Home Depot wins Black Friday battle with Lowe’s after it landed more market share of Black Friday weekend traffic, 5.6% vs. 4.2%, while spending roughly the same amount on TV advertising in the weeks leading up to the period. Lowe's spent $4M for each percentage point of market share (of the top 50 retailers) while Home Depot only doled out $2.9M.
The Conference Board Leading Economic Index for the U.S. increased 0.2 percnt in October to 97.5, following a 0.9 percent increase in September, and a 0.7 percent increase in August.
"The modest rise in the Leading Economic Index in October follows the strong advances recorded in the prior two months, which helps lift the six-month annualized growth rate to 5.1 percent from 3.7 percent in the previous six months," said Kathy Bostjancic, Director of Macroeconomic Analysis at The Conference Board. "The recent increase in the index supports our forecast that the U.S. economy is poised to grow somewhat faster at 2.3 in 2014 compared to 1.6 percent in 2013. Within the details, the sub-indexes contributing positively to growth are the financial, housing and manufacturing variables. Restraining growth is the ongoing caution of businesses that continue to keep tight reigns on capital expenditures."
"The U.S. LEI has increased for four consecutive months," said Ken Goldstein, Economist for The Conference Board. "Overall, the data reflect strengthening conditions in the underlying economy. However, headwinds still persist from the labor market, accompanied by business caution and concern about federal bucget battles. The biggest challenge to date has been relatively weak consumer demand, which continues to be restrained by weak wage growth and slumping confidence."
The Coincident Economic Index increased 0.2 percent in October to 106.9, following a 0.3 percent increase in September, and a 0.3 percent increase in August.
The Lagging Economic Index increased 0.3 percent in October to 119.7, following a 0.5 percent increase in September and a 0.2 percent increase in August.
Source: The Conference Board
The Conference Board Consumer Confidence Index, which had decreased sharply in October, declined again in November. The Index now stands at 70.4, down from 72.4 in October. The Present Situation Index edged down to 72.0 from 72.6. The Expectations Index declined to 69.3 from 72.2 last month.
"Consumer confidence declined moderately in November after sharply declining in October. Sentiment regarding current conditions was mixed, with consumers saying the job market had strengthened, while economic conditions had slowed. However, these sentiments did not carry over into the short-term outlook. When looking ahead six months, consumers expressed greater concern about future job and earning prospects, but remain neutral about economic conditions. All in all, with such uncertainty prevailing, this could be a challenging holiday season for retailers", said Lynn Franco, Director of Economic Indicators at The Conference Board.
Consumers' assessment of overall current conditions decreased slightly. Those claiming business conditions are "good" edged up to 19.9 percent from 19.5 percent, while those claiming business conditions are "bad" increased to 25.2 percent from 23.0 percent. Consumers' appraisal of the job market was little changed. Those saying jobs are "plentiful" ticked up to 11.8 percent from 11.6 percent, while those saying jobs are "hard to get" decreased slightly to 34.0 percent from 34.9 percent.
Consumers' expectations, which had decreased sharply in October, declined further in November. Those expecting business conditions to improve over the next six months increased slightly to 16.6 percent from 16.0 percent, while those expecting business conditions to worsen decreased to 16.8 percent from 17.5 percent. However, consumers' outlook for the labor market was more pessimistic. Those anticipating more jobs in the months ahead fell to 12.7 percent from 16.0 percent, but those anticipating fewer jobs also decreased to 21.7 percent from 22.6 percent. The proportion of consumers expecting their incomes to increase declined to 14.9 percent from 15.7 percent. Those expecting a decrease in their incomes rose slightly to 15.9 percent from 15.5 percent.
Source: November 2013 Consumer Confidence Survey, The Conference Board
- The amount of money that consumers spent over the Thanksgiving weekend is estimated to have slipped 2.7% to $57.4B, the National Retail Federation says.
- The drop is in contrast to estimates that Thanksgiving and Black Friday sales at brick-and-mortar stores rose 2.3%.
- The average consumer spent $407.02 over the whole weekend, down 3.9% from last year.
