Amazon’s late Prime Day, now in October, set to fuel record end to year Inc. has confirmed that Prime Day will take place on Oct. 13 and 14. While Prime Day has become a promotional tool for Amazon, the sales period is influential in the retail industry and funnels many customers into Amazon’s Prime membership. Walmart Inc., Target Corp. and many other rivals typically offer their own discounts during the event to counter Amazon’s effort.

Amazon, which has more than 150 million Prime members world-wide, has added roughly 50 million members since 2018. The company first rolled out Prime Day in 2015 to juice up sales during the typically slow summer period. Amazon this year pushed the event to later in the year after it became overwhelmed with customer demand during the onset of the coronavirus pandemic.

Retail analysts expect Amazon to have a big showing in the fourth quarter because of the combined Prime Day and holiday shopping period, as well as a general consumer shift to e-commerce in the pandemic. The holiday period typically provides retailers with their highest sales of the year. Amazon consumer chief Jeff Wilke said Prime Day will be an “opportunity for Prime members to get their holiday shopping done early.” That could potentially hurt competitors but also undercut some of Amazon’s holiday sales.

Amazon “will leverage Prime Day as a ‘test run’ to manage yet another surge in demand ahead of an unprecedented holiday situation,” analysts at investment firm Cowen Inc. wrote in a research note. Cowen said Amazon is expected to expand its fulfillment square footage by about 50% this year to meet the uptick in demand.

The pandemic has given Amazon record quarterly sales and accelerated its growth. The company is on pace to easily blow past the $280.5 billion it made in sales last year. The retailer has ramped up hiring at its package-fulfillment centers in anticipation of the fourth quarter. 

Amazon has tried to add enticements to Prime Day for customers. The company said this year “celebrities and influencers will be joining live to surprise customers with exclusive experiences,” without providing further detail. Amazon said it would be offering discounts for many of its most popular products, including its Echo smart speakers and Fire TV products. The company also unveiled several new devices it plans to release that included a redesigned Echo lineup, car-alarm system and drone security camera.

Source: Financial Post
Source: Toronto Star

Giant Tiger’s New CEO Sees Opportunities for Growth for the Discount Retailer

Giant Tiger Stores Ltd. has named a new CEO at a time when economic uncertainty is creating even more competition in the discount retail sector. Giant Tiger Stores Ltd. says veteran company executive Paul Wood will take up the reins as founder Gordon Reid steps down from his role as chief executive of the discount department store chain.

Giant Tiger had its start 59 years ago in Ottawa’s ByWard Market neighbourhood. The company now has 258 mostly franchised stores in Canada, and employs more than 10,000 people. The company says it had more than $2-billion in revenue last year.

Amid the fallout from the COVID-19 pandemic, shoppers are pinching their pennies. Cheap-chic retailer Target Corp. reported its best quarter ever last month in the United States. Canada led Walmart Inc.’s international markets in comparable sales growth in its most recent quarter. And demand for cleaning supplies has helped to boost sales for Montreal-based Dollarama Inc. 

Giant Tiger is smaller than its competitors, but is looking to continue expanding its store footprint in Canada, said Paul Wood. “Discount has been an area where people gravitate when times are a little tougher economically, and where there have been some really exciting developments. It’s a much more competitive space,” Mr. Wood said in an interview. “ … We continue to believe there’s opportunity for us to be in more Canadian communities. But we also have to continue that build-out from the e-commerce perspective.”

While e-commerce is still a very small part of the company, Mr. Wood said the company has seen “exponential” growth through the pandemic and will need to continue to accelerate its online business. The company offers online grocery purchases for pick-up at stores and also ships some goods to customers homes.

The company will also have to continue its work to absorb 34 of the 46 stores it bought back earlier this year from North West Co., its master franchisee in Western Canada. Bringing those stores back into the fold – first as corporate-operated locations, and eventually finding new franchisees – will take a couple of years, Mr. Wood said. In general, moving forward, the company’s goal is to open 10 to 15 new locations annually. Giant Tiger recently opened new locations in Chicoutimi, Thunder Bay and Sault Ste. Marie.

Competition in the discount sector has been ramping up, said John Crombie, executive managing director of retail services in Canada for commercial real estate firm Cushman & Wakefield. As an example, he points to TJX Companies, which owns the Winners, Marshalls and HomeSense retail banners, which have been expanding fast in Canada. He expects the sector to continue to do well due to behavioural shifts that have taken place during the pandemic. “Value is going to be a big component of our buying patterns going forward.”

Source: Globe and Mail
Source: Toronto Star

Costco Reports a 27% increase in Net Income for the Fourth Quarter of Fiscal 2020

On September 24, Costco Wholesale Corporation (“Costco” or the “Company”) announced its operating results for the 16-week fourth quarter and the 52-week fiscal year, ended August 30, 2020. Net income rose 27% on 12% higher revenue, with both figures exceeding analysts’ expectations. Highlights of the results include:

  • Net income for the fourth quarter was $1.389 billion, or $3.13 per diluted share, a 27% increase year-over-year.
  • The fourth quarter was negatively impacted by incremental expense related to COVID-19 premium wages and sanitation costs of $281 million pretax, and a $36 million pretax charge related to the prepayment of $1.5 billion of debt. 
  • There was also an $84 million pretax benefit for the partial reversal of a reserve of $123 million pretax, related to a product tax assessment taken in the fourth quarter of last year.
  • Net income for the fiscal year was $4.00 billion, or $9.02 per diluted share, compared to $3.66 billion, or $8.26 per diluted share in the prior year.
  • Comparable sales for the quarter climbed, 9.1% in Canada.
  • Earlier this month, Costco reported a 101% jump in August e-commerce sales as net sales for the month rose 15% to $13.56 billion. 
  • For fiscal 2020, the company reported a profit of $4 billion, compared to $3.66 billion in fiscal 2019.

Source: The Street
Source: Globe News Wire