In Q3, Toro on track for Destination 2014 goals
The Toro Company declared that it was well on its way to meeting its previously stated 2014 goals upon the release of its third-quarter earnings report Thursday.
Sales for the quarter were up 11.3% year-over-year to what Toro referred to as a "record $567.5 million," riding a wave of strong retail demand across its various segments.
Net earnings of $50.0 million were also up in comparison to last year’s $40.1 million.
“Our team is especially proud to deliver record results and double-digit sales and earnings growth for the third quarter, in which we also celebrated our Centennial milestone,” said Michael Hoffman, Toro’s chairman and CEO. “After successfully managing through the challenges of a late spring, our quarterly results benefited from favorable summer growing conditions in key markets that, similar to last year, helped drive retail sales across most of our businesses."
Hoffman pointed to an increase in golf equipment and irrigation products shipments, as well as a return to a more normal pace for channel purchases of professional equipment subject to Tier 4 emission standards.
He also cited a promising snow pre-season and gains in productivity in predicting a solid finish to the company’s fiscal year.
As such, Toro is changing its full-year outlook to a 6% revenue growth and net earnings per share of about $2.94 to $2.96.
Sears CFO describes decision points
Among the decisions facing Sears Holdings is what to do with its 51% stake of Sears Canada.
Rob Schriesheim, Sears Holdings’ chief financial officer, addressed that question and others as part of the company’s second-quarter earnings report.
"BofA Merrill Lynch continues to assist us in exploring strategic alternatives for our 51% interest in Sears Canada, including a potential sale of our interest or Sears Canada as a whole," Schriesheim said. "Our interest in Sears Canada has a current market value of approximately $765 million as of Aug. 19, 2014."
Closing stores also factored heavily in his remarks.
"We also continue to reduce unprofitable stores as leases expire and in some cases will accelerate closings when it is economically prudent," he said. "We have already announced the closure of approximately 130 underperforming stores in fiscal 2014 and may close additional stores during the remainder of the year."
Also up in the air is the fate of the Sears Auto Center business. "We have had discussions with third parties regarding a variety of opportunities, including partnerships," Schriesheim said. "In addition, over the next six to 12 months, we intend to work with our lenders and others to evaluate our capital structure with a goal of achieving more long-term flexibility, and may take other actions as appropriate."
During the first half of the year, Sears generated about $665 million in liquidity, including the $500 million dividend it received from the separation of Lands’ End.
Sears posts another loss
Describing second-quarter earnings as "unacceptable," Sears Holdings Corp. chairman and CEO Edward Lampert added that his company’s transformation is continuing and online sales are growing.
The company reported second-quarter net loss of $573 million, compared with a loss of $194 million in the same quarter last year. Revenues decreased $858 million to $8.0 billion for the quarter ended Aug. 2, 2014.
"We are taking steps to address our performance on several levels," Lampert said. "This includes reducing costs as we evolve our business model, investing in our Shop Your Way and Integrated Retail customer initiatives, rationalizing our physical footprint and improving pricing and promotions."
The revenue decrease included the separation of the Lands’ End business, which was completed in the first quarter of 2014 and accounted for $330 million of the decline. The revenue decrease also included the effect of having fewer Kmart and Sears Full-line stores in operation, which accounted for $256 million of the decline, as well as a decrease of $140 million at Sears Canada.
Sears also experienced a revenue decline in its Home Services business during the quarter, as well as a decline in delivery revenues.
Sears full-line stores experienced comparable-store sales growth of 0.1% for the quarter as compared with a decline of 0.8% in the second quarter of last year, despite the continuing impact of consumer electronics industry trends.
Kmart comparable-stores sales were down 1.7% for the quarter as compared with a 2.1% decline last year.
Sales to Shop Your Way members in Sears full-line and Kmart stores increased to 73% of eligible sales, up from 71% during the second quarter last year. Online and multichannel sales grew 18% over the prior-year second quarter and 22% over the prior-year first half.
"We continue to evaluate our Sears Auto Center business, as well as our 51% interest in Sears Canada, including a potential sale of our interest or Sears Canada as a whole," the company said.