Monday News & Notes
Mon, Apr 25, 2:42 PM ET, by RetailSails.com
First quarter earnings season is upon us, and though most big-box chains won’t report until May we are expecting a handful of releases this week from retailers including Tuesday Morning, Amazon.com, Coach, Destination Maternity, O’Reilly Automotive and Starbucks. Retailers have so far been able to sustain margins on improving top-line trends and aggressive cost-cutting measures, but we expect that higher input, transportation and manufacturing costs will start to pressure the bottom line in the coming quarters. Shoppers have yet to see major price increases on most non-food products, but retailers have begun to experiment with selectively raising prices on denim and cotton products, and consumers already facing near $4/gallon prices at the pump will be hit with double-digit price hikes at the store by this summer.
- RadioShack reported 1st quarter earnings this morning that were in-line with analyst estimates, but the company cut the top end of its full-year profit outlook mainly due to weakness in T-Mobile postpaid wireless sales. Revenue grew 2.1% in the quarter, driven by an increase in kiosk sales, but same-store sales declined 0.6%. Jim Gooch, President and Chief Financial Officer, said, “Despite a challenging economy and tough weather conditions, our first-quarter results were generally in line with our internal expectations. We expect the softness in our business to continue during the second quarter before we begin to see the benefits of our merchandising and sales initiatives improving both revenue and income trends in the back half of the year. In addition, growth in our mobility business will be aided by our tablet computer offerings, which are being introduced this month.”
- McDonald’s said global comparable sales rose 3.6% in March and 4.2% in the 1st quarter – they have now reported same-store sales gains for an incredible 95 straight months and 32 consecutive quarters. The company reported a slightly better-than-expected 11% profit gain during the quarter. McDonald's Chief Executive Officer Jim Skinner said, “As we begin the second quarter, our top-line momentum continues with global comparable sales trending in-line with or better than first quarter sales." However, the company expects food expenses to rise as much as 4.5% in the U.S. and Europe this year, up from a forecast for a 2.5% increase in February. Menu prices were raised 1% in March, and further increases are expected, but the stock was down on margin worries.
- Tractor Supply Company, the largest operator of retail farm and ranch stores in the U.S, posted EPS of $0.24 in its fiscal first quarter, up 73% from the prior year and much better than the $0.16 analysts were expecting. Total sales jumped 17.7% to $836.6 million in the quarter, the 4th straight double-digit increase, while same-store sales rose 10.7%. Jim Wright, Chairman and Chief Executive Officer, stated, "We are delighted with our record first quarter results and start to 2011 as we continue to experience broad-based strength across the organization. As a result, we achieved our fourth consecutive quarter of double-digit sales and earnings growth. We enhanced our merchandise management across categories and regions, maintained a prudent approach to expenses, and experienced greater productivity from new stores. Through great planning and execution, we believe we are well-positioned for the important spring selling season."
Other Worthwhile reads for Monday Afternoon:
- Killer Combo of High Gas, Food Prices at Key Tipping Point, Especially at Lower Income Levels (CNBC)
- Wal-Mart tests online grocery delivery in California (Reuters)
- The longstanding marketing adage that Women control 80% or more of spending is a myth (WSJ)
- Deadline set for buy-out deal to rescue UK retailer All Saints (Telegraph)
- Camouflaging Price Creep: The Easter special at many retailers this year involves higher price tags (NY Times)
- It’s only been a few days since American Apparel was rescued from the threat of Chapter 11, but CEO Dov Charney is already talking big again (NY Post)
- Surging pork and beef costs will keep pressure on U.S. food inflation, which are expected to rise 3% to 4% this year, the most since 2008 (Bloomberg)
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