Commercial Business Segment Makes Staples A Deep Value Investment With A High Income Stream
Non-Correlating Stock Ideas
Non-Correlating Stock Ideas
Staples Clearance Sale Going On Now
Chris DeMuth Jr. • 37 Comments
Chris DeMuth Jr. • 37 Comments
Today, 8:08 AM
Thu, Sep. 15, 1:59 PM
- A new report from Moody's makes the argument that brick-and-mortar retailers such as Wal-Mart (WMT +1.2%) and Best Buy (BBY +0.1%) are thriving due to their sheer physical size. The ratings agency doesn't believe mass store closing are in the future, but sees a continuing trend toward "repurposing" of the store fleets to evolve to the multi-channel world.
- The pitch runs counter to the calls from some analysts for a mass reduction in square footage by major chains.
- Moody's on WMT: "Walmart's recent acquisition of Jet.com, while not a threat to Amazon's position, provides Walmart a speed advantage in boosting online growth by leveraging Jet's ready-made platform."
- Moody's on BBY:" Best Buy is an example of a retailer that continues to successfully transition online, with penetration approaching 20% of total sales."
- The interesting take from Moody's is probably relevant to other larger retail chains such as Staples (SPLS +1.8%), Target (TGT +0.8%), Walgreen Boots Alliance (WBA +0.3%), L Brands (LB +0.6%), Macy's (M +1%), and TJX Companies (TJX +0.8%) as well.
- Moody's press release
Thu, Sep. 15, 9:02 AM
- Retail sales fell in August on a month-over-month comparison. The drop wasn't a large surprise considering the onslaught of warnings from the retail sector on store traffic.
- 8 out of the 13 retail categories showed negative growth during the month, with the largest drops recorded in the building material/garden equipment/supplies dealers and miscellaneous store retailers categories. The broad weakness turned on its head the argument that money freed up from a lower level of auto sales would be funneled into other consumer purchases.
- Food services and drinking places showed a +0.9% M/M and +5.8% Y/Y increase in a somewhat surprising result considering the harsh read from Black Box Intelligence on August same-store sales in the restaurant sector BITE. Is the discrepancy an indication that independent restaurants are taking market share?
- On a year-over-year basis, retail sales were up 1.9%. As expected the Amazon-influenced nonstore retailers category did the heavy lifting with an 11% gain. Larger U.S. retail chains (WMT, SPLS, TGT, BBY, DG, COST, KR, WBA, CVS, LOW, HD, SWY) have been raising the issue of pricing pressure in recent conference presentations and guidance updates which could be a nagging sales deflator for the balance of the year.
- Previously: Retail sales disappoint in August (Sept. 15)
- Retail ETFs: XLP, XLY, VDC, XRT, VCR, RTH, RETL, FXG, PBJ, IYK, FXD, IYC, RHS, FDIS, PEJ, FSTA, PSL, SCC, RCD, UCC, PEZ, PMR, PSCC, UGE, PSCD, SZK, BITE, CNDF, CNSF, IBUY, JHMC, JHMS.
Tue, Sep. 13, 4:35 PM
Sat, Aug. 27, 11:34 AM
- Many retailers are tightening up this year by reducing their store count or converting more locations to e-commerce fulfillment centers. Analysts note that although the strategy will lower revenue, over time the group should see improved bottom lines as underperforming stores are cut back and online efficiency improves. Amid the skittish trading with chain store stocks there could be some value deals.
- Store chains that currently trade with a PE ratio below 15 and offer a dividend yield of at least 2% include: TLRD, BKE, SMRT, GPS, AEO, CHS, CATO, TGT, KSS, M, HVT, WSM, PIR, BKS, OUTR, ODP, SPLS.
- ETFs: XLY, XRT, VCR, RTH, RETL, FXD, IYC, FDIS, SCC, RCD, UCC, PMR, JHMC, CNDF.
Wed, Aug. 17, 6:59 AM
- Staples (NASDAQ:SPLS) reports sales fell 2% in Q2 after excluding the impact of changes in foreign exchange rates, store closures and divestiture.
- North American stores and online sales decreased 5.7% to $1.99B and comp down 4%.
- North American Commercial sales dropped 0.2% to 2.04B.
- International operations sales squeezed 7.5% to $721M.
- Gross margin rate slipped 50 bps to 25.1%.
