From May, sales declines at US brands and retailers began to ease as stores reopened and coronavirus lockdowns were lifted. In June, US retail sales saw a 10.1% year-over-year jump, fueled by double-digit growth in several sectors. In July, US retail sales maintained strong growth momentum, with strength in multiple sectors driving total sales growth to 10.0%, amid still difficult circumstances—as many states paused or rolled back reopening plans in the third and fourth weeks of the month due to a spike in coronavirus cases. We assess the recent performance of selected retailers and brand owners below.

Apparel Specialty Retail

	American Eagle Outfitters (NYSE: AEO) 2Q20
Commentary	In 2Q, total revenues decreased by 15% versus the 38% decline in 1Q. The company’s overall online sales rose by 48%, the fastest growth rate in over a decade. By brand, Aerie’s online sales surged 113%, while American Eagle (AE) saw its digital sales grow 21%. The company is focusing on Aerie as a priority. Management said that Aerie is on pace to reach $1 billion in revenue, and the company reported white space in core areas such as intimates, swim and lounge, representing a combined $40 billion addressable market. The company is launching “Offline,” its new activewear brand. Management said that “Offline” offers strong growth potential within the $16 billion women’s active apparel market. The company is expecting an earlier holiday season and has added logistics partners to ensure sufficient delivery capacity during the season. In 2020, the company plans to open 25 new Aerie locations and close 40–50 AE locations. Management said that the BTS season started later and it saw a slower start, but the trends have been improving. COO Michael Rempell said, “We look at early, mid- and late back-to-school markets. So, through the month of August, as we got past early peaks, which happened in late July, we saw those markets return to a much healthier level. It actually looks like the demand is carrying into September in a stronger way than what we’ve seen in the past. So that really gives us optimism through the quarter as back-to-school continues.”
Outlook	The company expects to see continued sequential improvement in sales from the first half of the year. The company plans to capitalize on Aerie’s growth opportunities, improve AE’s profit and returns, and optimize its supply chain network.
	Lululemon Athletica (NasdaqGS: LULU) 2Q20
Commentary	Total sales increased by 2%, exceeding the company’s expectations of a high-single-digit decline. The company’s e-commerce comp grew 157% in the quarter. As of September 8, about 97% of the company’s stores are open globally. On average, the reopened stores are performing at 75% of last year’s volume. The company saw a sequential improvement in the men’s business, relative to the first quarter, although it lagged behind second-quarter growth in the women’s business. Lululemon continued to grow in the international markets. In China, the company’s comparable sales grew more than 30%, coupled with e-commerce growth of over 130%. In Europe, the company saw 160% growth in online sales. During the quarter, the company opened 17 new stores: eight in North America, four in Mainland China, three in other markets across Asia and two in Europe.
Outlook	In 3Q, the company expects total revenues to grow in the mid- to high-single-digit range. For 4Q, it expects revenue growth in the high-single to low-double-digit range. In the second half, the company expects reopened store sales productivity to remain at the current 75% level. In the second half, Lululemon expects its digital sales growth to remain above its pre-Covid growth of 30–40%, but moderate as compared to 2Q. For the full year 2020, the company expects MIRROR (at-home fitness innovator acquired by Lululemon in July 2020) to generate revenues of over $150 million, up from the initial revenue expectation of more than $100 million. CEO Calvin McDonald said, “We remain committed to our Power of Three growth plan, including the doubling of men’s, doubling of e-commerce and quadrupling of international by 2023.”

Convenience Stores

	Casey’s General Stores (NasdaqGS: CASY) 1Q21
Commentary	By segment, comps grew 3.6% in grocery, driven by increased sales in beer and alcohol and strong recovery in the packaged beverage category, but declined by 9.8% in the prepared food and fountain segment and by 14.6% in fuel. On the prepared food and fountain segment, CEO Derren Rebelez said, “This category has been under the most pressure since the crisis began. Consistent with other quick-serve restaurants who have recently reported, the breakfast day part continues to be the most adversely impacted by the pandemic.” In the fuel segment, management highlighted that it saw consistent improvement on fuel volumes throughout the quarter. The company noted that its digital sales are up 162% for the quarter, and around 50% of pizza orders are taken via its app, website or the DoorDash marketplace. Capex was $45 million compared to $101 million a year ago.
Outlook	Rebelez said, “So far in the second quarter, we continue to experience slow but steady improvement month by month across all areas of the business. For fuel, we have experienced negative same-store gallons in the mid-to-high single digits while fuel margins are above $0.30 per gallon. Total inside sales continue to trend favorably, sequentially in the mid-single digits, and we continue to see ongoing improvement in our grocery and other merchandise category, which is trending up in the high single digits.” Year-to-date, the company opened nine stores and it has 86 stores in pipeline, of which 20 are under construction. Casey’s expects new stores to generate double-digit returns on invested capital on average by their third year of operations. On August 18, the company launched a curbside pickup service (which was piloted soon after the outbreak of the coronavirus) nationwide. Casey’s expects its third distribution center in Missouri to be operational during the first quarter of next fiscal year.

