Which Retailers are Doing Well and Why? - Lift361

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Which Retailers are Doing Well and Why?

By Ed Higdon. Posted in Insight

October 04, 2018

Dramatic, scorched-earth tales of the retail apocalypse have dominated news cycles for the last several years, but in the first two quarters of 2018, reports of retail store deaths were noticeably absent. Earnings releases from some of the country’s top stores have signaled that the future of retail may not be as bleak as media hype has led us to believe.

Top Retail Players Leading The Way in 2018

Some of the biggest names in retail boasted strong first and second quarters in 2018. Walmart, Target, The Home Depot, and Urban Outfitters brands all had earnings to celebrate.

Walmart

  • $4.90 earnings per share (EPS)
  • $128 billion net revenue, increase of 3.8%
  • E-commerce growth of 40%
  • Comparable sales at stores open for one year increased 4.5%
  • Ticket growth of 2%

Walmart’s positive numbers can be attributed to the fact that they introduced over 1,100 new brands last year, began offering grocery pickup and delivery – and announced plans to allow delivery to 40% of the US population by the end of 2018. Walmart also partnered with Microsoft on AI and cloud innovations designed to further improve the customer experience.

Target

  • $17.55 billion in revenue, a nearly 7% increase
  • 19.8% increase in adjusted EPS
  • 6.5% increase in same-store sales growth
  • 6.4% increase in traffic
  • 41% increase in comparable digital sales

Target’s growth is in direct response to their one-day sale held in July to compete with Prime Day and boost sales before the winter holiday season. July 17 was Target’s highest single day of recorded website traffic and sales for the year. Their growth can also be attributed to $7 billion invested in capital improvements with plans to remodel over 1,000 stores by 2020. The retailer also added same-day shipping in 160 markets with plans to expand the service over the next two years.

The Home Depot

  • $3.05 EPS vs. $2.84 expected EPS
  • $3.5 billion net income vs $2.7 billion expected
  • $30.46 billion in revenue vs. $30.03 billion expected
  • Same-store sales up 8% globally vs 6.6% expected
  • Sales per-square-foot climbed 8.6%
  • Average shopper ticket increased 5%

Home Depot is investing heavily in improving online service, announcing plans to spend over $1 billion over the next five years to boost its supply chain with nearly 200 new distribution facilities. These investments are designed to improve delivery of products purchased online, and they have set a goal of reaching 90% of the US population in one day or less.

They have also made investments in tech personnel, hiring over 1,000 tech pros this year alone. Their main priority for the next three years is improving the multi-channel experience and blending online and offline shopping.

Urban Outfitters

  • $93 million earnings in Q2 compared to $50 million the previous year
  • 13.7% increase in net sales to $992 million
  • 15% same-store sales increase

Urban Outfitters owns brands like Anthropologie and Free People, and they have made significant investments in those brands over the last several years. They have also tested self-checkout kiosks, which have far outpaced expectations. Those results led to investments in rolling out the technology to new stores over the next several years.

What Can Retailers Learn From This Changing Tide?

The first half of 2018 has led retailers of all sizes to be more optimistic about their ability to compete in a digital-driven world. The strategies that led these four retailers to successful earnings varied from brand to brand, but the lesson is clear: they each invested in learning more about what their customers want from a shopping experience, and they invested in delivering it. Not every chain has a billion dollars to invest in new physical or technical infrastructure, but every retailer does have the capacity to study customer data, learn trends and preferences and make even small, incremental changes to continually boost sales in a competitive landscape.