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Retail Sales Rise 0.5% Retail sales rose 0.5% in June after rising a sharply upwardly revised 1.3% in May. Sales were up 6.6% from June 2017. The increase was twice what analysts were expecting. Core retail sales, which exclude autos, gasoline, building materials and food sales, were flat in June after rising an upwardly revised 0.8% in May. Sales at building material stores rose 2.8% after rising 2.4% in May and were up 2.8% year over year. Home and garden store sales rose 0.8%, with some of the lift due to rising lumber prices. Many economists are unsure about how the trade wars and new tariffs will impact retail sales. The Home Depot THD reached their 2020 sustainability target three years ahead of schedule. THD had set a target of reducing energy consumption by 20% by 2020 against a 2010 baseline. At the end of 2017 they had cut their energy use by 23.5%. They linked the reduction to installing low-carbon energy generation in 216 stores and fuel cells in 178 stores. Lowe’s Lowe's will be eliminating four senior positions, including chief operating officer, chief customer officer, corporate administration executive and chief development officer. New CEO Marvin Ellison, who took over July 1, says he is taking a fresh look at their organizational structure and realigning the leadership team. Ellison is determined to control margin pressure and improve same-store sales growth, which has trailed Home Depot's growth for many years. COO Richard Maltsbarger left the company immediately, while chief customer officer Michael McDermott will leave on November 6, after ensuring a smooth transition. As previously announced, CFO Marshall Croom will retire in October. William Boltz, from Chervon Tools, will be the new executive VP of merchandising. Lowe's also created two new executive vice president positions, one for stores and another for supply chain. Joseph McFarland is the new EVP of stores and will also be in charge of Lowe’s north, south and west divisions, along with Orchard Supply Hardware. McFarland joins Lowe’s from J.C. Penney, where he was EVP and chief customer officer. Prior to his stint at Penney’s, he spent more than two decades at The Home Depot, where he oversaw the company’s largest division in terms of sales volume as president of the northern and western divisions. New CEO Marvin Ellison is also a Home Depot and J.C. Penney alumnae. Lowe’s is expected to miss both their sales and earnings guidance when they report second quarter sales in August, but CEO Marvin Ellison has the full support of activist investors and analysts, who believe he is on the right track. Lowe’s also missed expectations in each of the two previous quarters. Walmart Walmart is automating more store tasks, adding automatic conveyor belts to backrooms that sort products to speed the process of unloading the nine trucks that arrive at a typical store each week. The conveyor belts cut the number of workers needed to unload trucks in half, from eight to four. WM says that will allow them to spend more labor dollars on pickers, the workers who roam the store to compile online orders that are picked up by customers in the store. Walmart also plans to use autonomous robots in more stores by next year to scan shelf inventory and detect products that are out of stock. The robots will also direct both shoppers and workers to precise product locations, enabling people to find what they are looking for much more quickly. Sam’s Club opened their first ecommerce fulfillment facility in Memphis, Tennessee. When Sam’s announced 63 store closures in January they stated they would turn up to a dozen of the closed locations into fulfillment facilities. The 135,000-square-foot Memphis location is the first one converted. ACE Hardware Ace appointed Kim Lefko to the position of senior VP, chief marketing officer. She will report directly to CEO John Venhuizen. She was most recently CMO of Weber Stephen Products. She also has experience with Newell Rubbermaid and began her career at Black & Decker. Several Ace Hardware locations are now using the Deputy workforce management system that provides software that streamlines operations and optimizes practices. Deputy says that its cloud-based system is ideally suited to manage hourly workforces and greatly reduces the management time needed to schedule staff. W. W. Grainger Q2 sales rose 9.4% to $2.9 billion, driven by a 9% increase from volume and 1% from foreign exchange, partially offset by a 1% decline from the divestiture of a specialty business. The company raised their 2018 sales and earnings per share guidance for the year and now expects sales growth of 5.5% to 8.5%. It was the fourth consecutive quarter Grainger beat their earnings and sales expectations. Results were due to strong growth from large and medium customers in the US, gross profit that was better than anticipated and meaningful operating expense leverage. Grainger reports that they are also gaining share across both large and medium customers and acquiring medium customers in the strong economy. Their single channel and international businesses also improved operating performance. In Canada, Grainger is on schedule with their business turnaround. Amazon Amazon revenues rose 39% in the second quarter to $52.89 billion but missed analysts’ expectations of $53.37 billion. Physical stores, mostly Whole Foods, brought in $4.3 billion. Amazon’s Web Services unit posted strong results, growing 49% to $6.1 billion in sales. Advertising and services that report under “other” on the balance sheet saw revenues more than double from a year ago to $2.19 billion. Amazon’s Sponsored Products, which uses the pay-per-click ad model to show products to shoppers, accounts for the majority of ad revenue. Amazon is working directly with many brands rather than working through the brands’ ad agencies. However, Amazon’s rapidly growing private label business makes some brands nervous about letting them into their business. Amazon Prime Day set records despite getting off to a very rocky start when shoppers crashed the website at the beginning of the 36-hour event. Shoppers spent $4.2 billion, up 33% from last year, according to retail analysts. Amazon acknowledged that they shipped more than 100 million products world-wide and that small and medium-sized businesses sold more than $1 billion worth of goods in the first 24 hours, with sales up 28% compared to the first 30 hours of last year, when Prime Day only lasted 30 hours. About one in four people who encountered problems abandoned their carts or bought less than they were planning to on Prime Day, according to a survey of 1,000 shoppers by JDA Software, a consulting company that focuses on the retail sector. Half of the people responding to the survey had encountered technical issues. Amazon’s heavy promotion plus the fact that they raised prices for Prime heightened consumers’ expectations, not just for deals, but for a frictionless experience. Four in ten made impulse purchases they had not planned on, and only one in five said everything they bought was a Prime Day special. Amazon is launching a start-up delivery program designed to compete with delivery giants FedEx, UPS and DHL in the all-important last-mile segment. Amazon is offering incentives to entice people to start their own small business delivering Amazon packages from their network of more than 100 warehouses in the US. Incentives include discounts on Amazon-branded delivery vans, uniforms, fuel and comprehensive insurance coverage. The minimum investment is $10,000. Couriers will not be Amazon employees but will have access to technology and operational support. In addition, shoppers will be able to track packages on a map, contact the driver or change where a package should be left. Amazon says they have great partners in their traditional carriers but need all the help they can get to fill orders from online shoppers. Amazon has committed $1 million to cover startup costs for military veterans. Amazon Logistics is buying a fleet of 100 all-electric vans from Mercedes-Benz. The eVitos vans will initially be put to work in Europe at Amazon’s Bochum and Dusseldorf facilities. The two companies are reportedly working with other partners on concepts for more efficiently running the two facilities. Electric vehicles are considered to be one of the new frontiers for the transportation industry. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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