Quarterly kpi reckoner for top retailers in the us (2q 2013) by Sutherland Global Services

Quarterly KPI Reckoner for Top Retailers in the US: 2Q 2013 September 2013

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Snapshot

Monthly Retail Sales* in US ($ Bn) 309 296

292

287 270

Jan 2013

305 295

265

Feb 2013

Mar 2013

Apr 2013

May 2013

Jun 2013

Jul 2013

Aug 2013

Source: Thomson One Banker; US Census Bureau; Secondary Research; Sutherland Analysis | Note: * = Excluding sale of Motor vehicles, motor parts and gasoline

www.sutherlandglobal.com October 1, 2013

Quarterly KPI Reckoner for Top US Retailers: 2Q 2013 (1/8) 1 Wal-Mart Stores Inc

Ticker WMT-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

116.95

5.81%

3.48%

Q1Y13

114.19

5.65%

3.31%

Q2Y12

114.30

5.86%

3.51%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

2.42%

15.48

16.56

2.32%

-5.15

-3.43

Q2Y13 End Date Q-o-Q 31-Jul-13

Y-o-Y

“The retail environment remains challenging in the U.S. and our international markets, as customers are cautious in their spending. Net sales in the first six months were below our expectations, so we are updating our forecast for net sales to grow between 2% and 3% for the full year versus our previous range of 5% to 6%.” - Charles Holley, Executive VP and CFO, Wal-Mart

– Total comparable sales in U.S. increased just 0.1% Y-o-Y in 2Q 2013 as compared to 2.1% Y-o-Y registered in 2Q 2012 – Wal-Mart’s updated full-year EPS (Earnings per Share) guidance range of $5.10 to $5.30 is comparable to the previous guidance range of $5.20 to $5.40 – The company plans to increase its investment in e-commerce which it anticipates to be a key area for the future growth

2 The Kroger Company

Ticker KR-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

22.72

2.62%

1.40%

Q1Y13

30.04

2.93%

1.59%

Q2Y12

21.73

2.46%

1.28%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

-24.37%

-30.72

-19.26

4.58%

15.61

11.09

Q2Y13 End Date Q-o-Q 17-Aug-13

Y-o-Y

“We are improving our connection with customers and associates, rewarding shareholders and investing to grow our business. We intend to continue building on this positive momentum with execution at every level of the company to achieve our long-term earnings per share growth rate of 8 – 11% in fiscal 2013 and beyond.” - David B. Dillon, Chairman and CEO, Kroger

– Kroger registered 39th consecutive quarter of positive comparable sales. The company posted comparable sales of 4% Y-o-Y (including fuel) and 3.3% Y-o-Y (excluding fuel) for 2Q 2013. Kroger raised the full year comparable sales guidance (excluding fuel) to range between 3.0% to 3.5% for fiscal 2013 from the previous guidance range of 2.5% to 3.5% Source: Thomson One Banker; Secondary Research; Sutherland Analysis

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Quarterly KPI Reckoner for Top US Retailers: 2Q 2013 (2/8) 3 The Home Depot Inc

Ticker HD-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

22.52

13.40%

7.97%

Q1Y13

19.12

10.95%

6.41%

Q2Y12

20.57

12.49%

7.45%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

17.77%

245.06

155.92

9.49%

91.12

52.22

Q2Y13 End Date Q-o-Q 4-Aug-13

Y-o-Y

“The second quarter results exceeded our expectations as our business benefited from a rebound in our seasonal categories, continued strength in the core of the store and the recovering housing market in the U.S.” - Frank Blake, Chairman and CEO, The Home Depot

– The Home Depot posted comparable store sales increase of 10.7% Y-o-Y in the second quarter of fiscal 2013. It expects comparable store sales increase of c.6% for the fiscal 2013 – The Company also raised its fiscal 2013 diluted EPS guidance to $3.60 which is c.20% higher than the previous year

4 Target Corp.

Ticker TGT-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

17.12

6.61%

3.57%

Q1Y13

16.71

6.09%

2.98%

Q2Y12

16.78

7.48%

4.20%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

2.46%

52.57

58.86

2.01%

-86.63

-62.62

Q2Y13 End Date Q-o-Q 3-Aug-13

Y-o-Y

“For the balance of this year, our U.S. outlook envisions continued cautious spending by consumers in the face of ongoing household budget pressures. In Canada, where we are only five months into our market launch, we continue to learn, adjust and refine operations in our existing stores as we prepare to open another 56 stores by year-end.” - Gregg Steinhafel, Chairman, President and CEO, Target

