We are seeing continued growth in Retail sales and a rebound in brick and mortar. July retail sales were $52.9 billion, another month to month increase and the highest July sales volume since 2004. 

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Looking at YTD results, Total Retail sales are down $23.1 B or 6.5% YoY. 

Retail sales volumes in total in 2019 were pretty much even every month (blue bars). The orange line above shows the steep decline of sales during the pandemic and recovery to date.
 The stores with increases YoY generated an additional $11.0 B sales. The stores with decreases took sales of $34.5 B out of the economy Feb thru Jul (the timeframe of the pandemic).
The stores up Y0Y are Building & Garden Material and Equipment+2.7% , Food & Beverage +11%, Health & Personal Care  -%, General Merchandise and Miscellaneous retailers +6%. Electronic and Appliance stores are almost flat to LY.
The stores with the biggest decline YoY are Clothing & Accessories -40%, Motor Vehicle & Parts -21%, Furniture & Home furnishings -20%, Sporting Goods/book & music -12% and Gasoline stations -23%.
 
February – July – the Pandemic timeframe impact
Looking at Retail sales (chart below) from Feb thru July, we see a significant shift in the major categories.
Motor Vehicles and Parts generated 50% of the sales volume decline. Gasoline stations 22% and Clothing and Accessories stores 20%

​Clothing & Accessories stores had the biggest drop in sales due to the pandemic. Sales volumes by month were relatively even in 2019. We can clearly see the staggering drop in sales in March and April 2020 as the pandemic intensified. Even after volume growth from May thru July,  sales YTD are still 39% less than LY.
Clothing stores -40%. Shoe stores -35%. Jewellery/luggage/leather goods stores -38%.  

Stats Canada posted May retail results which were up 4% over LY, excluding motor vehicles and parts and gasoline stores.
Food & Beverage stores were flat. Sporting Goods stores were up 5.7%.    Building Materials & Garden stores +12.2%.   General Merchandise stores + 3.6%.  Health & Personal Care stores +4.6%.
Clothing & Accessories stores +4.3%. Before you get too excited, the increase was mainly from Jewellery & Luggage which were up 25.9%. Clothing stores were only up 1.3% and Footwear +6%.  
 If you are wondering what everyone is spending their money on, it`s Vehicles & Parts, sales were up 14%. Gasoline, sales were up 11.5%. Not to mention mortgages and hydro.
 
Canada Goose, Canadian Tire, Macy`s, Kohl`s, Dillards and Nordstrom all posted results today for Q2. It was a mixed bag, although the 2 Canadian companies reporting had good results. . Here is a brief recap.
 
Canada Goose shares rose with the excellent results. Retail sales $8.3m (stores and on-line). Wholesale sales $19.9m, up 38.2%. Continuing made in Canada with 5 factories including one in Quebec. Opening stores in London, Chicago, Calgary, Tokyo. The market responded with higher stock prices. They are shipping fall with many customers wanting product earlier than ordered.
 Canadian Tire shares also rose based on a strong Q2. Results were better than expected even with the cooler weather. Revenue was up 8.8% over LY with comp sales +1.8%. Comp sales increases by banner were Canadian Tire +1.4%, FGL Sports +2.6% and Marks +4%. FGL Sports was below the annual +9% target. Profit was higher than anticipated, up 60 basis points over LY.  This was due to improvements n sourcing and incremental penetration of private brands which accounted for 30% of the revenue, up 8% over LY. They credited their good results to a strategy of diversified assortments and using new technology to mine customer data to target effective promotions. They have also launched Atlas with AI to improve customer’s searches on line.
Nordstrom also had a good Q2, achieving targets with net sales +3.5% to LY and comp sales +1.7%. The increased were generated by product newness selling at regular price, improved loyalty program and a strong Anniversary Sale. Nordstrom full line stores were up 2.4%, comp+1.4% (including Canada). Nordstrom rack stores were up 9.8%, comp +3.1. GP for the quarter dropped 25 basis points from LY due to new store and loyalty expenses. Merchandise profit was up over last year due to higher regular sales.
 