- The number of shoppers increased to 141M people from 139M.
- The fall in spending came after retailers warned of a difficult holiday season and was due to the aggressive bargains on offer, a trend that is expected to continue.
- However, the NRF maintained its forecast that retail sales will grow 3.9% for the whole holiday whole season.
- Online sales climbed 17.3% on Thanksgiving and Black Friday, ComScore estimates, noting that the latter day attracted a record $1.2B in spending. The research firm expects Internet sales to rise 16% for the whole of the holiday season.
- The most visited sites on Black Friday were those of Amazon (AMZN), eBay (EBAY) Walmart (WMT), Best Buy (BBY) and Target (TGT).
- Total e-commerce sales hit $20.6B in the first 29 days of this holiday season, up 3.1% from last year, although this year includes more days.
- Today is Cyber Monday, which the NRF reckons will attract 131M shoppers vs 129M last year. But as with Black Friday, Cyber Monday has started a day early, with J.C. Penney (JCP) and Macy's (M) among those who began related promotions yesterday. Target has gone further and created "Cyber Week."
Bentonville, Ark., November 25, 2013 – Wal-Mart Stores, Inc. (NYSE: WMT) today announced that its board of directors elected company veteran Doug McMillon, 47, to succeed Mike Duke, 63, as president and chief executive officer, effective February 1, 2014. McMillon was also elected to the company’s board of directors, effective immediately.
“This leadership change comes at a time of strength and growth at Walmart,” said Rob Walton, chairman of Walmart’s board of directors. “The company has the right strategy to serve the changing customer around the world, and Doug has been actively involved in this process. The company has a strong management team to execute that strategy.”
Walton continued, “Doug is uniquely positioned to lead our growing global company and to serve the changing customer, while remaining true to our culture and values. He has broad experience – with successful senior leadership roles in all of Walmart’s business segments – and a deep understanding of the economic, social and technological trends shaping our world. A merchant at heart, Doug has both a long history with our company and a keen sense of where our customers globally are heading next. He has also shown strong leadership on environmental sustainability and a commitment to using Walmart’s size and scale to make a difference in the lives of people, wherever they might be.”
“The opportunity to lead Walmart is a great privilege,” McMillon said. “Our company has a rich history of delivering value to customers across the globe and, as their needs grow and change, we will be there to serve them. Our management team is talented and experienced, and our strategy gives me confidence that our future is bright. By keeping our promise to customers, we will drive shareholder value, create opportunity for our associates and grow our business.”
“Mike put in place the building blocks for the next generation Walmart and today the company is stronger, more global and more unified across all our stores, mobile and online,” said Walton. “He also reinvigorated the productivity loop and delivered strong financial performance. During his tenure the company made critical investments in talent and technology to expand Walmart to even more customers globally and stepped up its progress on social and environmental issues. Mike also has a strong commitment to diversity, and has been especially engaged in advancing women throughout organization. He set a tone at the top to never be satisfied, to always accelerate and do better, while remaining true to the culture that has been core to the company’s success.”
“This is a great company and it has been an honor to help advance Sam Walton’s vision of giving people around the world a better life,” said Duke. “Our associates make it all possible and I’ve learned so much from them. No matter where I traveled, our associates continued to inspire me with their commitment to living our values, serving our customers and taking care of each other.”
Duke will continue serving as chairman of the executive committee of the board and, in the tradition of his predecessors, stay on as an advisor to McMillon for one year. The company plans to make an announcement on McMillon’s successor as CEO of Walmart International by the end of the fiscal year.
NOTE: Bios of Doug McMillon and Mike Duke are available at: http://corporate.walmart.com. A high resolution photo of Doug McMillon is also available for downloading from the site.
ATLANTA, Nov. 19, 2013 /PRNewswire/ -- The Home Depot®, the world's largest home improvement retailer, today reported sales of $19.5 billion for the third quarter of fiscal 2013, a 7.4 percent increase from the third quarter of fiscal 2012. On a like for like basis, comparable store sales for the third quarter of fiscal 2013 were positive 7.4 percent, and comp sales for U.S. stores were positive 8.2 percent.
