Tesco’s (TSCDF) Q2 2018

Alan Stewart – CFO

Inflation is back in the UK

Moving to the headline results of our UK and Irish segment. We’ve seen positive like-for-like of 2.1% for the half. Market conditions have been challenging with the return of inflation, but we’ve been able to protect our customers from more of this pressure than others by working closely with our supplier partners.

Bad debts way below pre-crisis levels

“Our bad debt-to-asset ratio has increased slightly to 1.3% but remains well below pre-financial crisis levels of 3% to 4% and is something that we continue to monitor very closely.”

Dave Lewis – CEO

They have increased prices by less than the market

“we have to keep the ability to flex as we need to. But clearly, we inflated by 1% less than the market, so that’s sharped our pricing and we continue to look for opportunities how we can sharpen the pricing.

Restoration Hardware 2Q17 Earnings Call Notes

Gary Friedman – Chairman & CEO

Teams are buttoning down the hatches in Florida

“as it relates to the Florida market. Our teams are buttoning down the hatches everybody is prepared for the storm and so we don’t have any more information than anybody else does at this point to know, to know the business impact in Florida.”

Membership model?

“Really because we’re the only specialty retailers ever done this, outside of Amazon and Costco and a few others we’re the only one made a move to membership that didn’t start out with membership this way and there is no benefit in us creating a roadmap for anybody else follow-up. So we’re not going to say a lot about membership other than the fact that we made a very brave move, a lot of people thought it wasn’t going to work. We’re in a position to tell you today that it is working and the renewal rates are positive. And the membership growth is positive. So other than that we don’t need to get anybody else a roadmap to simplify their business and gain the benefits that we are going to gain over the next couple of years because of that.”

Department stores have been dying forever

” Amazon is wrongly accused right, the department stores have been dying forever. It’s been a slow deferment from a lack of innovation and from very rigid business models that couldn’t adapt and innovate.”

You have to think of us as 7 years old

“you really have to think about this company like a relative new company we are really like 7 years old. I got here in 2001 and the company $20 million market cap is about ready to go bankrupt. We had to raise money three times to kick the company out of bankruptcy. And for the first — for the first five to seven years we were just on the edge of bankruptcy trying to make it. And we took the company from a $300 million, losing $40 million a year to $700 million making $40 million a year. And we’re taking the company private, and then, the economy collapsed in 2008 and 2009 and that set us back to $500 million company losing money again, right? And then, we came out of that really in 2010 as when we made it the significant pivot to the luxury and to the market and really emerged as the kind of a new company if you will.”

Walmart FY 2Q18 Earnings Call Notes

Douglas McMillon

Growth

Walmart U.S. grew comp sales 1.8% and comp traffic 1.3%. We continue to gain traction in e-commerce with Walmart U.S. GMV up 67%.

Moving to be more of a digital enterprise

“Our strategy is to make every day easier for busy families. To accomplish this, we continue our transformation to become more of a digital enterprise that moves with speed and agility. I’m encouraged by innovation in the business. We’re testing associate delivery of walmart.com orders in a few stores and by the end of the year, we’ll have approximately 100 automated pickup towers in stores across the U.S., where customers can pick up their orders within a matter of minutes.”

Seen strong results from online grocery rollout

“We’ve seen strong results from the rollout of online grocery, which is now in more than 900 U.S. locations, and we’re expanding this service in many of our markets around the world. Retail is constantly evolving and it’s critical that we move even faster as the customer and competitive landscape continue to change.”

Marc Lore and team delivered robust growth

“In Walmart U.S. e-commerce, Marc Lore and the team delivered another quarter of robust topline growth with GMV up 67%, including acquisitions. The majority of this growth was organic through walmart.com as customers are finding a broader assortment and more options to receive what they want at their convenience.”