Macy`s sales were better than analyst expectations and in line with their projections. Total sales of $4.55b were down 5.4% to LY. Comp store sales were down 2.5% mainly due to weaker international tourist sales (down 9%). Key strategic Merchandise initiatives are starting to pay off. Shoes were up mid-single digits and Fine Jewellery up double digits. Backstage tests in 38 stores generated 6% incremental sales. Fragrances, active apparel and men`s tailored clothing were all up in the quarter. Digital sales were up double digit with the new mobile app. Inventory is 3% lower than LY comp. Beauty and housewares continue under ``pressure``. The market didn`t like these results and stocks dropped during the day.
 
Kohl`s sales for Q2 were down 0.9% to LY, comp sales were down 0.4%. This was well received as it`s a good improvement over recent results. On line sales were up 19% attributed to an improved mobile app that drove 66% of the on-line traffic. GM was 39.4%, down 6 basis points to LY due to digital growth. Merchandise GM was improved due to an increase in regular sales increased while clearance sales declined. Expenses were down slightly as planned and Inventories were down $75.0M or 2%. Strong businesses included home, men`s apparel and active apparel and footwear.

​Dillards Q2 missed estimates and the stock price dropped today. Sales of $1.427B were down 1%. Merchandise Margins were down 235 basis points due to higher MD`s to clear high inventories. The Net loss for the quarter was $17.1M compared to net income LY of $12.1M. Strengths were in women`s apparel where sales were up slightly. Below trend were cosmetics, shoes and home.

PVH Corp.
Weak traffic and consumer spending trends in key tourist haunts plagued Calvin Klein and Tommy Hilfiger U.S. stores in the second quarter, and same-store sales declined by 4 percent and 7 percent respectively as a result. But thanks to both brands’ healthy American wholesale businesses, their North America revenue still rose: for Calvin Klein, by 11 percent to $398 million, while Tommy Hilfiger increased 3 percent to $407 million. Their international arms achieved double-digit growth, too, pushing total Calvin Klein revenue to $726.4 million and Tommy Hilfiger to $860.2 million.
Despite a 14 percent decrease in revenue in parent PVH Corp.’s (PVH) Heritage Brands business, the New York-based company’s total revenue increased from $1.86 billion to $1.93 billion in the three months ended July 30. Though Q2 profits fell to $90.5 million or $1.11 per diluted share, PVH now projects that full-year earnings per share will be in the range of $7.50 to $7.60, up from a previous range of $6.45 to $6.55.

Sears Canada
2nd Q ending Jul 30. Same store sales -5.5% due to lower than expected sales of spring product and lower traffic for big ticket, impacted by credit card change.
Cut $128m in costs in 1st half of year. Net Loss $91.6m, compared to profit of $13.5m LY. LY’s profit was fueled by store sale and leaseback agreements. 
 
 
Burlington
Another day, another off-price retailer knocking it out of the park. Burlington Stores(BURL) said Thursday that net sales in the second quarter increased 9.7% to $1.3 billion, thanks to a 5.4% increase in sales at stores open for at least a year, while new and non-comparable stores contributed $51.8 million. Net income jumped 87.1% to $20.4 million or 28 cents per diluted share, compared with $10.9 million a year ago. Based on its strong first-half performance, Burlington raised its full-year outlook and said it now expects net sales to rise by 7.8% to 8.3% and comps to increase between 3.6% and 4.1%. The company will open 25 new stores in the second half of the year.

Staples, Inc.
(SPLS) announced today the results for its second quarter ended July 30, 2016. Total company sales for the second quarter of 2016 were $4.8 billion, a decrease of four percent compared to the second quarter of 2015. On a GAAP basis, the company reported a net loss of $766 million, or $1.18 per share. Second quarter 2016 results on a GAAP basis include pre-tax charges of $986 million primarily related to the impairment of European goodwill and other assets and costs associated with the termination of the Office Depot merger agreement.
North American Commercial sales for the second quarter of 2016 were $2.0 billion, flat compared to the second quarter of 2015.
North American Stores and Online sales for the second quarter of 2016 were $2.0 billion, a decrease of six percent compared to the second quarter of 2015.
International Operations sales for the second quarter of 2016 were $721 million, a decrease of seven percent in U.S. dollars or four percent on a local currency basis compared to the second quarter of 2015. This was primarily driven by sales declines in Europe, partially offset by double-digit growth in China.
 