Net earnings for the third quarter were $1.4 billion, or $0.95 per diluted share, compared with net earnings of $947 million, or $0.63 per diluted share, in the same period of fiscal 2012. For the third quarter of fiscal 2013, diluted earnings per share increased 50.8 percent from the same period in the prior year. The prior year results reflect a nonrecurring charge of approximately $165 million, net of tax, or $0.11 per diluted share, due to the closing of seven stores in China. On an adjusted basis, the Company reported a 28.4 percent increase in diluted earnings per share from the same period in the prior year.
"Our third quarter results reflect the continuing improvement in the housing market and our solid operational performance," said Frank Blake, chairman & CEO. "I would like to thank our associates for their hard work and dedication."
Updated Fiscal 2013 Guidance
Based on its year-to-date performance and outlook for the remainder of the year, the Company raised its fiscal 2013 sales guidance and now expects sales to be up approximately 5.6 percent. Comparable store sales, on a 52-week like for like basis, are expected to be up approximately 7.0 percent for the year. The Company raised its fiscal 2013 diluted earnings-per-share guidance and now expects diluted earnings per share to be up approximately 24.0 percent to $3.72 for the year. The Company's fiscal 2013 sales and diluted earnings-per-share guidance is based on a 52-week year compared to fiscal 2012, a 53-week year.
Interesting little tid-bit in The Home Depot's recent SEC filing for the period ending August 4, 2013.
Interconnected Retail – Our focus on interconnected retail is based on building a competitive platform across all commerce channels. As of the end of the second quarter of fiscal 2013, approximately one-third of our online orders were completed in a store, either through Buy Online, Pick-Up In Store ("BOPIS") or Buy Online, Ship To Store ("BOSS"). When these customers come into our stores to pick up their online orders, approximately one-fifth of them purchase additional items. We also continued the roll out of MyInstall, an online functionality that will provide installation services customers with specific installation information, dynamic tracking to keep them informed of the status of the installation, e-mail notifications for appointments and a point of contact to process order changes.
TORONTO--(BUSINESS WIRE)-- Hudson's Bay Company (TSX:HBC) ("HBC" or the "Company") is pleased to announce that it has successfully completed its previously announced acquisition (the "Acquisition") of all of the outstanding shares of Saks Incorporated ("Saks") for US$16.00 per share in an all-cash transaction valued at approximately US$2.9 billion, including debt.
With the Acquisition, HBC creates a premier North American fashion retail business centered on three iconic retail brands — Hudson's Bay, Lord & Taylor and Saks Fifth Avenue. The combined Company will operate a total of 320 stores, including 179 full-line specialty department stores, 72 outlet stores and 69 home stores in prime locations throughout the U.S. and Canada, along with three e-commerce sites.
The Conference Board Consumer Confidence Index, which had declined moderately in September, decreased sharply in October. The Index now stands at 71.2 (1985=100), down from 80.2 in September. The Present Situation Index decreased to 70.7 from 73.5. The Expectations Index fell to 71.5 from 84.7 last month.
"Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers' expectations. Similar declines in confidence were experienced during the payroll tax hike earlier this year, the fiscal cliff discussions in late 2012, and the government shutdown in 1995/1996. However, given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months", said Lynn Franco, Director of Economic Indicators at The Conference Board.
Consumers' assessment of current conditions declined moderately. Those claiming business conditions are "good" decreased to 19.0 percent from 20.7 percent, however, those claiming business conditions are "bad" edged down to 23.0 percent from 23.9 percent. Consumers' appraisal of the job market was less favorable than last month. Those saying jobs are "plentiful" was virtually unchanged at 11.3 percent from 11.4 percent, while those saying jobs are "hard to get" increased to 35.8 percent from 33.6 percent.