Target 2Q17 Earnings Call Notes

Brian Cornell – Chairman and Chief Executive Officer

Pace of change doesn’t appear to be slowing

“During this period of rapid transformation in retail in which many others are shrinking, we will continue to look for ways to partner and deliver incremental growth for high quality brands while delivering differentiation and value for our guests. As we look ahead, we are committed to continued progress against our long-term goals. And we expect the environment will continue to be challenging. The pace of change in the consumer and competitive environment doesn’t show any signs of slowing down. And we are well positioned to emerge as one of the winners in retail”

Mark Tritton

Strong growth in hardlines

“In hardlines, comparable sales grew between 3% and 4% in the second quarter, the strongest performance we have seen in 10 years. Growth in this area was broad-based including double-digit growth in both videogames driven by Nintendo switch and Apple within electronics. Toys grew more than 3% with board games continuing to be a strong highlight. ”

Apple strength across the board

“I think firstly just on the Apple comments, they weren’t just driven by tablet, they are driven across the board in categories. And we had really strong showing in Q2 on the iWatch which we worked with Apple on clearly. And we have a lot in our plans for Q3 and Q4 with potential new launches as I have outlined. So we think there is still room for growth and continuing the trend. In terms of Nintendo Switch, we worked really closely with those guys as well to develop not only a product but a marketing campaign that the guests really responded to. ”

Cathy Smith

Better than expected performance

“In the second quarter our traffic sales and financial performance were all better than expected. Notably, the upside to our expectations was broad based across the country, across channels and in all three months of the quarter. Second quarter comparable sales increased 1.3% driven by a traffic increase of 2.1%. “

Nordstrom 2Q17 Earnings Call Notes

Erik B. Nordstrom – Nordstrom, Inc.

60% of online returns come back into the store

Sure, Adrienne. This is Erik. Our online return rate, we don’t break out specifically. It’s come down a bit in the last – it’s been over a year now that we’ve made some progress there. But it’s high. Our online business’ a high return rate. We get over – for full-price, over 60% of our online purchase returns do come to stores. For off-price, it’s over 80%, which is a real positive for us. It’s an example we use a lot internally, especially on full-price, because it is free for customers to mail back their returns, yet over 60% of our customers choose to do their returns in a store. And it’s because that’s what they want to do. It’s good for the customer, and by the way, it’s good for us. It’s more economical for us to take a return that way, and also, as you can imagine, having a customer in the store is beneficial.

And we really don’t focus on trying to turn around that return and make it fail immediately with it. What we’ve learned is a customer comes with a return, that’s their errand they have to do, and the more efficient, the faster we are in doing that, the more free time we’re giving back to the customer. And oftentimes, they take that free time and start shopping. So we’re really looking to take care of the customer on their terms, and if they have a great experience in our store with a return, we certainly believe that ends up in good news for us.

Kohls 2Q17 Earnings Call Notes

Kevin Mansell – Kohl’s Corp.

Goal to be a best in class omnichannel retailer

“Looking longer term, the results of the quarter and the year continue to reinforce to us that our goal to be a best-in-class omnichannel retailer is the right path for success. Our two priorities remain the same, and all areas of the company are focused on them: driving traffic and operational excellence. Our success in achieving our goals on those priorities will be driven by improvement in each of our key initiatives that are part of that strategic framework.”

Omnichannel impacted by store closures

“On the store closure analysis, as we indicated at the end of last year, there were some pretty consistent findings through that period of closure. And generally, what I would say is that the retention of sales from closed stores by other Kohl’s stores in the same trade area have continued around the same rate, which is around 30% or so. Of course, they range, but generally around 30%; that there is an impact on a market when you have fewer stores in it and share of mine is therefore decreased, and as a result, those areas where we’ve closed stores, the rate of growth in our omnichannel business has been a little less and that was a finding early on, and it continues to be so.”

Store closures have reinforced the need for a physical footprint

“Everything that we’ve learned from that store closure pilot has been that reinforcing the importance of a great physical footprint. And we’ve said over and over again, and we have seen nothing that doesn’t support this. In fact, I think the thesis is growing stronger. Certainly, probably smaller stores, certainly, as I alluded to, we are testing Your Store, which is a concept to what does the store look like in the future both operationally and from a customer experience standpoint, they’re going to look different. But I don’t see store closures has a meaningful impact anywhere in the near future.”

Macys 2Q17 Earnings Call Notes

Jeffrey Gennette – Macy’s, Inc.

I am confident that Macys will win again

“I also know that we operate in an environment of intense and disruptive competition, and that our customer has more shopping options than ever, and we need to provide her with a compelling and a unique proposition. So winning in this environment requires us to act with a great sense of urgency to make changes in how we operate and to move faster. And as we do this, I am confident that Macy’s will win again.”

