and triple-digit growth online,” said CEO Marvin Ellison. “We continued to invest in the future growth of the company, including a $100 million investment in the quarter as part of an ongoing effort to reset the layout of our U.S. stores, making them easier to shop with improved product adjacencies, especially for Pro customers.”

In the third quarter, Lowe’s said it invested $245 million in Covid-related support for its frontline hourly associates. In the first nine months of the year, these added costs have tallied more than $1.1 billion. “Lowe’s is clearly taking share,” Wells Fargo analyst Zachary Fadem said in a note to clients. “That said, the cost of this growth appears to be rising.”

Lowe’s said it expects to earn between $1.10 and $1.20 per share during its fiscal fourth quarter, while analysts had been calling for earnings of $1.17 a share. It forecasts same-store sales to grow about 15% to 20%. Revenue growth is expected to moderate from third-quarter levels, “consistent with natural demand patterns of the home improvement sector,” the company added.

As of Tuesday’s market close, Lowe’s shares were up roughly 33% this year, giving the company a market cap of $120.8 billion.

Source: CNBC
Source: The Street