POS Software Point of Sale Software Hardware GPS Security Camera
Bar Code

Industry News - May 2, 2008



CVS Caremark Announces Record First Quarter Results

CVS Caremark announces record first quarter revenue and earnings for the quarter ended March 29, 2008.

Net revenues for the thirteen-week period ended March 29, 2008, increased $8.1 billion to $21.3 billion, up from $13.2 billion during the thirteen-week period ended March 31, 2007. Same store sales (sales from stores open more than one year) in the Company’s CVS/pharmacy division for the first quarter rose 3.9% over the prior year period. Pharmacy same store sales rose 3.7% and were negatively impacted by approximately 450 basis points due to recent generic introductions, while front-end same store sales increased 4.3%. Same store sales for the first quarter benefited from an earlier Easter (March 23rd this year versus April 8th last year), which shifted more holiday sales into March. The Company estimates the Easter shift had a positive impact of approximately 115 basis points on front-end same store sales for the quarter ended March 29, 2008.

Net earnings for the first quarter ended March 29, 2008, increased 83.1% to $748.5 million or $0.51 per diluted share on a GAAP basis, compared with net earnings of $408.9 million or $0.43 per diluted share in the comparable 2007 period. Adjusted earnings per share, which excludes $0.04 in amortization of intangible assets primarily related to acquisition activity, for the first quarter were $0.55, compared with $0.46 per share in the comparable 2007 period.

Tom Ryan, Chairman, President and Chief Executive Officer of CVS Caremark, stated, “I’m very pleased with our results for the quarter. We delivered strong revenue and margin growth across our businesses that led to earnings at the high end of our expectations. I’m most excited about the substantial progress we have made on our new integrated PBM/retail model, which is resonating strongly in the marketplace.”

For the quarter, CVS Caremark opened 41 new retail pharmacy stores; closed 19 retail pharmacy stores, 2 mail order pharmacies and 1 specialty mail order pharmacy. In addition, the Company relocated 53 retail pharmacy stores and 1 specialty pharmacy store. As of March 29, 2008 the Company operated 6,267 retail pharmacy stores, 56 specialty pharmacy stores, 19 specialty mail order pharmacies and 7 mail order pharmacies in 44 states and the District of Columbia.

Honeywell to Acquire Metrologic Instruments

Honeywell announces a definitive agreement to acquire Metrologic Instruments, Inc., a manufacturer of data capture and collection hardware and software, for approximately $720 million. The agreement is subject to customary closing conditions, including regulatory review.

Based in Blackwood, New Jersey, Metrologic is a global provider of laser and imaging bar code scanners, including high performance linear and omnidirectional laser scanners, fixed position and in-counter scanners, area imagers and rugged mobile computers. Metrologic sells its products in more than 110 countries and is majority-owned by Francisco Partners, a global private equity firm.

Metrologic will be integrated with Honeywell Security, part of Honeywell’s Automation and Control Solutions (ACS) business. Metrologic’s revenue was approximately $246 million in 2007.

As a manufacturer of bar code scanners and high-speed image processing software, Metrologic incorporates an array of laser, holographic, vision-based, RFID and emerging technologies to create its best-in-class products and solutions. Its imaging and scanning solutions serve a variety of retail point-of-sale, industrial, healthcare, inventory and distribution applications. Approximately 65 percent of Metrologic’s business is with customers outside North America, which will extend the business’ global presence.

“Metrologic is very complementary to our Imaging and Mobility business. It will strengthen and expand our presence in key verticals, particularly retail, and provide Honeywell with strong laser and fixed position scanning competencies,” said Ben Cornett, President, Honeywell Security. “Through its more than 500 issued and 350 plus pending patents, Metrologic will allow us to extend our position in the data capture and collection industry. We will be able to provide our customers with even more comprehensive, robust data capture and collection solutions to help them achieve their business goals.”

