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Earnings Roundup: Walmart Reports Traffic Increases, Macy’s Sets Initiatives to Boost Fiscal 2017 Sales

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Walmart store front

Walmart

Walmart U.S. e-commerce growth was strong for the fourth quarter as sales increased by 29 percent, including online grocery and Jet.com. The retailer also experienced a 1.4 percent increase in foot traffic, which boosted Walmart U.S. comp sales for the fourth quarter.

Excluding currency fluctuations, total revenue for the fourth quarter was $133.6 billion, which was a 3 percent increase compared to the fourth quarter of fiscal 2016. Despite positive results for its U.S. business, fourth quarter net sales at Walmart International decreased by 5.1% to $31 billion.

For fiscal year 2017, total revenue excluding currency was $496.9 billion, which was a 3.1 percent increase from fiscal year 2016. Walmart also generated $31.5 billion in operating cash flow and returned $14.5 billion through dividends and share repurchases to its shareholders.

“We are moving with speed to become more of a digital enterprise and better serve consumers,” Walmart CEO and president Doug McMillon said. “We have more work to do, but I’m pleased with our progress.”

Macy’s

Macy’s fourth quarter sales totaled $8.5 billion, which were down 4.0 percent from total sales of $8.9 billion in fourth quarter 2015. Fiscal 2016 sales totaled $25.8 billion, down 4.4% from total sales of $27 billion last year.

Comp store sales on an owned basis declined 2.7% for the quarter and by 3.5% for the year.

For the fourth quarter ended Jan. 28, 2017, operating income totaled $815 million (9.6% of sales), down 13 percent compared to $936 million (10.6% of sales) from fourth quarter 2015. Fiscal 2016 operating income totaled $1.3 billion (5.1% of sales), compared to $2 billion (7.5% of sales) for fiscal 2015. The retailer’s fiscal 2016 operating income included $479 million in store closing expenses, since Macy’s shuttered 66 locations during this time.

Looking ahead to fiscal 2017, Macy’s expects total sales to decline between 3.2 percent and 4.3 percent, due to fiscal 2016’s store closures. To improve fiscal 2017 sales, Macy’s will strengthen its omnichannel services, marketing strategy and introduce a more simplified pricing structure.

“We will be investing for the future in 2017,” Macy’s CEO and chairman Terry J. Lundgren said. “Key to this is enhancing the customer experience in our stores where we are developing and testing concepts that feature new merchandise and entertainment options alongside enhanced technology to make shopping simpler.”

Dillard’s

Brick-and-mortar struggles, along with declining foot traffic, hurt Dillard’s fourth quarter and fiscal year results.

For the fourth quarter ended Jan. 28, 2017, net income was $56.9 million ($1.72 per share), down 32% from $84 million ($2.31 per share) for fourth quarter the previous year. Fourth quarter net sales were $1.9 billion, which was slightly less than $2 billion from the same period in 2016.

Dillard’s fiscal year results also indicated a decline in net income and net sales. For the fiscal year ended Jan. 28, 2017, net income declined to $169.2 million ($4.93 per share), down 37% from $269.4 million ($0.12 per share) for the prior fiscal year. Fiscal year net sales also dropped 4.5% to $6.3 billion from $6.6 billion for the same period last year.

“Our operating results reflect another quarter of mall traffic declines from continued retail industry challenges,” Dillard’s CEO William T. Dillard II said. “In response, we are ramping up our efforts to bring more distinctive brand and service experiences to Dillard’s, both in-store and online.”

Levi Strauss & Co.

Levi Strauss & Co. ‘s retail and e-commerce investments paid off for the company’s fourth quarter results.

Net revenues grew by one percent to $1.3 billion in the fourth quarter ended Nov. 27, 2016, compared to $1.29 billion for the same period last year.

Direct-to-consumer sales increased by 11 percent in the fourth quarter and were attributed to the company’s extensive retail and e-commerce expansion across all regions.

Gross profit for the fourth quarter also increased to $659 million, which was slightly higher than $658 million for fourth quarter 2015.

Operating income also declined to $143 million, compared to $161 million in fourth quarter 2015, due to the company’s direct-to-consumer investments.

For the fiscal year ended Nov. 27, 2016, net revenues remained relatively flat for the North American region, due to a decline in wholesale activities. Europe achieved a 10 percent revenue growth due to improved performance of the company’s operated retail network. In Asia, net revenues increased by six percent to $778,000,000 as a result of e-commerce and wholesale growth.

“We are pleased to report our fourth consecutive year of profitable constant currency revenue growth behind the strength of the Levi’s brand and our global direct-to-consumer business,” Levi’s CEO and president Chip Bergh said. “Looking ahead, although it remains a very challenging environment, given our diversified portfolio we remain optimistic about our long-term prospects for growth.”

Lands’ End

Lands’ End anticipates slightly unfavorable fourth quarter results.

On Feb. 9, the retailer announced its preliminary financial results for the fourth quarter ended Jan. 27, 2017. Net revenue is anticipated to decrease approximately three percent from $473.5 million in fourth quarter 2015, due to a decrease in the company’s retail segments.

Gross margin is expected to be 38.5% in fourth quarter 2016, compared to 42 percent in fourth quarter 2015. Net loss is also projected to fall between 92.8 million and $98.8 million, which would be significantly greater than $39.5 million in fourth quarter 2015.

Underperforming Lands’ End shops at Sears stores and a highly competitive retail environment could have contributed to the company’s disappointing fourth quarter predictions. Furthermore, Lands’ End anticipates that it will write down an estimated $2.3 million of aged Canvas by Lands’ end inventory in fourth quarter 2016.

“We remained disciplined in controlling costs and managing inventory while taking important steps to better execute our business strategies and stabilize the business,” Lands’ End co-interim CEO and CFO James Gooch said. “While we still have a lot of work to do, we believe that we are on the right path to improve the business for the long-term.”

Lands’ End will release its full fourth quarter and fiscal 2016 results on March 21.

VF Corporation

VF Corporation attributed its fourth quarter and fiscal year growth to its Vans business and international and direct-to consumer platforms.

For the fourth quarter ended Dec. 31, 2016, revenue increased by one percent to $3.3 billion, which was in line with the company’s predictions. Gross margin improved by 90 points to 49.1%, due to lower production cost benefits being offset by restructuring charges. On an adjusted basis, operating income decreased by five percent to $509 million, which was attributed to foreign currency changes.

For the full year ended Dec. 31, 2016, VF Corporation revenue increased to $12 billion, which was slightly higher than fiscal year 2015. Gross margin on an adjusted basis increased to 48.6%, despite the negative impact from foreign currency shifts. Adjusted operating income decreased by six percent to $1.7 billion.

“We’re pleased with the improved quality of our revenue, which reflects continued growth in our international and direct-to-consumer platforms, and our strong gross margin and cash generation performance that enabled us to return a record $1.6 billion to our shareholders,” VF Corporation Board executive chairman Eric Wiseman said. “Looking forward, I expect the strategic and operational actions we are taking to generate even stronger long-term value for our shareholders.”

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