Hudson's Bay Company
Hudson's Bay Company Announces Comparable Sales Results for the Second Quarter Ended July 30, 2016.
Consolidated Comparable Sales Grew 1.9%, Down 1.3% on a Constant Currency Basis.
Comparable Sales at Department Store Group ("DSG") Grew 2.6%, Up 1.1% on a Constant Currency Basis Led by strength at the Hudson's Bay Banner. (DSG includes Hudson’s Bay (Canada), Home Outfitters and Lord & Taylor).
Comparable Sales at Saks Fifth Avenue improved considerably, Up 2.7%; Down 1.3% on a Constant Currency Basis.
HBC Off Price (Saks OFF 5TH and Gilt) comparable sales decrease of 11.4%, cycling against an increase of 12.7% reported in the prior year
HBC Europe (GALERIA Kaufhof, Galeria INNO and Sportarena) comparable sales decrease of 0.9%
Total Digital Sales increase of 1.4% on a constant currency comparable basis. Excluding HBC Off Price, total Digital sales increase of 17.3% on a constant currency comparable basis.
At Saks OFF 5TH they significantly reduced promotional activity compared to the prior year, which increased margins substantially while reducing sales. At Gilt, they enhanced the return policy. These two dynamics at HBC Off Price reduced comparable sales in the quarter, but they believe they are the right things to do and will lead to growth.
Strategies for 2016 and 2017 include improved order fulfilment in the Toronto DC, the opening of 20 Hudson’s Bay stores in the Netherlands and 5 Saks Off 5th in Germany.

 
The TJX Companies, Inc.
On Aug 16th TJX  announced sales and earnings results for the second quarter ended July 30, 2016. The comp store sales growth of 4% was almost entirely driven by customer traffic. They are convinced that they are gaining consumer market share based on a compelling selection of brands and fashions.  Their apparel, including accessories, and home businesses both performed well and merchandise margin increased. Second quarter results were above plan so they have raised their guidance for full year comp sales to increase 3% to 4% and earnings per share to be in the range of $3.39 to $3.43. Continuing the pattern from 2015, Canada’s increase of 9% surpass both US (Marmaxx+4%, HomeGoods +5%) and International +2%.
 

Wal-Mart Stores Inc
Wal-Mart said sales at U.S. stores open at least a year rose 1.6 per cent in the second quarter, excluding fuel price fluctuations.
In Canada, Wal-Mart’s comparable sales increased 1.1 per cent in the quarter, “despite increased promotional activity by competitors,” said Brett Briggs, executive vice president and chief financial officer of Wal-Mart.
The retailer's comparable sales in Canada have been positive for nine straight quarters. This has been helped by market share gains in food, as well as the health and wellness segments, Briggs said citing data from Nielsen.
 
Earlier this year, Wal-Mart said it would invest US$2.7 billion over two years to increase entry-level wages to US$10 an hour, a move the retailer said has led to cleaner stores, faster checkouts and improved customer service.
Store visits increased 1.2 per cent in the second quarter. They have also just released bonuses to all staff. However, on Sept 2 they revealed that they are cutting 7000 desk jobs over several months in all US stores. These will be automated or handled by head office. The people affected in the stores will be moved into selling jobs so that there are more staff helping customers.
 
Alimentation Couche-Tard Inc
The Alimentation Couche-Tard Inc. convenience store chain has been doubling down on its fuel business, picking up gas stations across Europe and North America that include its biggest ever acquisition, of Texas-based CST Brands, announced last week.
 
The result in the first quarter of fiscal 2017 was mixed: revenues took a hit due in part to lower fuel prices, while U.S. fuel retail margins were largely responsible for the company’s higher-than-expected earnings per share.
In the Q1 report released Tuesday, earnings were up nine percent year over year despite a decrease in revenue of more than six per cent.
“A lower fuel selling price usually works in our favour as customers tend to travel more in this context — buying more fuel — while also leaving them with more cash for their discretionary spending,” the company said in a news release Tuesday.
 