- Non-GAAP operating margin rate up 14 bps to 2.7%.
- Q3 Guidance: Sales: down Y/Y; Non-GAAP EPS: $0.32 to $0.35.
- In FY2016, the company expects to generate ~$600M free cash flow and plans to close down ~50 stores in North America.
Wed, Aug. 17, 6:02 AM
Tue, Aug. 16, 5:30 PM
Fri, Aug. 12, 8:49 AM
- Retail sales came in flat for July with weakness in grocery stores, restaurants, and department stores standing out. The U.S. economy had produced three straight months of positive retail sales growth before the disappointment in July.
- Once again, the nonstore retailers category (primarily e-commerce) led growth with a 1.3% M/M and 14.1% Y/Y gain in July. Sales at health and personal care stores were also solid with a 7.8% Y/Y rise.
- Retail sales in June were revised to +0.9% from +0.7% in a positive development for the sector.
- Retail Sales report (.pdf)
- The S&P Retail ETF (NYSEARCA:XRT) is up 0.64% premarket to $45.55 as it looks to extend on yesterday's gain.
- Retail ETFs: XLP, XLY, VDC, XRT, VCR, RTH, RETL, FXG, PBJ, IYK, FXD, IYC, RHS, FDIS, PEJ, FSTA, PSL, SCC, RCD, UCC, PEZ, PMR, PSCC, UGE, PSCD, SZK, BITE, JHMS, IBUY, CNSF, CNDF, JHMC.
- Related stocks: WMT, TGT, COST, SPLS, HD, LOW, AMZN.
Wed, Jul. 13, 9:58 AM
- The new president of Staples' (SPLS -0.8%) North American business is giving himself until October before he fires off changes. The exec plans to use the time to gather information.
- Steve Matyas has a pretty serious challenge on his hands with some of the Christmas season strategy already set.
- Matyas seems to know that Staples need to narrow its focus. "A couple of years ago, if someone told me we’d be selling Chef Boyardee in our stores, I wouldn’t have believed it," he observed to New York Post.
Mon, Jul. 11, 8:38 AM
- Staples (NASDAQ:SPLS) announced that it has named Steve Matyas, President, North American Retail. Matyas previously served as a President of Staples Canada/Bureau en Gros since July, 2000, and will continue to serve as a member of the company’s executive committee.
- “Steve has over 25 years of deep experience leading Staples Canada, and a proven track record of delivering profitable growth and innovation,” said Shira Goodman, Interim Chief Executive Officer, Staples, Inc. “Realigning our retail leadership will strengthen our position as we continue to right size our store network and evolve to meet the changing needs of business customers.”
- Press Release
Tue, Jul. 5, 11:35 AM
- Staples (SPLS -3.6%) is considering pulling out of the U.K. as it looks at options for cutting costs in Europe, according to a report from The Telegraph. The strategic review began in May after the company's merger with Office Depot was blocked.
- The company has 107 stores in the U.K. and a total of 259 stores in Europe.
Fri, Jun. 17, 7:39 AM
Tue, Jun. 14, 5:39 PM
Tue, Jun. 14, 7:13 AM
- Staples (NASDAQ:SPLS) announces it will launch a same-day delivery service called “Staples Rush" in major metropolitan areas across the U.S.
- The service will cost $14.99 per delivery. Customers will be able to make online orders Monday through Friday for delivery the next day by 7:00 p.m.
- The service is now live in parts of Boston, Dallas, and Manhattan with other cities including Chicago, Houston, Los Angeles, San Francisco, and Seattle to follow shortly.
- Source: Press Release
Fri, Jun. 10, 11:29 AM
- Back-to-school sales will increase 2.8% Y/Y to $828.81B, according to a forecast from eMarketer.
- The once thriving July through August BTS season is now more spread out as more parents wait until the school year starts before jumping in.
- The increased role in e-commerce has as lot to do with that trend. E-commerce BTS sales are seen rising 15% this year.
- Amazon (NASDAQ:AMZN) and Staples (NASDAQ:SPLS) have benefited from the e-commerce push, while department stores such as J.C. Penney (NYSE:JCP) and Sears (NASDAQ:SHLD) have suffered as the concept of clothes stockpiling ahead of the opening day bell has been dismissed by the younger generation. Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) grab a lion's share of the in-store BTS traffic.