CostcoWholesale (COST, $99.64 ) has reported fourth-quarter earnings of $1.39 a share, $0.08 better than the consensus estimate.
Revenues rose 11.9% year over year and comp-store sales increased 5% (+6% US, +2% International). Currency translation hurt international comps by 500 basis points. Inventories were well controlled, increasing 6.9% on the nearly 12% sales gain.
Earnings quality was fair. Although the company beat by $0.08 about $0.05 of that amount was driven by non-operating factors. A lower-than-expected tax rate added $0.02 to results, while higher-than-expected other income added an additional penny. Meanwhile, lower-than-expected preopening expenses added $0.01 while lower net income attributable to non-controlling interests add an additional penny.
No earnings guidance was given in the release.
Earnings quality was fair. Although the company beat by $0.08 about $0.05 of that amount was driven by non-operating factors. A lower-than-expected tax rate added $0.02 to results, while higher-than-expected other income added an additional penny. Meanwhile, lower-than-expected preopening expenses added $0.01 while lower net income attributable to non-controlling interests add an additional penny.
No earnings guidance was given in the release.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------
For the full year, the company is guiding earnings to a range of $1.90 - $2.10, excluding non-recurring items. The consensus stands at $1.97.
YUM! Brands (YUM, $$71.10) has reported third-quarter earnings of $0.99 a share, $0.02 better than the consensus estimate.
Earnings quality was poor with all of the beat driven by non-operating factors. Indeed, lower-than-expected interest expense added a penny to the bottom line while a lower-than-expected tax rate and a lower-than-expected share count each added $0.01 as well. Absent these non-operating factors, YUM would have missed the consnsus by a penny.
Operationally, sales came in below the consensus estimate while labor costs were higher than expected by the Street. Lower-than-expected food and occupancy costs helped to lift the operating margin anyway, though.
Revenues rose 9.0% year over year to $3.57 billion. The consensus revenue estimate was $3.64 billion. U.S. Division same-store sales increased 6%, including growth of 7% at Taco Bell, 6% at Pizza Hut and 4% at KFC. In China, system sales increased 22%, prior to foreign currency translation. Same-store sales increased 6%, overlapping strong prior year same-store sales growth of 19%. Emerging markets system sales grew 10%, driven by 7% unit growth and 5% same-store sales growth. Developed markets system sales grew 1%.
Worldwide operating profit grew 18%, prior to foreign currency translation, including 22% in China, 14% at Yum! Restaurants International (YRI) and 13% in the U.S. Worldwide operating profit increased 16%, after foreign currency translation. Worldwide restaurant margin increased 1.9 percentage points to 18.9%, including increases of 0.1 percentage points in China, 1.0 percentage point at YRI and 4.6 percentage points in the U.S. Restaurant margin increased 0.6 percentage points in China excluding Little Sheep. Worldwide system sales grew 6%, prior to foreign currency translation, including 22% in China, 4% at YRI and 1% in the U.S. Worldwide system sales growth was 8%, YRI same-store sales were negatively impacted by 1 percentage point due to the timing of Ramadan.
For the full year, the company is guiding earnings to at least $3.24. The company's prior guidance was for EPS of at least $3.22. The consensus stands at $3.26.
-------------------------------------------------------------------------------------------------------------------------------------------------------------------
Safeway (SWY, $16.29) has reported third-quarter earnings of $0.45 a share, excluding non-recurring items, $0.03 better than the consensus estimate.
Earnings quality was only fair. The top line came in well below Street expectations and likely lead to today's weakness. A lower-than-expected tax rate added a penny to results.
Revenues fell 0.1% year over year to $10.05 billion. The consensus revenue estimate was $10.23 billion, The miss was primarily due to the disposition of Genuardi's stores and a lower Canadian exchange rate, partly offset by higher fuel sales. Identical-store sales, excluding fuel, were 0.1% for the quarter, which was below expectations due to a larger than expected decline in price inflation, partly offset by continued improvement in volume.
The gross margin declined 56 basis points to 26.44% but 11 basis-points of that impact was from fuel sales. The remainder of the decline was due primarily to costs incurred to launch the just for U loyalty program, costs incurred to dispose of Genuardi's stores, slightly higher shrink expense, higher revenue from Blackhawk (a lower gross margin business) and changes in sales mix, partly offset by lower LIFO expense.
For the full year, the company is guiding earnings to a range of $1.90 - $2.10, excluding non-recurring items. The consensus stands at $1.97.
Management noted that they "were encouraged that in the fourth quarter to date identical-store sales, excluding fuel, are running at 1.0% with slightly improved volumes and higher inflation." All said, they expect identical-store sales in the fourth quarter will be driven by increased just for U engagement, the roll out of our partner fuel loyalty program and the launch of their Wellness initiative.
