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Home Depot in China: Fewer cities, tighter focus

BY HBSDEALER Staff

Home Depot’s collection of Chinese stores has dwindled to seven, with the closing of a store in Beijing in January — the fifth closing in a little more than two years. 

The moves reflect the retailer’s strategy to adjust its focus on key markets, rather than scatter its attention around the country. The Atlanta-based retail giant operates seven stores in three Chinese cities — four in Tianjin, two in Xi’an and a smaller, 50,000-sq.-ft. format pilot store in Zheng Zhou.

"After four years of experience and learning, our plan in China is to focus on the high growth cities," said Ron DeFeo, a spokesman for The Home Depot, referring especially to Tianjin and Xi’an. "This is where we intend to concentrate our focus, establish a presence and gain scale and momentum." 

Tianjin alone has 12 million people, and Xi’an isn’t far behind, with about 8 million. The growing population of both cities represents a sales opportunity for the retailer. But cultural differences — for instance, the resistance to western DIY habits — present challenges to expansion.

In addition to Beijing, the company has closed stores in Xi Si Huan, Fengzhongsi, Dong Li, Qingdao and Shenyang.

Home Depot continues to appear content to take its time in China. In the company’s annual investors and analyst meeting on Dec. 13, CEO Frank Blake described the company’s Chinese retail business as a journey.

“I don’t think we’re alone in having it take some time to figure out how to build a profitable business model," Blake said. "We’ve said from the start that we’re not there to drive square-footage growth. We’re there to figure out a profitable business model and then move."

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Rubbermaid reports strong performance in 2010

BY HBSDEALER Staff

Atlanta-based Newell Rubbermaid used the term "growth trifecta" to describe its 2010 performance — strong sales, strong margins and strong earnings.

The company reported fourth quarter net income of $75.7 million, up 24.9% from $60.6 million reported for the same period last year.

Sales for the quarter ended Dec. 31 were $1.46 billion, up 3.4% from $1.42 billion reported for the same period in 2009. 

For the full year, the company reported net income of $292.8 million, up 2.6% from $285.5 million reported in 2009.

Sales for 2010 were $5.75 billion, up 3.2% from $5.57 billion from last year.

Looking forward, the company expects core sales to increase 4% to 5% in 2011.

“As I look back on 2010, I think it’s most notable that we consistently grew core sales in a sluggish economy and delivered on all of our financial targets, while continuing to advance our long-term growth strategies,” said Mark Ketchum, president and CEO. “By staying focused on the drivers that are in our control, we have created our own momentum to deliver once again a full year of the growth trifecta – sales growth, gross margin expansion and normalized earnings growth.”

 

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Tractor Supply Q4 comps up 13.1%

BY HBSDEALER Staff

Tractor Supply Company reported that net sales for the fourth quarter increased 19.7% to $1.03 billion from $862.5 million in the prior year’s fourth quarter.  Same-store sales increased 13.1% compared with a 0.7% increase in the prior-year period.  

Net income for the quarter was $50.2 million, or 67 cents per diluted share, compared with $37.3 million, or 51 cents per diluted share, in the prior year’s fourth quarter.  

The company opened 27 new stores and closed two stores in the quarter compared with 18 new store openings and no closed stores in the prior year’s fourth quarter.

Jim Wright, chairman and CEO, stated, "The team executed extremely well throughout the fourth quarter, further enabling us to exceed our goals for the year. Through broad-based sales strength and organizational discipline across the business, we achieved record sales and profitability. We served our customers with more effective merchandising, focused on key items, seasonal buys, and improved product placements.  We are pleased with our accomplishments and the momentum we carry into 2011 as the destination store for the rural lifestyle." 

For fiscal 2010, net sales increased 13.5% to $3.64 billion from $3.21 billion in fiscal 2009.  Same-store sales increased 7% compared with a 1.1% decrease for fiscal 2009.  

For fiscal 2010, net income was $168 million, or $2.25 per diluted share, compared with net income of $119.7 million, or $1.63 per diluted share, for fiscal 2009.  

During fiscal 2010, the company opened 74 new stores and closed three stores compared with 76 new store openings, two relocations and one closure in fiscal 2009.

 

The company anticipates net sales for fiscal 2011 will be approximately $4 billion to $4.07 billion, with same-store sales expected to increase approximately 2.5% to 4.5%.  The company projects 2011 full year net earnings to range from $2.54 to $2.62 per diluted share.

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