Consumers' outlook for the labor market was also more pessimistic. Those anticipating more jobs in the months ahead decreased to 15.3 percent from 16.1 percent, while those anticipating fewer jobs increased to 22.7 percent from 19.1 percent. The proportion of consumers expecting their incomes to increase rose to 15.8 percent from 15.1 percent, however those expecting a decrease rose to 15.4 percent from 13.9 percent.
Source: October 2013 Consumer Confidence Survey, The Conference Board
Waterloo, ON- 2013-November-5 – Open Text Corporation (NASDAQ: OTEX) (TSX: OTC), a global leader in Enterprise Information Management (EIM), announced today that it has entered into an agreement and plan of merger (Merger Agreement) to acquire GXS Group, Inc. (GXS), a leader in business-to-business (B2B) cloud integration, pursuant to which GXS will become a wholly-owned subsidiary of OpenText. For more information, please see the informational presentation under the investor section of www.opentext.com.
About the Transaction(1)
- Purchase price of $1.165 Billion
- Financing commitment of $800m Debt, $265m Cash
- Equity of $100m, or 2.1 to 2.4% of OpenText’s outstanding common shares
- Purchase price is 2.4x GXS Fiscal Year 2012 revenues
- Targeting to onboard GXS to the OpenText operating model within 2 years
- Targeting to be accretive to adjusted earnings for Fiscal Year 2014
- Targeting the transaction to close within 90 days
- Subject to customary closing conditions
“The next generation of enterprise software is Enterprise Information Management,” said OpenText CEO Mark J. Barrenechea. “Today’s GXS announcement strengthens the Information Exchange pillar with the addition of market leading cloud-based B2B integration services, it expands the EIM buying centers and it strengthens EIM with the addition of cloud-based Managed Services. I look forward to welcoming GXS employees, customers and partners to OpenText in the near future.”
Worries over jobs, the economy and fiscal policy uncertainty have left consumers spending cautiously, prioritizing long-term goals and improvement projects, according to the Chase Freedom Lifestyle index report released on October 30.
Spending on home improvement and self-improvement saw year-over-year spending increases in Q3, while consumer electronics and office supplies saw the biggest declines in spending. Home improvement spending rose 4%. The housing recovery and increase in home values likely prompted consumers to increase their spending on remodeling and other improvements to their dwellings.
Craft stores saw the biggest surge in spending during the quarter with a 91% increase, a sign of "continued strength of do-it-yourselfers who may be buying a home or remodeling their current residence." That is good news for home improvement retailers such as Home Depot and Lowe's, and hardwood flooring retailer Lumber Liquidators, which likely got their fair share of spending during the quarter.
Deep discounters such as Dollar Tree, Dollar General and Five Below, as well as Walmart and Target, which sell materials for arts and crafts, aldo tapped into some of that home improvement spending.
The index also shows that consumers are committed to self-improvement resolutions made earlier in the year, reflected in year-over-year spending increases on books at 6% and sporting goods at 5%. Book sellers Barnes & Noble and Amazon.com likely captured some of those dollars. Sporting good retailers such as Dick's Sporting Goods and athletic apparel outfits like Nike, Under Armour and Lululemon probably also benefitted from that spending.
Office supply and consumer electronics spending slipped 7% vs. a year earlier. That is not good news for retailers like Staples and Best Buy - which is in the midst of a turnaround. However, the report notes that the decline in spending on consumer electronics might be "a sign of calm before the holiday spending storm."
The Chase Freedom Lifestyle index is a quarterly barometer of consumer trends based on aggregated Chase Freedon cardholder spending. Chase is the retail banking business of JP Morgan Chase.
Source: Investor's Business Daily, www.investors.com
Publix Reports Third Quarter 2013 Results and Stock Price
LAKELAND, Fla., Nov. 1, 2013 — Publix's sales for the third quarter of 2013 were $7 billion, a 5.6 percent increase from last year's $6.7 billion. Comparable-store sales for the third quarter of 2013 increased 4.1 percent.
Net earnings for the third quarter of 2013 were $359.9 million, compared to $368.4 million in 2012, a decrease of 2.3 percent. Earnings per share for the third quarter decreased to $0.46 for 2013, down from $0.47 per share in 2012.
