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Financial Roundup: Bon-Ton to Close 40 Stores, Walmart E-com Surges, L Brands Comps Dip

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The Bon-Ton gets more aggressive with its turnaround initiatives, including store closures, Walmart sees U.S. traffic and comps rise, and L Brands rejiggers Victoria’s Secret assortment to re-engage shoppers.

The Bon-Ton

In a Nutshell: The Bon-Ton losses widen as the company continues to suffer sales declines amid its turnaround efforts. As a result, the retailer has announced plans to close “at least” 40 stores in 2018.

During its Q3 earnings call, Bon-Ton outlined four initiatives it feels will improve the business operationally and financially: differentiating itself through its merchandise assortment, driving omnichannel growth, refining its marketing strategy and reducing costs.

The retailer is also in talks with its debt holders to work on the company’s capital structure as well as its landlords to bring occupancy costs more in line with our sales and store performance.

The retail group anticipates a full year loss per share between $2.86 and $3.35. Comp sales are expected to decrease between 4.5% and 5.5%.

Sales: Sales for the third quarter ended Oct. 28 decreased by 7.6% to $545.3 million from $589.9 million in FY16. Comp sales decreased by 6.6% compared to the prior-year period.

Earnings: The company reported a net loss of $44.9 million or $2.19 per share, compared to a net loss of $31.6 million or $1.58 per share in 2016.

CEO’s Take: “Over the past three months, I’ve taken a fresh and comprehensive look at our business particularly given the headwinds of a challenging retail environment. While our third quarter results fell short of expectations, I want to assure you that we are approaching the challenges to the business with a sense of urgency and decisiveness, as such we’re taking more aggressive steps to ensure improved performance and to strengthen our financial position,” said president and CEO William Tracy.

Walmart

In a Nutshell: Net sales for the company’s U.S. e-commerce business grew by 50 percent, which Walmart attributed in part to strong word of mouth for related services and the company’s expanded assortment, which has tripled in the last year.

Comp sales for Walmart U.S. and Sam’s Club are both expected to be up 1.5% to 2.0% in the fourth quarter. The retailer has raised expectations for adjusted EPS for the year to the $4.38 to $4.46 range.

Sales: U.S. net sales for the third quarter ended Oct. 31 reached $77.7 billion, a 4.3% increase from $74.6 billion during the same period of FY16. Walmart International hit $29.5 billion, up 4.1% compared to $28.4, while Sam’s Club saw a 4.4% increase from $14.2 billion to $14.9 billion.

Comp sales for Walmart U.S. increased by 2.7% during the period. Store traffic ticked up 1.5% while average tickets increased by 1.2%. Sam’s Club comps rose by 2.8%.

Earnings: Consolidated net income totaled $1.9 billion, or $1.00 adjusted EPS, which is a 40.5% drop from $3.2 billion in 2016.

CEO’s Take: “The recent agreement with Lord and Taylor is a great example of how we will be creating specialty experiences that complement what we offer and serve customers with the brands they want. We’re making good progress attracting premium brands to the site such as KitchenAid and Bose,” said president and CEO Doug McMillon, adding in its quest for higher income urban customers, Jet.com started selling Modcloth and looking to attract additional premium brands.

L Brands

In a Nutshell: L Brands continues to feel reverberations from the company’s exit from the swim and apparel categories under the Victoria’s Secret label. That brand is also grappling with a change in consumer tastes away from bralettes to constructed silhouettes as well as a shift in demand in its panty business. Pink and beauty remain two bright spots. And Bath & Body Works continues to perform.

The company has set fourth quarter guidance at $1.95 to $2.10 and $3.05 to $3.20 for the full year. Comp sales are expected to be flat to low-single digit gains.

Sales: Net sales for the quarter ended Oct. 28, were up 1 percent to $2.62 billion, compared to $2.58 during the prior-year period. Comp sales dipped by 1 percent.

Victoria’s Secret saw a sales decline of 3 percent to $1.5 billion and comps dropped by 4 percent. Bath & Body Works was up 6 percent to $816 million with comps up 4 percent.

International sales increased by 11 percent to $115 million, partially on significant new store growth for Victoria’s Secret.

Earnings: Net income totaled $86.0 million, down from $121.6 million in 2016. EPS for the quarter dropped by 29 percent to 30 cents from 42 cents in the same period last year.

CEO’s Take: “We have strong brands that lead their categories with close connections with their customers, our stores have high sales productivity and 99 percent of our stores are cash flow positive. Our digital business continues to be strong with both go-forward Victoria Secret and Bath & Body Works delivering double-digit growth in the quarter,” said Stuart Burgdoerfer, EVP and CFO of L Brands. “We have confidence in our upcoming launches and we are focused on execution, staying close to our customers and leveraging speed and agility capabilities to really read, react and chase. We will also continue to manage inventory, expenses and capital with discipline.”

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