Loblaw Continues to See Pandemic Sales Lift but Tough Comparisons Loom

Loblaw Cos. Ltd. exceeded expectations in its first quarter, managing year-over-year sales and profit gains despite a difficult match-up against the great wave of panic buying at the outset of the pandemic in March 2020. Sales at Loblaw — a cross-country network of 2,400 grocery stores and pharmacies that includes Shoppers Drug Mart and No Frills — rose to $11.9 billion in the quarter, a year-over-year 0.6% increase, the company said in an earnings update on May 5. The company booked net earnings of $392 million, more than 30% higher than the previous year.

Analysts were expecting worse, since the last weeks of this quarter — which ended March 27 — correspond with the first frenzied weeks of the pandemic last year, when shoppers swarmed grocery stores to stock their pantries. At that time last year, sales at Loblaw spiked by as much as 44%, according to Scotiabank analyst Patricia Baker.

Baker had previously forecast a decline of 1% in food same-store sales — a key retail metric that leaves out results from stores that opened or closed during the year to give a clearer growth picture — for Loblaw this quarter, but they grew slightly, by 0.1%. Loblaw said same-store sales growth started off strong in the quarter, but struggled later due to the comparison to March 2020. Those struggles are expected to continue in the coming quarter.

“As economies reopen, revenue growth will be challenged while lapping elevated 2020 sales,” the company said, adding that same-store sales in food retail have declined “slightly” in the first four weeks of the second quarter. Still, Loblaw said it now expects to exceed its annual outlook for growth in earnings per share after the “momentum” in the first quarter continued into the first four weeks of the second quarter. “However, it is still early in the year and given the ongoing uncertainty and volatility caused by the COVID-19 pandemic, the company will not update its full-year outlook at the current time,” the company said. 

E-commerce demand continued to grow, even compared to the surge in online buying last year: In the 12 weeks ended March 27, online sales grew 133% compared to the same period in 2020. E-commerce sales should begin to “flatten out” on comparisons with last year, outgoing Loblaw president Sarah Davis said. But the company has been working to improve customer service for online orders, and to cut costs of filling those orders – by improving the efficiency of how orders are fulfilled in stores, for example. The company is also working on building its home-delivery service – both through a partnership with delivery company Instacart, as well as its own service operating in Toronto, Calgary and most of Quebec. 

Loblaw also said that its results were significantly helped by improved performance at its banking wing, President’s Choice Financial. “The year-over-year improvement in financial performance was significantly impacted by the Financial Services segment as a result of a $20-million reduction in the expected credit loss provision in the current quarter and the lapping of the $50-million increase in the expected credit loss provision recorded in the first quarter of 2020,” it said.

Source: Globe and Mail
Source: Financial Post


Canadian Tire Tops Expectations as Pandemic Continues to Drive Purchases of Home, Outdoor Gear

Spring’s early arrival sent demand for everything from patio furniture and inflatable pools to barbecues and bikes soaring at Canadian Tire Corp. Ltd., which reported higher-than-expected sales growth in its first quarter. Comparable sales across all of the company’s retail banners, a retail industry measurement of sales within an existing store network without the effect of opening and closing stores, increased by 19.3% for the three months ended April 3 compared with the year-earlier period. 

The Mark’s retail chain led the way with a 22% uptick in comparable sales growth, while Canadian Tire sales rose 19.2% and SportChek sales increased 18.7%. “Our multi-category assortment across all banners continues to prove integral to meeting the demand for products in backyard living, outdoor activities and home projects,” chief executive officer Greg Hicks said.

While many bike retailers have struggled to obtain inventory, the retailer was well positioned to benefit from surging demand for bicycles, he said. “Our ability to reliably source stock and assemble bikes puts them within easy reach of customers,” Hicks said. “This is proving to be a differentiator for us in the market.” The company’s cycling categories at Canadian Tire and SportChek were up over $50 million compared to last year, he said.

The Toronto-based retailer posted a profit attributable to shareholders of $151.8 million or $2.47 per diluted share, compared with a loss of $13.3 million or 22 cents per share for the same period a year earlier. Revenue for the quarter was $3.32 billion, up from $2.85 billion in the first quarter of 2020. The company’s financial results were better than many analysts had predicted.

Due to COVID-19 restrictions, only 40% of Canadian Tire and SportChek stores were open at the start of 2021. Yet the demand for outdoor gear, automotive products and home improvement items continued.

“More than 60% of the dealer shipment growth was to support spring and summer outdoor activities with products such as patio furniture, inflatable pools, barbecues and bikes.” chief financial officer Gregory Craig said during the call to discuss the results.

The company has also announced that it will soon begin testing a subscription membership program, charging customers a flat fee for perks such as extra loyalty rewards for in-store purchases, free home delivery of all online orders and access to Bell Media’s Crave streaming service. The company has not yet specified what it will charge for the service, or how long the test will continue before it decides whether to roll it out more widely. The program could be part of Canadian Tire’s efforts to compete with online giants such as Walmart and Amazon. Canadian Tire struggled to keep up with surging demand for online purchases in the early days of the COVID-19 pandemic, but is now seeing significant growth in e-commerce.

The company’s e-commerce sales grew by 257% to nearly $450-million in the first quarter, while online sales quintupled for its flagship Canadian Tire chain, compared with the same period last year. But three-quarters of its online orders are still for curbside pickup at stores.

Source: Globe and Mail
Source: Toronto Star
Source: Canadian Tire


The Home Depot Announces First Quarter Results

Home Depot beat Wall Street’s earnings estimates as consumers’ splurging on their homes lingers more than a year into the coronavirus pandemic. The stock has risen 19% this year, giving it a market value of $341 billion.

