Week in Review

May 22, 2022

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Week in Review | May 21, 2022

Retail spending remained strong to stable in Q1, however a growing number of retailers are facing eroding profits.

Big box retailers have been hit with a basket of challenges including inventory arriving too late or too early, steep logistics costs and rising worker wages, which together offset sales gains in Q1.

FINANCE

TJX (USA) reported Q1 sales rose 13% year-on-year to $11.406 billion. Net income was up 10% to $587.5 million.

Walmart (USA) reported Q1 revenue rose 4.5% year-on-year to $141.6 billion, but net income was $2.054 billion, down from $2.730 billion a year ago.

Same-store sales in the US rose 3% year-on-year with average ticket price up 3%.

Target (USA) reported total Q1 revenue rose 4.0% to $25.17 billion, exceeding estimates of $24.48 billion. However, net income fell to $1.01 billion, from $2.10 billion a year ago.

Cost of sales increased 10.4% to $18.46 billion, with gross margin contracting to 26.7% from 30.9%

BJ’s Wholesale Club (USA) reported Q1 net sales rose 16% to $4.4 billion. Same-store sales increased 14.4%. Net income grew 38% year-over-year, to $112.4 million.

Kohl’s (USA) reported Q1 total revenue fell 4.4% to $3.71 billion, missing analysts expectations.

The retailer continues to discuss possible acquisition by a growing list of bidders.

Warby Parker (USA) reported Q1 revenue rose 10.3% year-on-year to $153.2 million. Losses widened to -$33.7 million from a profit of $3 million last year.

Average revenue per customer increased 11.2% from the year-ago period to $249.

VF Corporation (USA) reported Q4 (ended April 2) revenue rose 9% to $2.8 billion. Full year revenue rose 28% to $11.8 billion, while operating income reached $1.6 billion, up 109%.

Ross Stores (USA) reported Q1 sales fell 4.5% year-on-year to $4.3 billion. Net earnings fell 29% to $338 million.

Ross warned that Q2 was likely to show a decline from 2021 when government stimulus money supported stronger spending.

Canada Goose (Canada) reported Q4 (ended April 3) revenue rose 6.8% to $223.1 million. The company reported a net loss of – $9.1 million, compared with a $2.5 million profit a year ago.

Gross margin improved to 69.1% from 61.4% a year ago.
SG&A expenses rose to 68.7% of revenue, from 62.9% last year.

PODCAST

Why Corporations Beat Startups for Innovation

The idea that startups are the right environment to cultivate innovation might be more myth than truth.

In fact, a lot of today’s leading innovation is coming from enterprises such as Microsoft, Bosch, NexisLexis, Analog, and of course Amazon, said Andrew Binns, co-founder of Change Logic, a US-based strategic advisory firm and co-author of ‘Corporate Explorers, How Corporations Beat Entrepreneurs at the Innovation Game’.

In this podcast episode Andrew talks about:

Why a large corporation is a better place for innovation than a startup.
Five ways that leadership can drive practical innovation within their organisations.
The discipline practices that companies like Amazon use to drive successful innovation.
Why Corporate Explorers are the key to igniting growth in your organization.

🎧 LISTEN TO THE PODCAST

MARKETS

“Clothing sales had a strong month, especially online, with some retailers suggesting consumers were purchasing clothes for summer holidays and weddings.” – Heather Bovill, the ONS deputy director for surveys and economic indicators

UK unemployment fell to 3.7% in Q1, its lowest rate in nearly half a century, per the Office for National Statistics.

UK retail spending rose 1.4% month-on-month in April, according to the Office of National Statistics (ONS). This, despite the highest inflation rate in 40 years.

The annual inflation rate jumped from 7% to 9% in April, per the ONS.
Retail sales volumes in the latest three months was just over 4% higher than pre-2020.

US retail sales rose 0.9% in April from March and were up 6.4% year-on-year, per the National Retail Federation. This follows a 1% month-on-month increase in March.