Week in Review

August 21, 2022

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Week in Review | Aug. 21, 2022

Inflation seems to be the great equalizer as more high income earners head to discounters, big box retailers and off-price chains.

FINANCE

Walmart (USA) reported Q2 revenue rose 8.4% year-on-year to $152.9 billion. Net income rose 20% to $5.15 billion.

The company projected that Q3 would show a 5% year-on-year increase in net sales.
Walmart’s inventory levels rose 25% in the second quarter year-over-year.

“We’re pleased to see more customers choosing Walmart during this inflationary period,” said CFO John David Rainey, noting that the retailer is attracting more middle- and higher-income consumers.

Target (USA) reported Q2 net earnings fell 90% to $183 million, from $1.82 billion a year ago. This followed a 50% year-on-year decline in Q1.

Total revenue for Q2 rose 3.5% to $26 billion.
The earnings decline was attributed to setting additional markdowns and removing excess inventory.
Target canceled orders to help reduce inventory levels.

BJ’s Wholesale Club (USA) reported Q2 net income increased 27% year-on-year to $141 million. Total revenues rose 22% year-on-year to $5.1 billion.

Excluding gasoline sales, Q2 comparable club sales increased 7.6% year-on-year.

TJX (USA) reported Q2 sales fell 2% year-on-year to $11.8 billion, however net income rose 3% to $809.3 million.

The company has raised its full year guidance for 2023 for both earnings and sales.

“Looking ahead, while we are not immune to macro factors, we are convinced that the flexibility of our off-price business model and the value proposition we offer to a wide range of consumers,” said Ernie Herrman, CEO and president of The TJX Companies Inc.

Ted Baker (UK) has agreed a $249 million takeover by Authentic Brands (USA). The retailer has 500 shops worldwide.

PODCAST

Billion Dollar Retail Opportunities that Everyone is Overlooking

In a tech-centric era, the pandemic was the perfect storm that convinced everyone that the future of retail was online.

With the pandemic behind us – and inflation ahead of us – is the future of retail still going to be heavily dependent upon e-commerce?

And if not, what could the next successful business model look like?

Walter Holbrook, a retail consultant with over 50 years of experience in senior management roles shares what he sees as the multi-billion dollar overlooked opportunities in retail.

What You’ll Learn:

Why retail needs to refocus on driving profits rather than chasing sales.
How grass roots retailer chains are cashing in – without e-commerce or heavy investments in technology.
What successful retailers are getting right – and how it’s helping them win even in highly competitive markets.

🎧 Listen to the podcast

RETAIL OUTLOOK

Retailers Could Face a Chilly Holiday Season

After last year’s retail feast, this year we could be facing a famine. Even well off consumers feel compelled to spend more cautiously. Smart retailers are positioning themselves so they are ahead of the market, ready to respond to what looks like a very unpredictable season. Read more

RETAIL

Amazon (USA) has halted the aggressive expansion of its self-checkout convenience stores, as sales fell short of expectations. It seems that part of what people like about shopping in stores is interacting with other people – even if it’s just the cashier.

Central Group (Thailand) is planning to invest $848 million to expand in Vietnam, as well as expanding in its domestic market.

The Group plans to triple its Vietnam sales over the 5 years to $2.8 billion, from current sales of $1 billion.
Central is betting on strong post-Covid growth in Southeast Asia.

MARKETS

US retail sales rose 10% in July, but apparel and accessories sales fell 2% year-on-year. Electronics were down 12%, while home and furniture fell 3%, according to the Commerce Department.

UK inflation hit 10.1% in July, the first time it’s exceeded double digits since 1982.