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Wholesale clubs report rise in April sales

BY Allison Cerra

NEW YORK — Sales during the month of April edged up for wholesalers Costco and BJ’s Wholesale Club, the companies reported Thursday.

Issaquah, Wash.-based Costco reported a 17% increase for the four weeks ended May 1 to $6.8 billion, compared with the year-ago period. For the period ended April 30, BJ’s disclosed a sales increase of 12.2% to $871.7 million, compared with April 2010.

On a comparable basis, however, the retailers differed: Costco said the calendar shift, which included one less day of sales and a later Easter, negatively impacted its sales by 1.5% to 2%, partially offset by several days of pre-Easter sales strength. Inflation in gasoline prices and strengthening foreign currencies had a positive impact on comparable sales. Excluding these effects, comps for Costco would have rose 6%.

Costco noted that its four-week period included sales from the company’s Mexico joint venture. The company began consolidating its Mexico operations on a prospective basis beginning with its 2011 fiscal year. Excluding sales from its Mexico joint venture, Costco’s net sales increase would have been 14%.

Meanwhile, BJ’s comparable-club sales increased by 8.5%, including a contribution from sales of gasoline of 4.4%. Excluding the impact of gasoline, merchandise comparable-club sales increased by approximately 4.1%. A calendar shift in the timing of Easter had a positive impact on merchandise comparable-club sales of approximately 2.7%.

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Target withstands Walmart’s aggressive pricing, assortment message

BY Mike Troy

MINNEAPOLIS — The 13.1% increase in same-store sales Target reported for April was toward the low end of the company’s projection of an increase in the mid-teens, and begs the question whether Walmart’s mid-month launch of a new marketing campaign contributed to the weakness.

Target’s total sales for the period increased 13.7% to nearly $4.9 billion, compared with roughly $4.3 billion during the same month last year. Easter had a huge impact on the company’s results, as it did for many other retailers, since the holiday fell three weeks later this year, which caused seasonal sales to shift into the April reporting period and, in Target’s case, made for an easy comparison to a prior-year comps decline of 5.9%.

As for any potential impact related to Walmart’s renewed emphasis around everyday low prices and a major advertising campaign that debuted the week prior to Easter, Target didn’t address the issue specifically but did make it clear that as has been the case in prior months, more people are shopping its stores and comps growth is coming from food and consumables.

More specifically, the company said more than half of its increase in same-store sales was due to growth in same-store transactions, with the remainder of the increase resulting from an increase in average transaction size. In addition, the company said its April same-store sales performance was strongest in the grocery category, which experienced a 30% gain, while boys’ and girls’ apparel comps advanced about 20% as did hardlines. However, the health care and beauty category was up in the mid- to high-single digits, while the home category advanced in the low- to mid-single digits.

“April comparable-store sales were somewhat below our expectations, as guests continued to be very cautious in their spending leading up to Easter,” said Target chairman, president and CEO Gregg Steinhafel. “Target remains focused on delivering an outstanding shopping experience, providing unbeatable value on high-quality, well-designed items throughout our assortment. This is more important than ever for our guests as they face increasing pressure on their household budgets due to higher energy costs and increasing prices of food, apparel and home merchandise.”

Going forward, Target has forecast its same-store sales for May will increase in the low- to mid-single digit range, which suggests the company isn’t anticipating the loss of shopper traffic to Walmart, even though its larger rival has grown more aggressive with messaging around price and breadth of assortment.

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Duane Reade encourages New Yorkers to make ’em laugh

BY Antoinette Alexander

NEW YORK — Duane Reade is inviting comedic talents to supply humorous or witty captions for a Duane Reade cartoon as part of the retailer’s Facebook "Caption Contest" that kicks off this week.

Each week for the next four weeks, the Manhattan-based retailer, which is owned by Walgreens, will run a caption-less cartoon in selected New York newspapers, where a uniquely New York scene or scenario is ripe for a clever caption. The subject matter in the various cartoons is designed to strike a chord with most city denizens.

In one cartoon, an air traffic controller is seen taking an ill-advised break amidst a busy day at the airport. A second cartoon has the city’s new sanitary grades for eating establishments making an appearance, as a man crawling through the desert encounters a less-than-sanitary sidewalk food vendor.

In each cartoon, a different Duane Reade product makes a cameo appearance. For instance, Duane Reade water is sold by the food vendor, and the air traffic controller sits reclined with a bag of Duane Reade popcorn while watching a movie on his monitor. All the products currently are featured in the new Duane Reader "magalog" that is published regularly for consumers by the drug store chain.

To submit a caption, contestants are asked to text "DR" to 30364, or visit Facebook.com/DuaneReade. Contest hopefuls also can visit the company’s corporate website and click on the dedicated contest banner located on the homepage.

"We felt this contest provided a natural viral path to increasing our social media presence while showcasing the creative zeal of many New Yorkers," stated Paul Tiberio, SVP merchandising and marketing at Duane Reade. "This Facebook initiative enables us to highlight our new Duane Reade product offerings in an edgy but strategically engaging way."

A panel of judges will select the best overall caption from among all entries for the four different cartoons, and will run the winning caption-cartoon combo as a full-page ad in the June 27 double issue of New York magazine.

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