The Home Depot reported sales of $37.5 billion for the first quarter of fiscal 2021, an increase of $9.2 billion, or 32.7% from the first quarter of fiscal 2020. Comparable sales for the first quarter of fiscal 2021 increased 31.0%.

The retailer reported fiscal first-quarter net income of $4.15 billion, or $3.86 per share, up from $2.25 billion, or $2.08 per share, a year earlier. Net sales rose 32.7% to $37.5 billion, beating expectations of $34.96 billion. 

Global same-store sales surged 31% for the quarter, and paint was the only category to see same-store sales growth of less than 20%. Online sales grew by 27%. More than half of digital orders were fulfilled through stores.

This is the first quarter that the retailer is facing year-over-year comparisons to its business during lockdowns. In 2020 its first-quarter same-store sales grew 6.4%. Home Depot was classified as an essential retailer, accelerating sales for the company’s do-it-yourself supplies as consumers tackled new projects while stuck at home.

A booming housing market has also helped fuel growth, although soaring lumber prices and higher interest rates have dampened sales of newly built homes in recent months. “The current shortage of new housing clearly is helping to drive improvements in the home values, which is a good thing for spending in the home,” CEO Craig Menear said.

For the company’s first quarter this year, it reported 447.2 million customer transactions, up 19.3% from a year earlier. Consumers were also spending more during their visits. Average ticket rose 10.3% to $82.37.

Home Depot hasn’t released an outlook for fiscal 2021. Last quarter, it cited the uncertainty caused by the pandemic.

Source: Home Depot
Source: CNBC


Walmart Releases Q1 FY22 Earnings

Walmart raised its annual earnings forecast after delivering better-than-expected results in the first quarter that showed shoppers, splurged on clothing, as well as lawn and garden items. First-quarter net income was $2.73 billion, or 97 cents per share, in the three-month period ended April 30. That compares with $3.99 billion, or $1.40 per share, in the year-ago quarter. Adjusted earnings was $1.69 per share. Analysts were expecting $1.21 per share, according to FactSet.

Sales rose 2.6% to $137.16 billon. Analysts were expecting $132.16 billion. Walmart said that it now expects earnings to increase in the high single digits; previously, the company had projected a slight decline in profit for the year.

Sales at stores opened at least a year rose 6%, slowing from the 8.6% increase during the fiscal fourth quarter. But it topped the 10% spike in 2020 when Walmart turned into a pandemic lifeline for millions of people. Online sales rose 37%, down from 69% during the fourth quarter.

As people go out more, Walmart said that sales of travel items and teeth whitener are popping as shoppers take their masks off. The company also said that transactions in its stores were up for the first time in a year. Shares rose nearly 4%, or $5.37, to $144.78 in morning trading.

Walmart is still faced with plenty of challenges. Analysts believe that sign-ups for Walmart Plus, a membership program costing shoppers $98 annually, or $12.95 per month, are slowing. The retailer is hoping it will be a big competitor to Amazon’s juggernaut Prime free shipping program, launched 15 years ago. Walmart Plus gives members same-day delivery on 160,000 items, a fuel discount at certain gas stations and a chance to check out at Walmart stores without having to wait at a register.

McMillon told analysts during the earnings call that what’s driving the selling memberships is the grocery supercenter pickup and delivery, and capacity is an issue. He said right now the focus is on the quality of that experience, not the quantity.

Source: Walmart
Source: ABC News


Lowe’s Reports First Quarter 2021 Sales And Earnings Results

Lowe’s Companies, Inc. reported net earnings of $2.3 billion and diluted earnings per share (EPS) of $3.21 for the quarter ended April 30, 2021 compared to net earnings of $1.3 billion and diluted EPS of $1.76 in the first quarter of 2020. Excluding charges in the prior-year period related to the strategic review of certain operations, first quarter diluted EPS of $3.21 increased 81% from adjusted diluted EPS of $1.77 in the first quarter of 20201.

Total sales for the first quarter were $24.4 billion compared to $19.7 billion in the first quarter of 2020, and comparable sales increased 25.9%. Comparable sales for the U.S. home improvement business increased 24.4% for the first quarter.

For the fifth consecutive quarter, 100% of Lowe’s stores earned a Winning Together profit-sharing bonus. This payout to front-line hourly associates totals a record $152 million, which is $70 million above the target level.

“Our outstanding performance continued this quarter, as we delivered strong sales growth and operating margin expansion. We delivered over 30% growth in Pro, over 18% growth in all 15 U.S. regions, and growth in Canada that outpaced the U.S.,” commented Marvin R. Ellison, Lowe’s president and CEO. “I would like to thank our front-line associates for their hard work and commitment to delivering exceptional customer service. Looking forward, I remain confident in our ability to accelerate our market share gains while driving further improvement in operating margin.” 

As of April 30, 2021, Lowe’s operated 1,972 home improvement and hardware stores in the United States and Canada representing 208 million square feet of retail selling space, and it serviced approximately 230 dealer-owned stores.

Outlook

Lowe’s delivered very strong financial results in the first quarter of 2021, with sales momentum continuing into May. The Company is currently tracking ahead of the Robust Market scenario provided at its December 9, 2020 Investor Update, which assumed fiscal 2021 sales of $86 billion. Better-than-expected year-to-date results and a supportive macroeconomic backdrop build the Company’s confidence in its ability to deliver strong results for the fiscal year, including continued market share gains and the achievement of a 12% operating margin. Additionally, the Company continues to plan for $9 billion in share repurchases and $2 billion in capital expenditures in fiscal 2021.

Source: Cision New Wire
Source: Market Watch