Retail Industry Sneak Peek for the December Quarter

Edited by Vani Rao

Earning releases so far portray a grim picture

The earning releases for quarter ended December 2013 reflect the holiday season sales, an important time of the year for many retailers. ShopperTrak, the leading global provider of insights into shopper behavior and retail analytics, says that during the holiday shopping season of November and December 2013, US retail sales increased 2.7% while foot traffic decreased 14.6% when compared to the same two months last year. However, consumers took a break from shopping after the Thanksgiving weekend. Hence, retailers were pressurized to offer deep discounts and promotions in the final week before Christmas to finish the holiday on a positive note. The decline in footfall was as a result of the increasing usage of mobile devices by the consumers to conduct advance research and figure out exactly where they wanted to go. The earnings so far has painted mixed consumer sentiments. The major releases so far…

Restaurant Retail Chains – Quick Service Restaurants (QSRs)

In the US, it is observed that customers are less likely to eat out during the holiday season mostly because they are spending time with family and preparing meals at home. This trend can also be reversed if the busy shoppers end up picking up a quick meal between shopping or entertaining guests. As seen below, among the QSRs that have announced their results, Starbucks Corp. (NASDAQ:SBUX) was the only winner in terms of revenue growth and increase in EPS so far. Yum! Brands Inc. (NYSE: YUM), McDonald’s Corp. (NYSE:MCD) and Burger King Worldwide Inc. (NYSE:BKW) reported lacklustre performance. McDonald’s exhibited marginal growth in terms of revenue and EPS. Yum! Brands reported a negligible growth in term of revenue and its EPS fell marginally. Wal-Mart Stores Inc fourth-quarter revenue improved marginally by 1.5%, however the net profit dipped by 21.0% during from the year ago quarter.

*Data gven for Q1 2013, Q1 2014 and Q1 2013 EPS and Q4 2014 EPS
*Data gven for Q1 2013, Q1 2014 and Q1 2013 EPS and Q4 2014 EPS

Apparel Retail

Apparel seems to be making a wave this quarter. The two main earnings releases so far were that of Fossil Group Inc. (NASDAQ:FOSL) and Ralph Lauren Corp. (NYSE: RL). Both the companies posted strong Q4 earnings in 2013 and outperformed analysts’ expectation.

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Pharma Retail Chains

The only company that announced results under pharma retail chains was CVS Caremark Corp. (NYSE:CVS). The sales of this company were driven by higher sales in established stores.

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E-commerce

Amazon, one of the leading e-commerce websites, reported decent growth in sales during the holiday quarter. However, it failed to make an impression against analysts’ expression.

MM pic 4Keep Watching……

Now that the earnings of all major retailers are due in the last week of February, keep viewing this space for comprehensive insights on this industry.

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