Retail Sales Fall 8.7%
Retail sales fell 8.7% in March after falling 0.5% in February and were down 6.2% from March 2019. Control group retail sales, which exclude automobiles, gasoline and sales at building and supply stores and factor into calculations for GDP, actually posted a modest 1.7% gain. Sales at building and supply stores rose 1.3%. It was the best monthly gain on record for grocery stores (+26.9%) and general merchandise stores. In addition, online sale rose 3.1%. April retail numbers will likely plummet further with panic buying subsiding and millions of American out of work.
The CV19 Retail Landscape
Several states took steps down the road to the new normal in late April, with some allowing non-essential retailers to re-open with social distancing guidelines that limit the number of customers allowed in a store to 25% to 50% of capacity. Some retailers reported that everyone who came in bought something, perhaps an indication of pent-up demand. In other states restrictions continued and, in some cases, became more strict, limiting the number of customers per square foot and further restricting hours. Bankruptcy filings are soaring, with retailers large and small filing for protection.
The Home Depot
THD updated their CV19 response guidelines in mid-April, announcing that all stores would close at 6 p.m. daily in order to give associates enough time to clean and restock. Opening hours remain the same.
They have installed social distancing captains in the stores to reinforce social distancing and continue to limit the number of customers allowed in the store at any one time to 100. Floor distancing markers and additional signage have been added to encourage customers to follow guidelines. They’ve also posted hand washing and social distancing information in stores and warehouses.
THD expanded benefits for all hourly employees and created a special time off policy for associates who are 65 years of age or older or at special risk.
They’ve voluntarily frozen prices of high-demand products nationwide, redirected shipments of N95 masks to be donated to essential workers and donated millions of dollars’ worth of PPE to hospitals, health care providers and first responders.
They are limiting installed services to those that are essential for maintenance or repairs.
Lowe’s closed all their stores and distribution centers in the US and Canada on Easter Sunday in order to give their 300,000 associates a much needed day off. They also assured employees that no one would lose any scheduled hours or pay as a result. Lowe’s increased wages throughout the month of April, provided a special payment for hourly associates and made sure there were masks and gloves available for associates who wanted to wear them.
Jennifer Weber resigned from her post as EVP human resources in early April. She’d been EVP since March 2016. Janice Little, Lowe’s SVP talent management and diversity, is assuming Weber’s role while Lowe’s searches for a permanent successor. Weber was responsible for several initiatives, including the Tracks to the Trades program, which helps employees work toward certification in a range of trades. She will remain in her position of chair of the Charlotte Regional Business Alliance. She’s getting more than $2.5 million in severance over 24 months and has an 18-month non-compete agreement.
Lowe’s CEO Marvin Ellison’s compensation fell 19% to $11.6 million in 2019. His 2019 package included a base amount of $1.45 million, plus stock and options awards and compensation tied to performance goals.
Walmart named former Target senior vice president William White as chief marketing officer, concluding an eight-month search. White spent seven years at Target, and is replacing Walmart’s previous CMO, Barbara Messing, who left the company last August.
Menards banned children under 16 and pets other than service animals from stores in order to help prevent the spread of CV19. Menards also changed their hours to allow extra time for cleaning and sanitizing.
Ace Hardware and their independent retailers plan to hire a total of more than 30,000 people to better serve their communities during the CV19 crisis.
An Ace Hardware store in Winston-Salem, North Carolina is offering virtual home maintenance assistance to customers. They are partnering with North Carolina based home repair technology startup Patch. Customers can share details about their project with an Ace associate at the location or a remote home assistant. Homeowners can then use the app’s chat or video function to get assistance in making repairs, recommendations on the types of tools and supplies they need and connect with a professional if they want a contractor to handle the job.
CEO John Hartmann left True Value in mid-April. He took True Value through their dramatic transition from a hardware co-op to a privately held distributor. Former Grainger exec Chris Kempa, who recently joined True Value in the newly created role of chief commercial officer, will move up into the CEO spot. Current CFO Deborah O’Connor will become president and CFO. Hartmann will remain into May to aid with the transition and will continue to serve on the board. Hartmann and Kempa appeared together in a video, with both men observing six-feet of social distancing, to announce the news. Hartmann stated that he knew he was leaving True Value in a position to thrive. Kempa said he was very excited to lead the business into the next phase of growth.