Publix's sales for the first nine months of 2013 were $21.6 billion, a 5.2 percent increase from last year's $20.5 billion. Comparable-store sales for the first nine months of 2013 increased 3.4 percent.
Net earnings for the first nine months of 2013 were $1.23 billion, compared to $1.16 billion in 2012, an increase of 6.3 percent. Earnings per share increased to $1.58 for the first nine months of 2013, up from $1.48 per share in 2012.
These amounts are based on unaudited reports that will be filed next week with the U.S. Securities and Exchange Commission (SEC). The company's quarterly report to the SEC, Form 10-Q, will be available Nov. 7 on its website at www.publix.com/stock.
Effective Nov. 1, 2013, Publix's stock price increased from $27.55 per share to $30.00 per share. Publix stock is not publicly traded and is made available for sale only to current Publix associates and members of its board of directors.
"I'm very pleased we had another significant increase in our stock price, resulting in a 33 percent increase in our stock price over the last year," said CEO Ed Crenshaw. "Our associates continue to deliver premier customer service, the key to our success."
Retail sales fell in September for the first time in six months, but the decline was credited to a drop-off in auto purchases. Most U.S. retail sectors actually experienced broad sales gains during the month, according to the National Retail Federation, which reported that, excluding automobiles, gas stations and restaurants, retail sales grew a seasonally 0.6% compared to the previous month and 3.8% unadjusted compared to the prior year.
Results of specific sectors include:
- Building material and garden equipment and supplies dealers stores' sales increased 0.1% seasonally adjusted and 8.0% unadjusted year-over-year.
- Clothing and clothing accessories stores' sales decreased 0.5% seasonally adjusted month-to-month yet increased 0.7% year-over-year.
- Electronics and appliance stores' sales increased 0.7% seasonally-adjusted month-to-month and 1.8% unadjusted year-over-year.
- Furniture and home furnishing stores' sales increased 0.2% seasonally-adjusted month-to-month and 4.1% unadjusted year-over year.
- General merchandise stores' sales increased 0.4% seasonally adjusted month-to-month yet decreased 0.2% unadjusted year-over-year.
- Health and personal care stores' sales increased 0.4% seasonally adjusted month-to-month and 4.6% unadjusted year-over-year.
- Sporting goods, hobby, book and music stores' sales increased 0.5% seasonally adjusted month-to-month and 0.9% unadjusted year-over-year.
- Non-store retailers' sales increased 0.4% seasonally adjusted month-to-month and 12.0% unadjusted year-over-year.
"Falling gas prices combined with rising housing and stock prices continue to support consumer spending, and the broader economy," NRF chief economist Jack Kleinhenz said. "While far from robust, consumers are shopping, but they are spending both discriminately and moderately. Volatility still persists in various retail sectors but spending has somewhat stabilized heading into the all-important holiday shopping season."
September retail sales, released today by the U.S. Census Bureau, showed that total retail and food services sales, which include non-general merchandise categories such as automobiles, gasoline stations, and restaurants, decreased 0.1% seasonally adjusted month-to-month yet increased 3.2% adjusted year-over-year.
Source: www.retailingtoday.com, Dan Berthiaume
Total nonfarm payroll employment rose by 148,000 in September, and the unemployment rate was little changed at 7.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in construction, wholesale trade, and transportation and warehousing.
Both the civilian labor force participation rate, at 63.2 percent, and the employment- population ratio at 58.6 percent, were unchanged in September. Over the year, the labor force participation rate has declined by 0.4 percentage point, while the employment- population ratio has changed little.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was unchanged at 7.9 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
Source: Bureau of Labor Statistics
Shoppers in the United States plan on spending an average of $646 on gifts this holiday season, representing an 11% increase over the $582 they planned to spend, on average, in 2012, according to Accenture’s annual holiday shopping survey. The forecast uptick is more optimistic than other holiday surveys released to date.
