Earnings Talk: Our Favorite Quotes From Your Favorite Retailers’ Earnings Call Transcripts

Overall Market Summary: The novel coronavirus has dug deep and left scars across the economy in the last 5 months. Small businesses have struggled to survive, and retailers have had to innovate to stay afloat and to accommodate these unforgiving circumstances. Over the past few weeks, Omni Talk’s other intern, Peyton Duncan, and Chris Walton dove into the recent earnings reports of the nation’s top retail firms. Optimism ruled the day, as retail CEOs regaled their handling of COVID-19 over the last quarter, boasting of spending on safety precautions for both their employees and their customers, while many retailers also shattered expectations and showed tremendous resilience and ability to bounce back after the tough prior quarter. Regardless of their outlooks, however, it is still hard to look past the looming haze over the economy that is COVID-19 and all the uncertainty it still brings with it. 

The fight isn’t over: Retail surges, but further growth could be stunted…

Retail Sales rose in July, but growth rates have may be starting to stunt. Purchases rose by roughly 1% in July showing promise that the market may be returning back to pre COVID-19 levels.

“For the quarter, we were very pleased that both our top and bottom lines well exceeded our internal plans, despite our stores only being open for a little more than two thirds of the second quarter, and that our merchandise margin was excellent. Further, we saw especially strong sales at our HomeGoods and Homesense chains, as well as the home departments within our other chains, across geographies. Specifically, HomeGoods delivered double-digit, open-only comp store sales increases each month of the quarter. As to the future, we are confident that when more customers are comfortable with in-store shopping, we will be in a great position to continue gaining market share as we have for many years. We have been a trusted, value leader for more than 40 years, and we see a long runway of successful growth ahead for TJX.” – TJX Companies CEO Ernie Herrman

“Same-store sales trends for open stores stabilized in June just a few points short of flat, despite the majority of our dining rooms still remaining closed, and these trends have continued into July.”  – YUM! Brands CEO David Gibbs

“We are pleased to share that the vast majority of Starbucks stores around the world have reopened and our global business is steadily recovering, demonstrating the relevance of the Starbucks brand and the trust we have built with our customers.” – Starbucks CEO Kevin Johnson

A beacon of faith from top retail CEOs:

“The investments we have made across the business have significantly increased our agility, allowing us to respond quickly to changes while continuing to promote a safe operating environment. This enhanced our team’s ability to work cross-functionally to better serve our customers and deliver record-breaking sales in the quarter” – Home Depot CEO Craig Menear

“In uncertain times, this performance is a testament to the important role our products play in our customers’ lives and to Apple’s relentless innovation” – Apple CEO Tim Cook

“COVID-19 continues to create significant uncertainty for the 2020 outlook, though, due to the Company’s strong performance in the first half of the year, guidance for underlying operating margin, underlying EPS, and free cash flow is being raised.” – Ahold Delhaize CEO Frans Muller

“While COVID-19 has presented incredible challenges for the entire restaurant industry, I remain confident in the power and resiliency of our unique and highly diversified global business model and that we will emerge an even stronger growth company for all our stakeholders.” – YUM! Brands CEO David Gibbs

“With the dedication of our team, the benefit of a sustainable business model and a strong balance sheet, we are confident Target will emerge from this crisis an even stronger retailer, with higher affinity and trust from our guests.”- Target CEO Brian Cornell

 “It was so great to welcome back our Associates and loyal customers around the world this quarter. I am incredibly proud of the monumental effort of our Associates worldwide to reopen more than 4,500 stores in 9 countries, multiple distribution and fulfillment centers, and our e-commerce sites. Across our organization, our Associates worked tirelessly to help us operate safely in the current environment and bring our customers the excellent values we are known for. When we reopened, customer response to our values was beyond what we could have imagined.” – TJX Companies CEO Ernie Herrman

Not all retailers are created Equal — Target and Walmart win big this quarter, while apparel retailers struggles to survive