Former CEO John Hartmann accepted a job as the new COO of Bed Bath & Beyond; he was also named president of the company’s buybuyBaby unit. He’ll report to CEO Mark Tritton.
True Value stores across the country are participating in the co-op’s Shine-A-Light campaign by hanging decorative lights in their store fronts to show goodwill, hope and solidarity. True Value says Shine-A-Light tells communities True Value stores are open and ready to help however they can.
True Value will defer making principal payments to former members as they focus on supporting current True Value retailers. They will continue to pay interest to former members. However, some of the retailers entitled to receive payments noted that they were owed payments on December 31, 2019, and instead received a letter in January saying they would be paid in Spring 2020.
Q1 sales increased 7.2% to $3.0 billion. On a daily basis, sales were up 5.5%. The first quarter had one more selling day than the prior year period. Sales were composed of volume increases of approximately 7% and price and mix headwinds of around 2%. Foreign exchange contributed a 0.2% unfavorable impact. Grainger suspended their previously issued guidance for the year and paused share repurchases due to uncertainty surrounding the pandemic.
Q1 Revenue rose 26.5% to $75.5 billion. Total revenue for North America was $46.1 billion. AWS revenue rose to $10.2 billion.
They plan a major investment in Q2. They expect to invest their entire anticipated operating profit of $4 billion, and possibly more, on COVID-related expenses getting products to customers and keeping employees safe. That will include investments in personal protective equipment, enhanced cleaning of facilities, less efficient process paths that better allow for effective social distancing, higher wages for hourly teams and hundreds of millions to develop their own COVID-19 testing capabilities.
Amazon will halt their Amazon shipping program in June in order to move workers towards fulfilling Amazon orders. Amazon Shipping was launched in 2018 to compete with FedEx and UPS, delivering non-Amazon products across several major US cities.
Amazon is extending their higher hourly pay and double overtime pay, and offering warehouse employees in the US and Canada an extra $2 per hour through mid-May. However, Amazon asked warehouse employees who have stayed away from work during the pandemic to return to scheduled shifts beginning May 1, or request a leave of absence.
Amazon is looking for an additional 75,000 workers on top of the 100,000 warehouse and delivery workers they began hiring in March. As of the end of March they’d hired 80,000 new workers. Amazon has had to change how they operate, with CV19 panic buying causing many items to run low and delivery slots to take longer than allotted. They have also had to close several facilities after workers tested positive.
Amazon is developing their own lab to screen workers, saying that being able to tell who is infected is essential to return to some sort of normal business model. Amazon acknowledged that they might not be ready before the current outbreak subsides, but they believe it is worth the investment, and are willing to share everything they learn with others. They are working on antigen testing, which is a diagnostic test to determine whether a person is infected. Amazon stated that regular testing on a global scale across all industries would both help keep people safe and help the economy get back up and running.
Amazon lifted the ban imposed in March that prevented sellers on the Amazon marketplace from shipping nonessential items to Amazon warehouses. While delivery demand has continued to soar, Amazon now has more workers to pick up the slack. Amazon also announced they’d expand their temporary $2 hourly raise to more workers. They reached out and invited people who have lost their jobs or been temporarily furloughed to come work for Amazon until things return to normal and they can go back to their former jobs.
Amazon notified sellers on the marketplace that N95 masks, face shields, surgical gowns and some other items would be made available exclusively to hospitals and government organizations. Amazon has also stepped up safety precautions at warehouses and sites around the world.
Amazon stopped accepting new online grocery customers. Instead, new customers will be added to a wait list as Amazon adds capacity. They plan to launch a feature that will help customers secure a virtual place in line to distribute delivery windows on a first come, first served basis. Amazon also offered higher pay to encourage warehouse workers to work for the grocery delivery window.
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