Duane Reade Experiences Q1 Sales Surge

Net retail store sales, which exclude pharmacy resale activity, increased 3.7% to $414.9 million from $400.0 million in the first quarter of 2007. Total net sales increased 3.1% to $427.1 million from $414.4 million in the first quarter of 2007. Total same-store sales increased by 4.5% during the first quarter of 2008, with a front-end same-store sales increase of 7.0% and a pharmacy same-store sales increase of 1.5%. During the first quarter, the Company opened one new store and closed one store. At the end of the first quarter of 2008, the Company operated 242 stores, compared to 245 stores at the end of the first quarter of 2007.

Front-end sales growth was driven by continued strong performance in the food and beverage categories, over-the-counter products, and health and beauty care items. The front-end same-store sales increase was favorably impacted by approximately 0.5% due to the earlier timing of the Easter holiday this year. The pharmacy sales growth was partially attributable to increased Medicare Part D sales. Generic drugs, which typically sell at lower prices but yield higher margins and profitability than brand-named drugs, represented approximately 59.1% of pharmacy prescriptions for the first quarter, compared to 54.3% of pharmacy prescriptions in the first quarter of 2007. The higher proportion of generics adversely impacted pharmacy same-store sales growth by 4.2%.

Gross margin for the first quarter was 31.1%, compared to 29.4% during the first quarter of 2007. Gross margin on retail sales, which excludes pharmacy resale activity, increased to 32.0% from 30.5% in the prior year, reflecting the higher selling margins resulting from improvements in front-end margins and increased pharmacy margins due to higher rates of generic utilization. Selling, general and administrative expenses as a percentage of net sales increased to 27.6% from 27.4% in the previous year, primarily due to increased advertising costs and recruitment fees paid in connection with the hiring of the Company's new CEO.

In the fourth quarter of 2007, the Company reclassified its store occupancy costs from cost of sales to selling, general and administrative expenses in accordance with current industry practice. For the 13 weeks ended March 29, 2008 and March 31, 2007, the reclassification resulted in decreases of $41.4 million and $40.8 million in cost of sales, respectively, and corresponding increases in gross profit and selling, general and administrative expenses. This accounting change did not impact the operating loss for either of the periods presented.

The above factors resulted in a 43.2% increase in Adjusted FIFO EBITDA, as defined on the attached schedule of preliminary operating data, to $18.2 million for the first quarter of 2008, compared to $12.7 million in the prior year period. As a percentage of sales, Adjusted FIFO EBITDA increased to 4.3% from 3.1% in the first quarter of 2007.

The first quarter operating loss was $4.1 million, compared to $14.9 million in the prior year period. The improvement was primarily due to the factors described above and a reduction in other expenses from $5.0 million in 2007 to $0.9 million during the first quarter of 2008. The other expenses in the prior year's first quarter included $2.4 million of expenses incurred in connection with the Company's former CEO (Mr. Cuti) and $1.7 million of closed store expenses, compared to $0.3 million and $0.2 million, respectively, in the current year's first quarter.

The net loss for the quarter was $21.0 million, compared to $30.5 million in the prior year period. The improvement in this measure is attributable to the factors discussed above and was partially offset by $1.5 million of additional interest expense in the first quarter of 2008, compared to the prior year. The additional interest expense was primarily due to the non-cash fair value adjustment for the mandatory redemption feature in the Company's outstanding redeemable preferred stock, which is considered a derivative financial instrument, and was partially offset by lower floating interest rates on the Company's variable rate borrowings as compared to the prior year.

At quarter end, the Company's total debt, including capital leases but excluding the liability associated with the issuance of the redeemable preferred stock, was $564.2 million, reflecting an increase of $8.4 million from the balance at the end of fiscal 2007. Availability under the Company's revolving credit facility at quarter end was approximately $63.0 million. The availability at quarter end reflects the benefit of unspent proceeds from the sale of redeemable preferred stock and common stock warrants to Oak Hill Capital Partners L.P. and their affiliates. These proceeds were received in the first half of 2007 and are being used to fund the acquisition of up to eight store leases from the Gristedes supermarket chain as well as certain growth-related capital expenditures. At March 29, 2008, the Company had completed the acquisition and opening of five of the former Gristedes stores.

