Census Bureau Retail Sales Data Analysis:
March 2013
Big picture, our favorite measure of “what’s happening at the mall” (excludes Motor Vehicles, Gasoline, and Building Materials) suggests a +2.2% year-over-year sales improvement in March 2013 versus LY. This represents a deceleration versus the +3.5% growth rate in February 2013.
The most compelling category specific storylines in March 2013 were:
- March 2013 represented the 41st consecutive month of positive year-over-year growth for our favorite “mall” measuring stick.
Yet, it’s important to note that our favorite “mall” measuring stick reported its weakest year-over-year sales growth in March 2013 since January 2010.
- Most categories reported a weaker top-line growth in March 2013 than February 2013. Bucking this particular trend with stronger year-over-year sales growth in March 2013 than February 2013 were Furniture & Home Furnishing Stores, Clothing & Clothing Accessory Stores, and Food Services & Drinking Places.
- Furniture & Home Furnishing Stores reported a slight acceleration in March 2013 versus February 2013.
Yet, it’s important to note that the comparison to last year in March 2013 was much easier to anniversary than February 2013 (i.e. the 2-year growth rate materially declined in March 2013 versus February 2013).
The category’s 2-year growth rate has now declined from +15.1% in January 2013 to +8.6% in March 2013.
- After reporting relatively strong top-line results in calendar Q4 2012 and slightly positive results in Jan/Feb 2013, sales Electronics & Appliance Stores fell off the cliff in March 2013 (-3.2% versus LY).
The problem is that the category lapped materially easier top-line compares in calendar Q1 2013 than calendar Q4 2012.
- Non-Store Retailers continue to report robust top-line growth. In Q1 2013 (January – March), the category grew +14.5% versus LY, an acceleration versus +11.0% in Q4 2012 (October – December). Very few categories accelerated in Q1 2013 versus Q3 2012.
- Food Service & Drinking Places continued its impressive run with its 34th consecutive month in which year-over-year sales growth exceeded +3.0%.
- Motor Vehicle & Parts Dealers was one of the few categories to report an acceleration of year-over-year growth in Q1 2013 versus Q4 2012 (Health & Personal Care Stores, Electronics & Appliance Stores and Non-Store Retailers are the others).
In addition, the category reported +46.5% growth in March 2013 versus March 2009 (4-year).
See attached for the full report and the data.
Recent monthly “Big Picture — what’s happening at the mall” year-over-year results:
| Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 Jan 2013 |
+5.4% (+10.7% 2-year) +4.8% (+10.0% 2-year) +5.2% (+10.6% 2-year) +3.9% (+10.4% 2-year) +4.3% (+10.7% 2-year) +3.2% (+10.1% 2-year) +4.1% (+11.4% 2-year) +3.2% (+10.3% 2-year) +4.0% (+10.7% 2-year) +2.6% (+9.9% 2-year) +3.0% (+9.3% 2-year) +4.1% (+9.6% 2-year) +3.3% (+8.8% 2-year) |
URBN Proxy Statement Reveals Brand CEO’s Not Created Equal
Urban Outfitters (URBN – $41.55) CEO Richard Hayne (who owns 18.8% of the total outstanding stock) received very little pay last year (only $33K). But, he made sure that his son received $415K in total compensation during FY 2012. We wonder what David Hayne does at URBN to deserve such a rich pay package.
But, here’s what is most interesting. Anthropologie CEO, David McCreight’s annual bonus “criteria” is 75% based upon “individual initiatives.” See below.
Last year, despite his brand not achieving their “plan” (see Proxy Statement below), he achieved 5 of 5 “individual initiatives” (new stores opened, capacity utilization, customer penetration, asset turnover, and hiring of personnel).
But, the annual bonus criteria for Ted Marlow, the Urban Outfitters brand CEO, only allots 14.3% to “individual initiatives.” See below.
You see where this is going? Mr. McCreight was awarded a $1.377 million annual bonus for the last fiscal year even though Anthropologie did not deliver on its “plan.” Conversely, Mr. Marlow was only awarded a $126K annual bonus for the last fiscal year (also did not achieve its “plan”…but, Urban Outfitters significantly outperformed Anthropologie during the year).
Why does Mr. McCreight have such a ridiculous bonus criteria that is primarily focused on “individual initiatives” and allows for a rich payout even when the Anthropologie brand underperforms?
The fact is that Mr. McCreight’s Anthropologie brand has greatly underperformed, not just compared to Urban Outfitters, but also compared to many of its peers. Yet, he received a handsome bonus in FY 2012. URBN’s executive compensation, at least in the case or Mr. McCreight, clearly rewards (under) performance.
Weekly Top 5 Articles – Five Articles Worth Reading
Samsung Plans Mini-Stores in Best Buys – Click to Open PDF
Did Samsung test a mini-store in an actual Best Buy location? Do they really want to rely on Best Buy employees for the customer service aspect of this partnership? Regardless, rolling this out in such a major way (1,400 stores) without testing the concept is a recipe for disaster.