– Target’s comparable sales (in US) increased 1.2% Y-o-Y for 2Q 2013, lower that 3.1% Y-o-Y increase it registered in the same period of previous year – The Company expects full year adjusted EPS for fiscal 2013 to be near the low end of its previous guidance range of $4.70 to $4.90 – Target started operations in Canada in current fiscal and was operating 68 stores at the end of 2Q 2013 Source: Thomson One Banker; Secondary Research; Sutherland Analysis

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Quarterly KPI Reckoner for Top US Retailers: 2Q 2013 (3/8) 5 Lowe's Companies Inc

Ticker

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

15.71

10.29%

5.95%

Q1Y13

13.09

7.50%

4.10%

Q2Y12

14.25

9.19%

5.21%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

20.04%

279.04

184.82

10.26%

109.22

74.39

Q2Y13 End Date Q-o-Q

LOW-N

2-Aug-13

Y-o-Y

“Home improvement demand was strong during the quarter, and we capitalized on it with improving execution. We drove a healthy balance of ticket and transaction growth, and delivered solid performance across all product categories.” - Robert A. Niblock, Chairman, President and CEO, Lowe’s

– Lowe’s registered comparable sales increase of c.9.6% Y-o-Y for the 2Q 2013 and expects full year comparable sales for the fiscal 2013 to be around 4.5% – The company expects diluted EPS of c.$2.10 for the fiscal 2013 – It also expects to open 10 new stores during the current fiscal

6 Amazon.com Inc

Ticker AMZN-O

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

15.70

0.50%

-0.04%

Q1Y13

16.07

1.13%

0.51%

Q2Y12

12.83

0.83%

0.05%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

-2.28%

-62.33

-55.48

22.36%

-33.07

-9.91

Q2Y13 End Date Q-o-Q 30-Jun-13

Y-o-Y

“This past quarter, our top 10 selling items worldwide were all digital products – Kindles, Kindle Fire HDs, accessories and digital content. The Kindle service keeps getting better. The Kindle Store now offers millions of titles including more than 350,000 exclusives that you won’t find anywhere else.” - Jeff Bezos, Founder and CEO, Amazon.com

– Amazon.com reported loss for 2Q 2013 as higher order fulfillment cost and increasing expenditure on digital content rights weighed on the c.22.36% Y-o-Y increase in revenue – For 3Q 2013, Amazon.com expects sales to be between $15.45-$17.15 Bn, which is 12%-24% higher as compared with 3Q 2012 Source: Thomson One Banker; Secondary Research; Sutherland Analysis

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Quarterly KPI Reckoner for Top US Retailers: 2Q 2013 (4/8) 7 Dell Inc

Ticker DELL-O

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

14.51

1.87%

1.41%

Q1Y13

14.07

1.61%

0.92%

Q2Y12

14.48

6.72%

5.05%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

3.13%

26.83

48.19

0.21%

-484.42

-364.87

Q2Y13 End Date Q-o-Q 2-Aug-13

Y-o-Y

“In a challenging environment, we remain committed to our strategy and our customers, and we’re encouraged by increasing customer interest in our end-to-end solutions offerings and continued growth in our Enterprise Solutions, Services and Software businesses.” - Brian Gladden, CFO, Dell Inc

– On February 05, 2013, Dell announced of a definitive merger agreement with Denali Holding Inc. (a Delaware corporation owned by Michael S. Dell – Chairman and CEO of Dell) to take the company private; hence, it has not provided an outlook in its earnings release – Merger is expected to be completed before the end of 3Q 2013

8 Best Buy Company Inc

Ticker BBY-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

9.30

4.52%

2.86%

Q1Y13

9.38

9.87%

-0.86%

Q2Y12

10.55

1.12%

0.11%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

-0.85%

-535.59

372.38

-11.82%

339.73

274.64

Q2Y13 End Date Q-o-Q 3-Aug-13

Y-o-Y

“…investment plan includes ongoing pricing and SG&A investments related to the following Renew Blue initiatives: (1) price reductions to further enhance Best Buy’s price competitiveness where needed; (2) increased marketing costs to support growth in the mobile category; (3) improvements in the multi-channel customer experience; (4) optimization of our retail floor space; and (5) the re-platforming of bestbuy.com.”