Cabela’s Expands Analytical Capabilities

Cabela’s expands its Teradata system to enable more extensive analysis of data pertaining to customer behavior. This will support Cabela’s initiatives to provide more precise and personal service to its millions of customers.

The Teradata system integrates data from Cabela stores, catalog and online operations to address critical needs and provide strategic and tactical business insight. The retailer uses a variety of software tools running on Teradata to continuously improve merchandising and marketing analysis across its large customer base.

“Cabela’s is focused on developing the tools and analytical capabilities necessary to take the vast amount of multi-channel data available and turn it into actionable insights,” said Corey Bergstrom, director of analytics at Cabela’s. “The current partnership with Teradata has positioned Cabela’s to provide more dynamic information to more areas of the company – and we feel this expanded partnership will provide even more flexibility in terms of data availability and ultimately, insights that can be leveraged to better take care of our customers.”

The recent Teradata system expansion at Cabela’s also includes the addition of a Teradata financial services data model for improved visibility into financial performance drivers and management. The data model establishes relevant connections pertaining to individual customers, spending details, economic data, region, store locations, promotional events and types of business impact. This helps accelerate insight for analytical questions such as the impact of certain promotional events on customer spending, correlations to payment details, customer profitability and detailed analysis of sales to merchandise, assortment and selling channel.

Walgreens Expands Use of Mobile Fulfillment Solution for Store Restocking

Walgreens expands its Kiva Mobile Fulfillment System in its Mt. Vernon, Illinois facility. The expansion enables Walgreens to move additional inventory items and volume into its Kiva system, filling the remaining space in this Illinois facility.

Walgreens initially chose the Kiva Mobile Fulfillment System for its speed, accuracy and flexibility, all of which are critical to the company’s expansion. Walgreens operates more than 6,200 stores, and plans to open 550 new stores during its 2008 fiscal year.

Kiva utilizes a fleet of mobile robotic drive units that bring inventory directly to workers, allowing easy and efficient access to all inventory items at all times. For retail replenishment, which demands high picking speed, Kiva helps boost productivity, while maintaining picking standards. Elimination of operator walking and waiting time enables worker productivity that is two to three times higher than with other automated systems. The Kiva OrderFetch shipping sorter also routes the totes to and from the pickers, ensuring that the right order is delivered to the right dock door at the right time.

Burlington Coat Factory Implements Merchandising Reporting and Analytics

Burlington Coat Factory Warehouse Corporation has selected MicroStrategy for merchandising reporting and analytics. Burlington Coat Factory plans to use MicroStrategy for reporting and analysis on key merchandising metrics. MicroStrategy will convert the detailed transactional data into personalized reports through dashboards and exception reporting for Burlington Coat Factory executives and merchants. MicroStrategy teamed with QuantiSense to provide Burlington Coat Factory with an end-to-end solution for their retail business intelligence requirements.

“Following a highly competitive evaluation of merchandising-related BI products, we felt that MicroStrategy and QuantiSense provided the solution that best fit our growing BI requirements,” said Brad Friedman, Senior Vice President of Information Services, Burlington Coat Factory. “MicroStrategy is a robust BI product with proven retail experience. We were impressed with MicroStrategy’s analytical toolset, which we expect to empower our users to create their own reports and dashboards and remove IT from the report request process.”

More Technology News


News Archives:

3-18-08 3-11-08 3-4-08 2-26-08 2-19-08 2-12-08 2-05-08 1-22-08


[ [ Home ] . [ POS Hardware ] . [ POS Software ]. [ Security & ID]. . [ News ]. [ About Us ] . [ Clients ] . ]