Good signs so far on back to school

“On back-to-school, good signs so far. There’s a lot of good trends that are going on in the business. Charles, to your comment or question about we’re not seeing any differences really between how the southern stores are, outside of the fact that many of them have gone back to school. And so you’re seeing some lifts there that are encouraging for where stores go later around the east coast or in the northern states, but we expect they will all even out when the calendar is evened out.”

Going to remain promotional

“Let me just back up a bit and just say that when you look at the marketing strategy, we really wanted to reengineer the entire marketing machine at Macy’s and it has a lot of moving parts as we look at the fall season. Number one, we’re going to remain very promotional. And what we’ve spent a lot of time on is reducing the overlap of promotions, reducing the amount of overlap of discounts on top of each other. But we’re doing that all the way through the back half and that really is a big focus of ours.”

Omnichannel customer is clearly a potent one

“today, 25% of our entire digital demand could be satisfied in a door that is in the ZIP Code that is generating that online sale. And so that gives us huge fire power opportunity to convert that to a buy online pick up in store if that’s what the customer would like to do. We love that because when they’re in that store, they generally upsell about 25% of additional goods. The omnichannel customer is clearly a potent one when they buy in both channels, so all good things come from that. So the first thing was having the inventory availability to do that.”

Karen M. Hoguet – Macy’s, Inc.

Tourist sales were weak

“In the second quarter, international tourist sales were down approximately 9%, which was much worse than in the first quarter and negatively impacted our comp owned plus licensed sales in the second quarter by approximately 40 basis points.”

Dicks 2Q17 Earnings Call Notes

Ed Stack – Chairman and CEO

Retail market is currently in flux

“The retail market is currently influx. The environment is highly competitive and dynamic. We continue to believe this disruption translates into opportunity for our business long-term. We like the position we occupy in the sporting goods marketplace. And as this industry continues to consolidate, we believe we will become stronger. Although, sales and earnings did not meet our original expectations, we still reported a significant increase in our bottom line from last year of approximately 17% increase over the same period last year.”

We tried not to be promotional. We didn’t want to be the price leaders.

“We tried to not be promotional. We didn’t want to be the price leaders in the industry. And as things got competitive and somewhat unpredictable, the consumer told us that they felt that we weren’t priced competitively in the marketplace. Part of it has come from the fact that if we have an expensive athletic shoe or a high-priced jacket, we’re not — we weren’t high-priced on that jacket or on that shoe, but it was a high-priced shoe or a high-priced jacket. And we think with the right price guarantee, they’ll feel comfortable that we are at the right price, and that we are competitively priced, but as we go forward with this, we need to make sure that we convince the customer that they should be comfortable shopping with us. And that’s the whole idea around the right price promise. And it’s gotten some — it’s gotten some traction, we’ve got a very positive response from it.”

Irrational pricing is going to be the new normal until the industry consolidates further

“That’s a really good question, and if — I don’t really know, I think that this whole mindset in what’s going on with the business that everybody resetting their business can get more rational. I think there is going to be continued consolidation in this industry. And as we know it’s — when the consolidation starts to happen, price is the first line of defense if you will or the last line of defense. So I think it’s going to continue on. As I said, I think that this pricing — how the market is being priced right now in the promotional opportunity, I think it’s going to be at least for the foreseeable future, it’s going to be the new normal until the industry consolidates further.”

“the definition of loyalty in the retail business for the consumer is the absence of the better alternative.”

“But the promotional aspects are across a number of categories. So there is a hunt category, the athletic apparel category. And with the increase distribution in the athletic apparel category, it’s become more promotional. We didn’t start the promotion, but we can’t sit around and pretend it doesn’t happen. We need to engage in that. And our customers have told us, you need to engage here in today’s marketplace, the higher price than I can find the product someplace else. And I’m a firm believer that the definition of loyalty in the retail business for the consumer is the absence of the better alternative. And we need to make sure that we provide the consumer the best alternative, and that’s what we are going to do. It’s going be a little expensive and it’s going to be a little painful for a short period of time, but it’s what we need to do long-term.”

