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.”

Unilever 2Q17 Earnings Call Notes

Paul Polman

Significant disruption in a number of markets

“In the short-term, there has been some significant disruptions in a number of markets. Political uncertainty is high in several countries. This is hampering their recovery. This is particularly so in Brazil, where the trade has reacted to contrasting demand by reducing stock. In India, the welcome introduction of the new Goods and Services Tax prompted distributors and wholesalers to cut back their stocks during the transition period. And in Indonesia, we’ve seen changes in effects of calendar that led to a few less shipping days.”

We’ve had a prolonged period of weakening in emerging markets

“we have had one headwind that is consistently stuck us which is really in the emerging markets where since the financial crises, interest rates, currencies etcetera, we’ve had a prolonged period of about eight, nine years now where we have seen significant weakening of emerging market currencies. Well, with unfortunately we have to price as many of that is being imported, and as we price for that, we have seen in these countries that rate-related increases or productivity-related increase were actually trailing the pricing that we have to do on our products and the markets have been subdued. So despite seeing in this six months for example, a 5.5% increase in the emerging markets, you actually see the volume component of these emerging markets continuing to be very, very low, while historically it was all volume-driven growth. I am convinced that that is coming back now. We are starting to see these currencies stabilizing.”

Lowe’s 1Q17 Earnings Call Notes

Robert Niblock

Consumers have favorable view of the national economy

“Our most recent Consumer Sentiment Survey revealed that homeowners have an increasingly favorable view of the national economy and their personal financial situation. Rising home prices are continuing to encourage homeowners to engage in more discretionary projects in addition to ongoing maintenance and repair spending, and we believe that this trend will continue. As well over half of homeowners we surveyed, believe their home values will continue to be increased. Also nearly half of the owners we survey indicated that they intend to engage in a home improvement project in the next six months and home improvement spending is expected to continue to outpace overall spending”

Williams Sonoma 1Q17 Earnings Call Notes

Laura Alber – President & CEO

Amazon coming into the furniture market

“Great. There is more competition coming in, particularly at the low end and there is still the big box retailers who have been offering furniture for a lot of years and we’ve just learned that Amazon is going to come into the furniture business. We believe that actually Amazon will take more market share from the mass retailers than anyone else; and we will continue to carve out our specialty niche with our edited inspirational assortment and decorating ideas for our customers. We know that our stores are a competitive advantage because they are experiential and they are the first expression of our brands and as I just said it earlier, we offer our shoppers an integrated experience across channels and our retail stores help drive e-commerce sales. Retail traffic is down nine, we all read those numbers; our traffic is down a lot less and we believe there is a huge interaction between our online and our stores obviously, and we’re going to continue to maximize that opportunity. So I’d say that yes, it’s definitely competitive, we don’t see the promotional environment going away and as Julie said, we see a lot of people liquidating a lot of inventory; and we believe that we are going to outperform because of our sustainable profitable model”

PVH 1Q17 Earnings Call Notes

Manny Chirico – Chairman, Chief Executive Officer

*I feel confident that a border tax is not going to occur

“I feel more confident today that the likelihood of the border tax, particularly the way it was initially drafted is not going to recur. And I don’t have a crystal ball. I have been in Washington. My entire career, before this year, before this last 12 months, I think I have been in Washington three times. In the last 12 months, I have been in Washington multiple times. And I don’t know if it’s six, seven times meeting with different members of Congress and meeting with the administration when possible to really try to take a leadership position on this topic because I just think it’s so bad, not only for our industry but I think it’s just so bad for the economy in general. Since the consumer represents two-thirds of the economy, I think the last thing we want to do is put an import tax and start picking winners and losers as a country as we go forward. So I really tried to be front and center about it.”

Inventories in excellent position. Outlet has become more promotional

“Inventory levels globally are in excellent position in just about every market. I am not going to micro manage into each one. But overall, when you look at international inventories, fantastic shape. When it comes to the United States, I think it’s a little bit more mixed. But on balance, I think you are seeing is with the contraction of open to buy dollars that has well significantly exceeded the negative comp store trends that I think on balance inventories are in good shape in the channel. A lot depends in the next couple months, how we see the Father’s Day and how we see that will progress, but there is not bi callouts right now about any inventories in the channel. Outlet, in general, our inventories are in fine shape. I would say that’s become a highly promotional channel today and I think because there has been such contraction in the open to buy dollars, there is a lot more availability of merchandise in the outlet channel which has put pressure on margins overall.”

Best Buy FY 1Q18 Earnings Call Notes

Hubert Joly – Chairman and CEO

Benefit from competitor closing

“Yes. Thanks, Peter. So yes, a competitor filed last quarter, and I think they’re finishing the closing of their stores. It’s always a little bit choppy initially, given promotions, liquidation and so forth, but we believe we’re seeing some lift in the sales in the stores, of course, around their locations in appliances and home theater. To provide some order of magnitude, their appliances and home theater business, that’s about $2 billion, and we’ll get a share of that. It’s about 200 stores”

Impact of VR is small

“Yes. I would say, David, that we are excited by the fact that there’s a set of emerging technologies. And it’s been very interesting to see the inflow and the regular inflow of a variety of technologies, VR being one of them. You had drones. You’ve had a variety of products like this. The impact of VR specifically is small, but we like the proliferation of innovation across our sectors.”