“The average dollar spend is trending up, and we are seeing a consumer mindset shifting from ‘cautious’ to ‘sensible,’ which is good news for retailers,” said Chris Donnelly, global managing director of Accenture’s Retail practice. “However, retailers are mindful that during the 2013 Thanksgiving-Christmas shopping period, they will have six days less in which to tempt shoppers through their doors, so many will go big and go early.”
read the rest of the Retailing Today article
Deloitte’s holiday sales forecast points to further signs that the economy is recovering. Holiday sales are expected to climb to between $963 and $967 billion, representing a 4% to 4.5% increase in November through January holiday sales (excluding motor vehicles and gasoline) this year from last year’s season.
The growth rate is on par with last year's 4.5% gain. In addition, Deloitte forecasts a 12.5 to 13% increase in non-store sales. Nearly three-quarters of non-store sales result from the online channel with additional sales coming from catalogs and interactive TV.
Deloitte also anticipates that mobile-influenced retail store sales will account for 8%, or $66 billion, in retail store sales this holiday season, driven by consumers' store-related smartphone activity such as product research, price comparison or mobile application use.
"We anticipate non-store sales growth will continue to surpass overall retail sales growth," said Alison Paul, vice chairman, Deloitte LLP and Retail & Distribution sector leader. “In addition, shoppers researching their purchases electronically, via their PC, tablet or mobile phone, are increasingly influencing in-store sales, particularly as we see greater integration across retailers' store, online and mobile channels. More retailers are offering services such as 'buy online and pick up in store,' as well as inventory from other locations and price matching on the spot. The store is still a core element of holiday shopping, and retailers leading the way this season will be those that effectively bring together their pricing, promotions, merchandise and inventory management across both their physical and digital storefronts."
source: www.retailingtoday.com, Dan Berthiaume
Canadian retailer Hudson’s Bay, parent company to Lord & Taylor stores, has agreed to purchase Saks Fifth Avenue, based in New York City. The buyout is expected to close by year end.
The combination of these three brands will make the company one of the largest luxury brand retailers in North America, with over 320 stores.
During a conference call with investors, Hudson's Bay Co. Chairman and CEO Richard Baker said the goal is to bring Saks luxury brand into Canada. The company plans to open up seven Saks Fifth Avenue stores and 25 Off Fifth outlet stores to Canada. "With the addition of Saks, (Hudson's Bay) will offer consumers an unprecedented range of retailing categories and shopping experiences," Baker said.
Global luxury sales, including higher-end jewelry and clothes, rose an estimated 10 percent to $281.96 billion last year, according to the latest study from Bain & Co. In North America, luxury sales were up an estimated 12 percent to $81.33 billion.
Bradenton, FL June 12, 2013—Accelerated Analytics®, a leading provider of retail point of sale reporting, announced today it has acquired afterBOT’s retail POS reporting business. The acquisition further expands the market leadership of Accelerated Analytics as the go to provider for retail point of sale reporting solutions.
“The acquisition of the afterBOT point of sale reporting business is a key strategic step in our growth strategy for Accelerated Analytics. We are looking forward to servicing the existing afterBOT customer base, and bringing new capabilities to our existing customers.” said Chad Symens, President and CEO of Accelerated Analytics.
As part of the Accelerated Analytics family afterBOT customers will now have opportunities to expand their retail point of sale reporting through:
- Multi-retailer reporting. Accelerated Analytics provides reporting for over 100 retailers. Customers will now have the opportunity to access POS reporting for all their retail customers in a single set of reports.
- Expanded reporting tools and capabilities including the ability to customize reports and add other non-POS data like shipping.
- Mobile access to reports on the iPad and iPhone.
As part of the agreement afterBOT has licensed IP to Accelerated Analytics for servicing the current customers which can also be considered for new opportunities in the future.
MOORESVILLE, N.C., Jun 17, 2013 (BUSINESS WIRE) -- Lowe's Companies, Inc. LOW +0.51% , the world's second largest home improvement retailer, today announced it has entered into an asset purchase agreement with Orchard Supply Hardware, under which Lowe's will acquire the majority of Orchard's assets for approximately $205 million in cash, plus the assumption of payables owed to nearly all of Orchard's supplier partners. Upon completion of the transaction, the acquisition will enable Lowe's to expand through a new store format and reach a new customer base in California with the addition of Orchard's smaller-format metro store locations. Lowe's plans to have Orchard operate as a separate, standalone business, retaining its brand under the leadership of Orchard's current management team.