- Sharon McCollam, EVP, CAO and CFO, Best Buy

– Best Buy reported domestic comparable stores sales decline of c.0.4% Y-o-Y for 2Q 2013 whereas during the same period, it reported growth of 10.5% Y-o-Y in domestic comparable online sales due increased traffic and higher average order value – The company also completed 50% sale of its interest in Best Buy Europe to Carphone Warehouse (CPW) during the 2Q 2013 Source: Thomson One Banker; Secondary Research; Sutherland Analysis

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Quarterly KPI Reckoner for Top US Retailers: 2Q 2013 (5/8) 9 Sears Holdings Corp.

Ticker SHLD-O

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

8.87

-3.26%

-2.19%

Q1Y13

8.45

-2.99%

-3.30%

Q2Y12

9.47

-0.98%

-1.39%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

4.96%

-26.44

111.41

-6.30%

-227.55

-79.26

Q2Y13 End Date Q-o-Q 3-Aug-13

Y-o-Y

“We made meaningful progress this quarter in our transformation to a member-centric company. Shop Your Way members represented over 65% of our sales and they redeemed rewards points at a significantly higher rate than last year. While the increase in Shop Your Way promotional activity and member redemptions resulted in a meaningful increase in our costs, it demonstrates that our members are deepening their engagement with our program which will allow us to further accelerate our transformation. At the same time, we recognize how important it is to improve the profitability of our company and I am disappointed that we did not deliver a better result.” - Eddie Lampert, Chairman and CEO, Sears Holdings

– In 2Q 2013, Y-o-Y comparable store sales declined 2.1% at Kmart, declined 0.8% at Sears Domestic and declined 2.5% at Sears Canada. However, online business on sears.com and kmart.com grew c.20% in 2Q 2013 as compared with the 2Q 2012 – The company also plans to boost its financial flexibility by reducing its peak domestic inventory by $500 Mn and by reducing its fixed cost base by $200 Mn

10 Safeway Incorporated

Ticker SWY-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

8.70

1.59%

0.09%

Q1Y13

9.99

1.80%

1.18%

Q2Y12

10.39

2.38%

1.18%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

-12.99%

-21.10

-108.69

-16.28%

-79.19

-109.05

Q2Y13 End Date Q-o-Q 15-Jun-13

Y-o-Y

“We are pleased with the significant milestones we achieved this quarter. The substantial cash proceeds we expect to receive from the sale of our Canadian operations combined with the completion of the Blackhawk IPO will allow us to broadly enhance stakeholder value. At the same time, our continuing U.S. operations demonstrated strong year over year earnings growth in the second quarter, and we continue to gain share in our U.S. markets with a 20 basis-point improvement in the supermarket channel and a two basis-point improvement in the all outlet channel.” - Robert Edwards, President and CEO, Safeway Inc

– In June 2013, Safeway Inc. announced that it entered into an agreement to sell its Canadian operations (Canada Safeway Limited) to Sobeys Inc. – After adjusting for discontinued operations, the Blackhawk IPO and the reduction of tax expense due to the resolution of federal income tax matters, the company now expects diluted EPS to range in between of $1.02 to $1.12, which is lower than the previously provided guidance range of $2.25 to $2.45 Source: Thomson One Banker; Secondary Research; Sutherland Analysis

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Quarterly KPI Reckoner for Top US Retailers: 2Q 2013 (6/8) 11 McDonalds Corp.

Ticker MCD-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

7.08

30.47%

19.71%

Q1Y13

6.61

28.58%

19.23%

Q2Y12

6.92

30.55%

19.48%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

7.24%

188.97

48.40

2.43%

-8.75

23.71

Q2Y13 End Date Q-o-Q 30-Jun-13

Y-o-Y

“…. While the informal eating out market remains challenging and economic uncertainty is pressuring consumer spending, we're continuing to differentiate the McDonald's experience by uniting consumer insights, innovation and execution. …. Based on recent sales trends, our results for the remainder of the year are expected to remain challenged.” - Don Thompson, President and CEO, McDonalds

– Global comparable store sales growth at McDonalds was 1% in 2Q 2013. For the quarter, It raised the quarterly cash dividend by 5% to $0.81 per share – The company has planned to enter the Vietnamese market by opening its first store in Ho Chi Minh City in early 2014. The developmental licensee to build the Brand in Vietnam is given to Henry Nguyen (a Vietnamese businessman and the founder of Good Day Hospitality)

12 Publix Super Markets Inc

Ticker PUSH-5

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

7.10

8.19%

5.65%

Q1Y13

7.56

9.06%

6.23%

Q2Y12

6.84

7.99%

5.58%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

-7.40%

-86.62

-58.55

2.36%

19.97

6.28

Q2Y13 End Date Q-o-Q 30-Jun-13

Y-o-Y

“I’m proud our operating performance resulted in another increase in our stock price…. ….Publix offers differentiating services we know our customers have come to expect from us like premier service, valuable savings, quality products and knowledgeable associates. “ - Ed Crenshaw, CEO, Publix Super Markets