Date Published: Thursday, April 4th, 2013
Source: New York Times
Wal-Mart Strains to Keep Aisles Stocked Fresh – Click to Open PDF
Not sure this is an issue for anything other than produce. The fact is that inventory growth has exceeded sales growth in 6 of the past 8 fiscal quarters. But, that’s what the media does… take an issue that may be isolated to just produce and turn it into something much larger.
Date Published: Wednesday, April 3rd, 2013
Source: New York Times (more…)
Has the Recent Top-Line Success in the E-Commerce Channel Permanently Lowered GPM% Expectations?
Other than the ‘pure’ merchandise margins reported for ANF and CHS, it’s difficult to parse out the impacts of store occupancy, distribution, et al. But, if we view the Q4 2012 GPM% performance versus Q4 2009 (3-year), it becomes clear that ex-JCG and URBN’s top-line success over the past few years has come at a price… merchandise margin degradation.
We continue to believe that a material decline in the company’s GPM% rate over the past three years is likely indicative of a permanent degradation in the company’s merchandise margin rate.
We believe that it’s worth noting that both ex-JCG and URBN have enjoyed tremendous top-line success over the past few years… largely via out-sized e-commerce growth. Yet, their respective levels of profitability have come under pressure and remain so.
Let’s go one step further. The profitability decline at both ex-JCG and URBN over the past ~3 years can be traced directly to their dramatic GMP% declines. Therefore, out-sized e-commerce channel growth for specialty apparel retailers may not be all that it’s cracked-up to be.
Weekly Top 5 Articles – Five Articles Worth Reading
Toys R Us Pulls IPO Filing – Click to Open PDF
Yeah, they pulled the IPO in part due to “unfavorable market conditions.” How market conditions could be more “favorable” is beyond us. Simply, a melting ice cube.
Date Published: Friday, March 29th, 2013
Source: WSJ
Wendy’s Cut Affordable Care Act Cost Outlook by 80%: CFO – Click to Open PDF
Many of these outrageous prognostications from company management teams were made during the election cycle… begging the question in the case of WEN and others that predicted doom and gloom, were they made primarily for political purposes?
Date Published: Wednesday, March 27th, 2013
Source: CFO Journal (more…)
Q1 2013 Stock Price Winners/Losers
Let’s take a look at the calendar 2012 stock price performance rankings for a variety of retail/consumer categories (click here to view PDF of complete listing by category):
Specialty Apparel Winners/Losers:
| APP CACH HOTT |
+117.0% +74.4% +43.8% |
CWTR CTRN LULU |
-34.3% -25.7% -18.2% |
Retail Department Winners/Losers:
| SHLD SKS KSS |
+20.8% +9.1% +7.3% |
JCP DDS JWN |
-23.4% -6.2% +3.2% |
Retail Specialty Hardlines Winners/Losers:
| BBY RSH HGG |
+86.9% +58.5% +57.2% |
SCSS PETM FBN |
-24.5% -9.2% -7.4% |
HIBB’s Web Strategy Being Directed by Ted Kaczynski?
Sometimes you just can’t make this stuff up.
In the company’s Q4 2012 conference call, the management team at Hibbett Sports (HIBB – $54.90) made some rather curious remarks re: the web channel. It seems that, unlike EVERY OTHER RETAILER, the company is more concerned about their DC expansion and HQ move than addressing the transformational potential of the web channel.
HIBB management has done a remarkable job over the past 4-5 years greatly improving their level of profitability. Actually, an argument could be made that no one has done a better job than the folks at HIBB. But, the lack of strategic focus on what is likely to be the future of retail (web) needs to be noted.
Here is the transcript for two separate exchanges with sell-side analysts on the company’s Q4 2012 conference call:
Terrific. Finally, if I could ask Jeff the time line for potentially discussing an e-commerce strategy.
In the second half of this year, we are coming up with a strategy. And, as we put that together, we’ll let people know, but really we have got enough on our plate between a new home office, a new distribution center going on right now, but the second half of the year, we will open, spend some time on the strategy and take a further look into it.
Okay, that’s great. And then maybe just a last thing as it relates to e-commerce and the plan there. It sounds like you’re already sort of in the phases of building out some marketing spend and allocating more dollars to social media and sort of online marketing. How do we reconcile that to maybe not still needing — having a need for an e-commerce platform? And I guess just the overall assessment of your consumer and where the trends have gone in terms of their access to the internet, where that’s going, what the pace is, and ultimately, yes, the strategy for Hibbett in terms of holding onto that consumer as they migrate along.
One of the advantages that we have, and you talk e-commerce strategy, and one of the things we talk about — 75% of our transactions are cash or debit. So very little has been spent from a credit card. So our consumers are very (inaudible) driven, which is impactful. Most of our markets, we are in small towns. Their form of entertainment is getting out into public and going to a physical store.