Costco FY 3Q17 Earnings Call Notes

Richard Galanti

8% sales increase

“Turning to our third quarter sales, reported sales were up 8% and our 12 week total company reported comparable sales figure was up 5%. For the quarter, the plus five comp sales figure was helped by gasoline price inflation to the tune of about 140 basis points and offset or hurt from FX by about minus 60 basis points.”

A little inflation is good

“Well I think for low margin retailers and certainly we are at the low end and the lowest end of margins, but super market is well on the food side, a little inflation is good, a little deflation hurts you a little bit it still has the D in front of it, not the IN and so it’s still impacting some. it hurts you most in items like I think the example I gave last quarter was of fresh meats where year-over-year, second quarter or first quarter year-over-year per pound beef was down by 10% and we were selling more than 10% more tonnage and certainly we are having lower gross margin dollars because of that and so as that changes that will help us a little bit.”

*Being the low cost operator means not advertising

“Sure. And I think first if the advertise is good, we don’t advertise we don’t spend on that and we would love seeing add TV and the print adds still from both other competitors. And we are not concerned about it. We think that the value of the Costco is still as significantly higher price or without the free three months is a much better value. And we think that’s evidence by our success of what we have done overtime and the fact that even what we have done in the past renewal rates have not really been impacted by it.”

Wal-Mart Stores’ (WMT) Q1 2018

Brett Biggs – EVP and CFO

Comp inventory down

“our sales strengthened as the quarter progressed, delivering comp sales growth of 1.4%, led by an increase in customer traffic of 1.5%. This marks the 10th consecutive quarter of positive comp traffic…During the quarter, inventory at comp stores fell 7.3%, while in-stock levels remained high…For the 13-week period ending July 28, 2017, we expect comp sales to increase between 1.5% and 2%. “

E-commerce is growing

“The U.S. e-commerce GMV growth accelerated significantly, up approximately 69%. Through the lens of strong, efficient growth, I’m pleased with the results. Gross profit margin increased 1 basis point during the quarter. The rate for Walmart U.S. was flat, while Walmart International was up slightly.”

Kohl’s 1Q17 Earnings Call Notes

Kevin Mansell – Kohl’s Corp.

Notable improvement in March/April vs February

“Overall, while sales results for the quarter in total didn’t meet our expectations, there was notable improvement in the March/April combined period compared to the February period in both sales and in traffic. Sales in February were down high single digits and improved to down 1% in the March/April combined period. April sales and traffic metrics were both positive mid-single digits, and traffic metrics actually led sales during that month. ”

*Even Kohls is touting machine learning

“importantly, from a cost perspective, while we increased fulfillment levels from our stores, our overall fulfillment costs remain nearly constant as a percent of digital sales. Team was able to accomplish this by using machine learning to improve the algorithms that determine how to optimally fill orders with our network of stores and EFCs”

*April was exceptionally strong

“Anecdotally, I know there’s been a lot of discussion around things like late arrival of tax refunds and a little bit maybe of a holiday hangover and colder weather in February, so I’m sort of putting February to the side. And I think March/April is probably the way we’re considering our business trend. I mean, as we indicated in the call, Matt, April was exceptionally strong, and – but as you also know, it was positively impacted by an Easter shift as well.”

We’re all in on omnichannel

“we’re all in on being a meaningful omnichannel retailer. We have a massive brick-and-mortar presence. It’s uniquely positioned as an apparel store in freestanding and strip centers across the country, which gives us unbelievable flexibility and amazing convenience to our core customer. And as such, our challenge is, of course, on the product side, to make the product offering in those stores more relevant and more effective, and then to leverage, as an omnichannel retailer, those store assets, our people, our inventory, our physical facilities, for customers who prefer to buy online.”

NOTE From JC Penney Call

Marvin R. Ellison – J. C. Penney Co., Inc.

We remain committed to omnichannel

“And third, we remain committed to becoming a world-class omnichannel retailer. We continue to see significant increase in our online SKU growth, and we plan to continue the SKU expansion throughout 2017.”

Macy’s 1Q17 Earnings Call Notes

Jeffrey Gennette – Macy’s, Inc.

We know that these trends are secular

“these are unusual and challenging times for retail, especially for mall-based department stores. And we certainly know that these changes that we’re seeing are secular and not cyclical. On the consumer side, we see continuing shifts in shopping trends, driven by the rapid adoption of technology, and for some of our customer segments, a greater emphasis on value and on experience. As for the retail industry overall, we’ve known for some time that the United States is over-retailed compared to other markets, so it’s not surprising to see the contraction in retail square footage. And it will take some time to tell how the consolidation and the closure of stores, and in some cases, entire brands will impact us.”