– Comparable store sales at Publix Supermarkets increased 2.1% Y-o-Y during 2Q 2013 – On September 13, 2013, the company announced plans to purchase seven BI-LO-branded stores in North and South Carolina for an undisclosed amount. The transaction is estimated to be closed by the end of October 2013 Source: Thomson One Banker; Secondary Research; Sutherland Analysis

www.sutherlandglobal.com October 1, 2013

Quarterly KPI Reckoner for Top US Retailers: 2Q 2013 (7/8) 13 TJX Companies Inc

Ticker TJX-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

6.44

12.13%

7.44%

Q1Y13

6.19

11.84%

7.32%

Q2Y12

5.95

11.44%

7.08%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

4.08%

28.87

12.68

8.36%

68.70

36.13

Q2Y13 End Date Q-o-Q 3-Aug-13

Y-o-Y

“…we see great growth opportunities in our brickand-mortar business and are excited about the longterm potential of e-commerce as another avenue to bring our values to even more consumers. We remain confident that our strong top- and bottom-line growth will continue and we will grow TJX to be a $40 billion-plus company!” - Carol Meyrowitz, CEO, The TJX Companies

– Comparable sales for the 2Q 2013 quarter were up 4% Y-o-Y. TJX expects comparable sales growth for the year in between 2% to 3% – Diluted EPS grew 18% Y-o-Y in 2Q 2013. The company is raising its diluted EPS guidance range for the current fiscal to $2.74 to $2.80 – TJX increased its store count by a net of 19 stores during 2Q 2013 thereby increasing total square footage by c.4% as compared with 2Q 2012

14 Macy's Inc

Ticker M-N

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

6.07

8.80%

4.63%

Q1Y13

6.39

6.81%

3.40%

Q2Y12

6.12

9.06%

4.56%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

-5.03%

199.25

123.49

-0.85%

-25.21

7.21

Q2Y13 End Date Q-o-Q 3-Aug-13

Y-o-Y

“We believe we have the right strategies in place at Macy’s and Bloomingdale’s, particularly in the Omnichannel and online initiatives that are driving our business to a new level of shopping accessibility for our customer. Our My Macy’s localization and Magic Selling customer engagement strategies continue to differentiate the Macy’s shopping experience.” - Terry J. Lundgren, Chairman, President and CEO, Macy’s Inc.

– Macy’s reported comparable sales (including online sales at macys.com and bloomingdales.com.) decline of 0.8% Y-o-Y in 2Q 2013. – The company has reduced the full year comparable sales guidance range to 2%-2.9% from 3.5%. Diluted EPS guidance range for the fiscal 2013 at $3.80 to $3.90 remains comparable with the previous guidance range of $3.90 to $3.95 Source: Thomson One Banker; Secondary Research; Sutherland Analysis

www.sutherlandglobal.com October 1, 2013

Quarterly KPI Reckoner for Top US Retailers: 2Q 2013 (8/8) 15 Staples Inc

Ticker SPLS-O

Period

Sales ($ Bn)

Operating Margin (%)

Net Margin (%)

Q2Y13

5.31

3.53%

1.93%

Q1Y13

5.81

4.90%

2.92%

Q2Y12

5.50

4.00%

2.19%

Sales Growth (%)

Op. Margin Change (Basis Points)

Net Margin Change (Basis Points)

-8.60%

-137.12

-99.32

-3.34%

-47.03

-26.10

Q2Y13 End Date Q-o-Q 3-Aug-13

Y-o-Y

“We continue to make progress on our strategic plan to reinvent Staples. We drove online sales growth and aggressively managed expenses during the second quarter, but this progress was offset by weakness in our retail stores and international businesses.” - Ron Sargent, Chairman and CEO, Staples Inc

– Staples closed 103 stores in North America and Europe in last 12 months preceding the 2Q 2013, which had a negative impact of 1% on total sales growth during the quarter. Staples posted comparable store sales (exclude sales in Staples.com) decline of 3% Y-o-Y for 2Q 2013. The company expects sales decline in the low single-digits for the fiscal 2013 as compared with the previous year. Diluted EPS for the fiscal 2013 is expected in the range of $1.21 to $1.25

Source: Thomson One Banker; Secondary Research; Sutherland Analysis

www.sutherlandglobal.com October 1, 2013

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