According to the National Sporting Goods Association, if you go back 20 years, approximately 13% to 15% of sporting goods was sold by mail order or catalog. Today, that’s almost nothing by mail order or catalog. It’s gone to nothing, but e-commerce has gone up to the 13% to 15%. So this is probably why we haven’t been impacted in Hibbett. But if it keeps growing in the future, we will have to look at it but we want to be needed. We are not too sure we are needed there today.
Weekly Top 5 Articles – Five Articles Worth Reading
What’s In Your Digital Wallet? Lucrative Data – Click to Open PDF
Digital wallets are not (generally) providing specific merchant-level information to the credit card network or credit card issuer. Therefore, issuers are retaliating by charging fees to digital wallets.
Date Published: Friday, March 22nd, 2013
Source: WSJ
Tiffany Sees Lackluster First Quarter But Stronger Second Half – Click to Open PDF
How many times does the “abysmal first half of year followed by a strong second half of year” managerial guidance actually come to fruition (excluding FY 2012′s sourcing cost tailwind)? Almost never. But, that certainly does not sway head cheerleader Oliver Chen at Citigroup (see quote).
Date Published: Friday, March 22nd, 2013
Source: WSJ (more…)
Weekly Top 5 Articles – Five Articles Worth Reading
Samsung Launches Tour of New Galaxy – Click to Open PDF
It will certainly be interesting to look back in 6-12 months to see if this week’s launch was a true inflection point.
Date Published: Friday, March 15th, 2013
Source: WSJ
Eyes Turn to J.C. Penney’s Joe Fresh Launch – Click to Open PDF
Can a shop roll-out that is less than 1% of the company’s square footage (800K of 112M) reverse the company’s fortunes? We’ll know shortly. But, it’s interesting to see how quick Mr. Johnson was to throw Liz Clairborne under the bus (see quotes on page #2).
Date Published: Wednesday, March 13th, 2013
Source: WWD (more…)
Census Bureau Retail Sales Data Analysis:
February 2013
Big picture, our favorite measure of “what’s happening at the mall” (excludes Motor Vehicles, Gasoline, and Building Materials) suggests a +3.9% year-over-year sales improvement in February 2013 versus LY. This represents a deceleration versus the +3.6% growth rate in January 2013.
The most compelling category specific storylines in January 2013 were:
- February 2013 represented the 40th consecutive month of positive year-over-year growth for our favorite “mall” measuring stick.
- Most discretionary categories reported a weaker top-line growth in February 2013 than January 2013. Conversely, most non-discretionary categories reported a stronger top-line growth rate in February 2013 than January 2013.
- Furniture & Home Furnishing Stores reported its lowest year-over-year growth rate since August 2011. In addition, February 2013′s year-over-year growth rate represented a sharp deceleration versus January 2013 (+1.6% year-over-year growth in February 2013 versus +4.2% in January 2013).
In addition, the category reported the largest sequential drop in February 2013 versus January 2013.
- After reporting relatively strong top-line results in calendar Q4 2012, Electronics & Appliance Stores have reported slightly positive year-over-year sales growth thsu far in calendar 2013. The problem is that the category is lapping materially easier top-line compares in calendar Q1 2013 than calendar Q4 2012.
- Non-Store Retailers continue to report robust top-line growth. In Q1 2013 QTD (i.e. January/February), the category grew +15.9% versus LY, an acceleration versus +11.0% in Q4 2012 (October – December).
- In December 2012, the Sporting Goods-Hobby-Book & Music Stores category reported its strongest monthly year-over-year top-line growth rate (+11.1% in December 2012 versus LY) since AT LEAST 1998 (we’ve only tracked the data since 1999).
But, the category has seen a dramatic deceleration over the past two months (January 2013 +8.9% and February 2013 +3.9%).
- Building Material & Garden Equipment Supplies Dealers was one of the few categories to report an accelerating 2-year top-line growth rate in February 2013 versus January 2013.
This fact is especially noteworthy since the category is lapping strong year-over-year sales growth in February 2012 & March 2012 (material weather benefit).
- Motor Vehicle & Parts Dealers was the only category to report an acceleration of sequential year-over-year growth in both January 2013 and February 2013.
See attached for the full report and the data.
Recent monthly “Big Picture — what’s happening at the mall” year-over-year results:
| Jan 2012 Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Jul 2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 Jan 2013 |
+5.4% (+10.7% 2-year) +4.9% (+10.1% 2-year) +5.0% (+10.3% 2-year) +3.9% (+10.4% 2-year) +4.3% (+10.7% 2-year) +3.2% (+10.1% 2-year) +4.1% (+11.4% 2-year) +3.2% (+10.3% 2-year) +4.0% (+10.7% 2-year) +2.6% (+9.9% 2-year) +3.0% (+9.3% 2-year) +4.1% (+9.6% 2-year) +3.6% (+9.1% 2-year) |