Based in San Jose, California and with fiscal 2012 annual revenue of $657 million, Orchard currently operates 91 neighborhood hardware and garden stores primarily located in densely populated markets in California. Under the terms of the transaction, Lowe's would acquire at least 60 of these stores based upon further due diligence on the locations. On average, the Orchard stores, which offer a product selection focused on paint, repair and backyard categories, include approximately 36,000 square feet of selling space, compared to 113,000 square feet of selling space for an average Lowe's home improvement store. Lowe's currently operates 110 stores in California.
The transaction is expected to be consummated through a court-supervised process under Section 363 of the U.S. Bankruptcy Code and is subject to an auction and Bankruptcy Court approval. The agreement with Lowe's will serve as the "stalking-horse bid" in the auction process. Earlier today, Orchard filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
Robert A. Niblock, Chairman, President and CEO of Lowe's, said, "Orchard's neighborhood stores are a natural complement to Lowe's strengths in big-box retail, offering smaller-format hardware and garden stores catering to the needs of local customers. Strategically, the acquisition will provide us with immediate access to Orchard's high density, prime locations in attractive markets in California, where Lowe's is currently underpenetrated, and will enable us to participate more fully in California's economic recovery.
"Overall, Orchard's business model offers great potential but it has been burdened with a high level of debt. With the debt addressed through the Chapter 11 process and appropriate support from Lowe's, we believe that Orchard will be positioned for profitable growth as a standalone business within our portfolio," added Mr. Niblock.
Subject to the auction process, Court approval and customary regulatory review, the parties anticipate the transaction will close in approximately 90 days. Under the terms of the agreement, Lowe's would receive a break-up fee of 3 percent of the purchase price should it not be successful in acquiring the Orchard assets. In addition, subject to Court approval, for an alternative bidder to be successful, it must outbid Lowe's by a minimum of $12.0 million, representing $5 million in addition to the break-up fee and an expense reimbursement of $850,000.
Goldman Sachs is acting as financial advisor to Lowe's, while Hunton & Williams LLP is acting as legal advisor.
With fiscal year 2012 sales of $50.5 billion, Lowe's Companies, Inc. is a FORTUNE(R) 100 company that serves approximately 15 million customers a week at more than 1,750 home improvement stores in the United States, Canada and Mexico. Founded in 1946 and based in Mooresville, N.C., Lowe's is the second-largest home improvement retailer in the world. For more information, visit Lowes.com.
JC Penney has launched a new home goods strategy that includes expansive home goods boutiques at 500 of their 1,100 stores. CEO Ron Johnson calls the strategy “pivotal” to his efforts to revive Penney.
For seven years, home goods have been Penney’s worst performing category. The home category accounted for only 12 percent of sales in 2012, compared to 21 percent in 2006.
Penney’s neglected the home goods area to focus on improving its fashion collection, leaving consumers to choose from uninspired, deeply discounted goods. Penney’s new home goods section will be anchored by top designers, such as Jonathan Adler, Michael Graves, Sir Terence Conran and Martha Stewart.
The new home area will occupy up to 19,000 square feet of space, more than twice the size of a Williams-Sonoma store. Their desire is to bring in younger shoppers with attractive brands. They will also organize products by category at a variety of prices, and hold sales events and offer discounts.
Penney’s spokesperson Ellen Degeneres highlighted the JC Penney home goods boutiques on her show Thursday, May 30, by treating a family in need from Georgia to a shopping spree that replaced everything in their house from furniture to window treatments, bedding, dishes and accessories. They showed the boutique in an on-site store visit. The family was also awarded $15,000 from JC Penney to help them with expenses. Ellen’s show also gave each audience member a $100 gift card to spend at a JC Penney.