Reitmans Canada Ltd
Q1 (ended Apr 30) Sales +0.9% with a net reduction of 60 Smart Set stores.
Comp stores sales +8.8%, stores +6.3%, e-com +52.5%.
GM 55.8%, down 370 basis points from LY due to the exchange rate and increased markdowns. Half of the reduction is the exchange rate. EDITDA loss $4.3m vs LY earnings of $2.3m. Inventories 3.3% higher than LY.
750 stores in Canada. Reitmans 327, Penningtons 130, Addition Elle 104, Thyme Maternity 66, RW & Co 83, Hyba 17 and 23 Smart Set (will close by Jan 2017).
Strategies:
Ecom growth
New Supply Chain initiative to be completed in 2017
Distribution Centre & systems updated
Addition Elle launched “Ashley Graham” collections in US at Nordstrom and Lord & Taylor. 
 
Lululemon Athletica Inc
Q2 (ended Jul 31)
Net Revenue +14%. Comp sales +4%. stores +3%, e.com +6% (including an one time only online warehouse sales. )
E.com = 17% blend of total sales.
GP $ +20% over LY. Rate 49.4%, 260 basis points higher than LY.
Opening 42 new stores in 2016, some will be the new smaller concept “infil” neighbourhood stores that will address community events.
 
Canadian Tire
Q2 Total Retail Sales +3.1% (includes -5.3% Petrolium Sales due to lower prices)
Revenue +2.9%, +4.5% excluding Petrolium
Same store sales

• Canadian Tire +2.9%
•  FGL +5.8%
• Marks +4.6%

Retail GM increased 55 basis points.
 
Karen Aboud is the principal of K.A.A. Business Solutions. Services provided include Analysis, Merchandise Planning, Planning systems and tools, Training and Process management.
 
Karen Aboud |416-489-0384| kaabusinesssolutions@yahoo.ca | http://www.kaasolutions.net

Fiscal 2014 Information

HBC
Sales $8.2B. +56.4%
2014 Results include Saks for full year. GP adjusted re new accounting rules re advertising expenses & one-time charge re the Saks acquisition. Digital sales +35.1%.
DSG* Merchandise performance driven by men’s apparel, ladies shoes, dress clothes, outerwear.
Saks by menswear & accessories.
2015 projected sales $9.0B.
Gross Profit $3.3M, +61%. GP % 40.4%
# Stores 322
Same store Sales % to LY
DSG*   +1.5%
Saks +2.1%
Off 5th +15.1%
* DSG = department stores group (Hudson’s Bay, Home Outfitters, Lord & Taylor)

 Kohl’s
Sales comp stores = Flat.  Net Income -2%
5 key initiatives drove Q4 comp sales +3.7%.  National Brands performed best while Women’s Apparel under-performed.
2015 Forecast Sales +1.8 – 2.8%, Flat GM.
# Stores 1162

GAP Inc
Total Sales +2%. GP % 35.2%. GP $ +4% over LY
Successes due to “product consistency & great marketing”.
China growth 2014 = GAP + 32 stores, Old Navy +7. Adding 40 more in 2015. GAP Women’s not performing up to plan.
Old Navy +5%
GAP -5%
Banana R Flat
On Line  +10.6%

Macy’s Inc
Sales comp stores + 0.6%. Sales 1.4% below plan. GM % 40%. Net Income +2.6%
2015 Sales forecast +1%. Plans to expand internationally in Puerto Rico, Abu Dhabi, United Arab Emirates. New off price both brands.

TJX Companies
Sales +6%
HomeGoods +7%, Marmax +1%.
Customer traffic up every quarter. Comp Sales +2%

Dollarama
Sales +13%.  Same Store sales +5.7%
# Stores 955. Opened 81 new stores in 2014. Potential for 1400 stores in Canada
Earnings +1.8%

J.C. Penney
Sales +3.4%. Comp Sales +4.4%. Operating Profit -2.5% (LY -12%)
Now shipping to Canada; pay in Can $.
Sales per sq ft $113.00, up $6.00.
# stores 1062. Closed 61 stores since 2010 & opened 15.

Nordstroms
Comp Sales +4%. .com sales +23%. 
GM 35.9%.GM dropped 52 basis points from 2014. Net Income -1.2%
Results include Canada. Canadian operation loss was $32.0m.
# stores 167. 27 stores are Rack stores. 2015 new stores Canada +2, USA +3, Rack +27.

Target
Sales +1.9%. Comp Sales +1.3%. GM % 29.4%. GM down 40 basis points
Results exclude Canada.