It’s a perfect storm right now

“It’s a perfect storm right now, we’re not particularly happy that we’re in it but we think we are the one we are one of the few that are very well positioned to come up the other side very strong and continue to be the leaders in this industry and we think it’s there and we think it’ll be great on the back side but it’s going to be painful for a while and we’re fortunate that we’ve got the financial strength in the balance sheet to get through it all without having to raise additional capital.”

Real estate prices are coming down at all but true A mall locations

“we’ve talked about slowing down our store growth not because we’re not happy with our new store performance or new store performance has been very good. We slowed the store growth down because we think real estate prices a couple years from now are going to be less expensive than they are today. We’re starting to we’re seeing that as we renegotiate leases or relocate stores. The rents are coming down in all but the truth A mall so, if you take a look at the true A malls we actually think rents in those malls might actually go up we’re not in a ton of those, we think in and we’ve got long term option so it won’t affect us. But we actually think those rents may go up because they’re going to be in such high demand but some of the secondary locations and we’re destination shop so, we can take that kind of the B Mall location in the rents have continued to come down in those and we think they’re going to continue to come down. We’ve got 25% of our stores over the next three years that are up for renewal and the renewals there are options.”

Home Depot 2Q17 Earnings Call Notes

Craig Menear – Chairman, CEO and President

Healthy balance of growth

“As Ted will detail both ticket and transactions grew in the quarter and all of our merchandising departments posted positive comps. We saw a healthy balance of growth from both our Pro and DIY categories with Pro sales once again outpacing DIY sales in the quarter.”

Housing has had a protracted recovery. Don’t seem to be any concerns

“I mean, I’d say Simeon that we’ve had obviously a protracted recovery here, and it has been clearly driven from housing which has been a steady but slow recovery in the market. You know we continually look at months of supply, there is 4.3 months of supply in the market of housing availability against a historical norm of six, that clearly is helping to drive improvement in home value appreciation, but housing starts haven’t returned to their norm yet either. The only thing that’s kind of run on an historical averages is housing turnover. So, we see this housing favorability continuing as we look forward. And I think the watch out for us is, you wouldn’t want to see affordability become an issue, but that at this point doesn’t seem to be a concern for us at all.”

Carol Tome – CFO and EVP, Corporate Services

Housing affordability index looks fine to us

“Right. As we look at the affordability index, it stands at 153%, so long ways to go before that would be a watch out for us. And recovery is a difficult thing to put your arms around. But if you look at simply PFRI dollars they’ve only recovered 70% of the loss. So, if you put that into baseball terms like [Indiscernible] 6 [Indiscernible]. The other thing that’s really interesting to us is the age of the housing stock. We’ve talked to you a lot about 66% of the housing stock being older than 30 years. Did you know that 51% of the house stock is older than 40 years and as houses age, well, they need more of repair.”

Ted Decker

Significant pivot to digital with low single digit growth

Yes. Our overall advertising spend is up, lower single digits, but as we’ve essentially made more significant pivot to digital marketing it’s over half our marketing right now. That’s a medium that you can get good insight on the return on your spend and as Craig said, the team just done a great job continuing to increase the return on that spend, so leveraging that low single digit to a much more productive return on overall ad spend.

TJX FY 2Q17 Earnings Call Notes

Ernie Herrman – Chief Executive Officer and President

Brick and mortar essential

“The customer is clearly telling us that brick-and-mortar retail continues to be an essential part of the shopping experience and certainly when it is executed right with the right values. All of this gives us confidence in our long-term global store growth potential. Across the company, we plan to open approximately 260 stores this year alone.”

3900 stores today

‘Next, with 3,900 plus stores today, we are growing successful business with a global presence in an uncertain retail environment. We saw branded merchandise and vendors know their product will hang next to other great brands in our stores.”

Scott Goldenberg

Average wage pressure going down

Yes. I think a bit in terms of this quarter being somewhat similar the major at Marmaxx you would – in a world where merchandise margins were flat you had no wage pressure or supply chain pressure, you need approximately a three comp to be flat. Clearly, we have had both wage pressure and some average retail pressure. The average wage pressure obviously going down so there will be a little less pressure on the P&L going forward, average retail, Ernie early talked about earlier, so you would clearly need a bit more than a three comp at this point to hold your margins flat given that we still have some wage and some supply chain pressure due to the average retail. But the plans have been put, so I think that answers your question.