The Company’s total comparable sales grew 24.3 percent in the second quarter, reflecting comparable stores sales growth of 10.9 percent and digital sales growth of 195 percent. Total revenue of $23.0 billion grew 24.7 percent compared with last year, reflecting sales growth of 24.8 percent and a 16.6 percent increase in other revenue. Operating income was $2.3 billion in second quarter 2020, up 73.8 percent from $1.3 billion in 2019. – Target Q2 Earnings Report

“Throughout the first quarter, our team and guests faced unprecedented challenges arising from the spread of COVID-19. In the face of those challenges, our team showed extraordinary resilience as guests relied on Target as a trusted resource for their families. With our stores at the center of our strategy, and a significant investment in the safety of our team and guests, our operations had the agility and flexibility needed to meet the changing needs of our business,” – Target CEO Brian Cornell

“So, let’s get to Q2 results. Total constant currency revenue growth was strong at 7.5% to more than $140 billion, despite operating limitations in some markets early in the quarter. Walmart US comp sales increased more than 9%, International net sales grew nearly 2% in constant currency, and Sam’s Club grew comp sales more than 17%, excluding fuel and tobacco.” – Walmart CFO Brett M. Biggs

Net sales declined 23% due primarily to our stores being opened approximately 25% fewer days than last year and operating with limited hours. Digital sales increased 58% and represented 41% of net sales in the quarter, up from 20% last year. – Kohl’s CFO Jil Timm

“Lastly, for the third quarter, we are planning overall open-only comp store sales to decrease in the range of 10% to 20%, which is in line with the sales trends we have seen since the middle of July and the beginning of August. This wide sales plan reflects the uncertainty of the current environment and the difficulty in forecasting the impact of the global pandemic on consumer behavior, demand and traffic as well as an anticipated slower back-to-school selling season. Further, due to this uncertainty, we are not providing any additional guidance for the third quarter or financial outlook for fiscal 2021 at this time.” – TJX Companies CFO Scott Golderberg

Although there is hope, will there be a vaccine?

“We do expect these enhanced cleaning procedures to continue for the foreseeable future, and I think that’s until we get a vaccine and COVID essentially goes away. As Larry said, we’re making a significant pivot to health care services, whether it be the COVID testing we’re doing, we’re gearing up for a pretty significant flu vaccine season, and the repositioning of our retail footprint and the HealthHUBs supports that health care services move” – CVS Executive VP & COO Jonathon C. Roberts

“I think what is unique for us is this is where the intersection of testing and vaccine creates a sustainable business model because I couldn’t be prouder of the work of our CVS colleagues in standing up the testing business in 1,800 drive-thru locations in a matter of a few weeks. And we’ve also used our digital capabilities, as you heard in our prepared remarks, where customers can actually schedule — are required to schedule an appointment to get the test. But you don’t see 6, 8 hours of cars backed up trying to get a test in one of our drive-thru sites. And we can bring that same digital and technology capability to scheduling vaccines when they become available. So I think we’re in a great place there to be an important part of the solution” – CVS CEO Larry J Merlow

When is the next stimulus?

“Stimulus was definitely impactful to the consumer in the second quarter, and we’re watching what’s going on in Washington, and how we’re going to progress with a new stimulus package… I think certainly it would be helpful for consumers.” – Walmart CFO Brett Biggs

What does that FED have to say?

“The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over thee medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” July 2020 FED statement

Uncertainty in future projections?

“Sitting here today, I don’t know if 30 days from now that number is going to be 6% or 96%, So we’ve got to be flexible, we’ve got to be adaptable.” – Target CEO Brian Cornell

Big business =  big innovation?

“Digital sales were a big driver of the dramatic improvement in sales from the initial impact of COVID-19, reaching an all-time high of $3.5 billion for the quarter, an increase of more than $1 billion over the prior year. World-class operations, including rapid implementation of contactless options, supported a steady pace of store reopening through the quarter, with approximately 95% of our global system restaurants now at least partially open.” – YUM! Brands CEO David Gibbs

“In Mexico, we’ve now launched same-day delivery from 70% of Sam’s Clubs. And in India, we launched Flipkart Wholesale, a business-to-business solution that will leverage our omnichannel capabilities to better serve kiranas and other small businesses as our cash-and-carry business joins Flipkart.” – Walmart CEO Doug McMillon

“Our launch of Store Drive Up has been particularly successful and will be an important capability this holiday season. We are also leveraging our stores to deliver innovative services like Amazon Returns, where our customers continue to appreciate the ease and convenience that we provide. As we reopen stores, we moved the Amazon Returns area to its own outpost in the back of the store to allow for greater social distancing and to enhance safety. We have seen traffic build and remain pleased with the overall performance of the program.” – Kohl’s CEO Michelle Gass

“Finally on the Verizon Business Group, 5G mobile edge compute, an important piece of our growth strategy. We have said that we’re going to have 10 5G mobile edge compute sites this year deployed. And now we also start gearing up our partners. We have announced IBM and we also talked about SAP as 2 very important application providers that’s going to take part on our deployment and that we are collaborating with right now. So we’re creating a lot of excitement around the 5G mobile edge compute and a lot more to come in the second half.” – Verizon CEO Hans Vestberg

Bigger baskets, less visits

“Grocery sales had another strong quarter, including robust growth in fresh. As stimulus funds tapered off toward the end of the quarter, sales started to normalize, but July comps still grew more than 4%. Trip consolidation continued throughout the quarter, resulting in an average ticket increase of about 27% and a transaction decrease of about 14%” – Walmart Brett M. Biggs

Going Digital

74 percent of consumers in April did more shopping online as opposed to in-store because of COVID-19, compared to 57 percent in March (a 30 percent increase)

COVID Related Costs

Walmart spent 1.5B on COVID-19 related costs, hiring more than 400,000 hourly employees to keep up with demand.

“Every day I hear directly from customers the deep appreciation they feel for the work our local heroes are doing to keep their communities going. People trust and know Walmart as a source of affordable products that help people live better, as well as being a major employer. We also understand the important role we play in the fabric of communities. To help meet the critical needs resulting from the pandemic, Walmart and the Walmart Foundation have committed $25 million to support organizations on the frontlines responding to the outbreak.” – Walmart CEO Doug McMillon

“As expected, we spent over $4 billion on incremental COVID-19-related costs in the quarter to help keep employees safe and deliver products to customers in this time of high demand—purchasing personal protective equipment, increasing cleaning of our facilities, following new safety process paths, adding new backup family care benefits, and paying a special thank you bonus of over $500 million to front-line employees and delivery partners. We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales. Lastly, even in this unpredictable time, we injected significant money into the economy this quarter, investing over $9 billion in capital projects, including fulfillment, transportation, and AWS.” – Amazon CEO Jeff Bezos

“I am also pleased that we were able to make important investments in additional safety measures, enhanced associate pay and benefits, and significant charitable donations, including to several local food banks. Additionally, our brands hired more than 45,000 associates globally in Q2.” Ahold Delhaize CEO Frans Muller

Employees — the backbone to company wide success…

“I want to thank our associates for their continued focus on serving our customers and communities as we navigate these extraordinary circumstances together,” – Home Depot CEO Craig Menear

“I want to give a big thank you to our associates for their tireless efforts during these unprecedented times. We also appreciate the trust and confidence of our customers. We remain focused on serving them well now and expanding our set of global capabilities to serve them well in the future.” – Walmart CEO Doug McMillon

“This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe,” Amazon CEO Jeff Bezos

“A big thank you and my sincere gratitude to our 300,000 colleagues for all of their hard work across all parts of our organization, especially those that are working the front lines. And they have just displayed incredible commitment and effort during these unprecedented times. And all of that represents our best in terms of our commitment in helping people on their path to better health. And we’re proud to be able to serve our communities at such a crucial time in our nation’s history.” – CVS CEO Larry J Merlow

“COVID-19 has presented adversity across society and business. It has impacted our communities, associates, customers, and their families. I would like to thank associates across all our local brands and support offices for their outstanding service during this crisis. Their agility and dedication have ensured the safety of our stores and distribution centers, sustained the strength of our supply chains, and helped nourish families and local communities. I am grateful for the commitment they have shown and continue to show.” Ahold Delhaize CEO Frans Muller

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