Food, Drug and Mass Retailers: Food Retailers

	Kroger (NYSE: KR) 2Q20
Commentary	In 2Q, comps grew 14.6% versus 19.0% in 1Q. Digital sales grew 127% in 2Q versus 92% in the prior quarter. Comp growth slowed to 12.5% in the final period of the quarter, from mid-July to mid-August, in the context of reduced government stimulus and SNAP funding and lower back-to-school activity. CFO Gary Millerchip said, “We were very pleased with the progress on our Restock Kroger savings initiatives in the quarter and now expect to achieve the targeted [$1 million] savings in 2020. Fuel remains an important part of our strategy to drive customer loyalty. Compared to the first quarter and consistent with market trends, the decline in gallons slowed to around 15% in the second quarter.” For the remainder of 2020, Kroger expects fuel profitability to continue to be a headwind as compared to prior year as the company cycles margins from 2019 and gallons continued to be impacted by Covid-19.
Outlook	For the full year, the company expects comparable sales, excluding fuel, to grow by over 13%. Millerchip said, “Kroger’s alternative profit model is built on a platform of leveraging supermarket traffic and data, with media and Kroger Personal Finance representing the largest contributor to growth in 2020. These businesses rebounded strongly in the second quarter, and we now expect growth approaching $100 million for the fiscal year 2020.”

  Below, we summarize the performance of retailers reported in prior weeks.

Apparel and Footwear Brands

	PVH Corp. (NYSE: PVH) 2Q21
Commentary	Total sales declined by 33% as the company’s owned stores and wholesale partner stores were closed for nearly one month during the quarter, and its stores operated at significantly lower occupancy levels and reduced working hours. By brand, Tommy Hilfiger sales declined by 28%, while Calvin Klein revenues decreased by 32%. Digital sales grew 50%, including a 90% surge in the company’s owned commerce sites. PVH believes that digital sales will contribute nearly 20% of its total sales in the next couple of years. Management said that the company continued to convert new consumers to the Tommy Hilfiger brand, including in its growth market, China, where its livestreams generated more than 60% of sales from first-time buyers. CEO Emanuel Chirico said, “International tourist traffic to the United States, which typically represents about 30–40% of our revenues, is down over 90% so far this year—and we do not expect it to come back during the second half of 2020. While back-to-school was never a big business for PVH, it was a traffic driver for outlet centers and department stores that we are not experiencing at the same level this time this year.”
Outlook	CFO Michael Shaffer said, “We currently expect revenue in the second half to be down 25% versus last year. We expect that our second-half gross margin will be relatively flat compared to the first half as we project heavy promotional activity across the industry in order to clear inventory, particularly in the United States.” Chirico said, “We are prepared to begin the holiday sales season early, as a number of our retail partners… are all beginning the holiday selling at an earlier time.” This includes PVH partner Amazon kickstarting its holiday season with the postponed Prime Day, which will now be held in October instead of its usual timing in the summer.
	VF Corporation (NYSE: VFC) 1Q21
Commentary	Total revenues declined by 48% year over year, led by store closures and lower consumer demand due to the coronavirus outbreak and related restrictions. Global digital business increased by more than 80%, led by 115% growth in the Americas region and nearly 90% growth across its four big brands. Gross margin decreased by 340 basis points to 52.9%, primarily driven by elevated promotional activity to clear excess inventory. During the quarter, all of the company’s retail stores reopened in the APAC region. In the US, “buy online, pick up in store” (BOPIS) and ship-from-store capabilities have been fully launched in the vast majority of stores. Its business in Mainland China is strong and has been recovering sharply since February, with growth of 9% in the quarter. The company is applying many of its consumer-centric strategy learnings from China to other markets across the globe. VF continued to explore the divestiture of its Occupational Workwear business.
Outlook	For fiscal year 2021, the company expects more than 40% growth in its digital business and expects its digital penetration to be over 25% of total revenues. The company will continue to focus on key strategic choices around the transformation to a retail-centric, digitally led enterprise: By August end, its North Face brand will launch BOPIS and ship-from-store capabilities in EMEA; BOPIS and ship-from-store for its Timberland brand in EMEA and the US is under planning. The company is also applying curbside functionality in both the Americas and EMEA.

Apparel Specialty Retail

	Burlington Stores (NYSE: BURL) 2Q20
Commentary	Total sales declined by 39%, while sales in reopened stores decreased by 14%. Burlington saw a significant shift in spending to home and casual wear. These are underdeveloped categories for Burlington, and management sees these as growth opportunities. CEO Michael Sullivan said, “Following the reopening of our stores, we experienced an exceptionally strong sales trend, driven by pent-up demand and by our own great clearance values. This strong sales trend continued into the second half of June, but then fell off dramatically as we struggled to replenish the depleted inventory levels in our stores. For inventory flow, we prioritized the stores that we opened in May. That was just over half the chain. These stores are now at approximately the inventory level that we want. Their sales levels are trending down approximately 20% but are on an improving trajectory.” Management reported that staffing shortages in distribution centers (DCs) also contributed challenges. These issues are subsiding but have not completely gone away—and are a risk not only to Burlington but across the retail industry, as retailers start to ramp up for holiday. The company said that this could lead to an increase in supply chain costs across the industry this year. During the quarter, Burlington opened three new stores, bringing its total store count to 739 stores.
Outlook	The company did not provide financial guidance but said that it is moving prudently on the major elements of its Burlington 2.0 off-price strategy, which is focused on long-term success beyond the pandemic and includes store expansion. In the third quarter, the company expects to open 37 new stores, with seven expected closings or relocations. In fiscal 2020, Burlington expects to open 62 new stores and close or relocate 26 stores. This would translate to 36 net new stores in the full year.
	Dick’s Sporting Goods (NYSE: DKS) 2Q20
Commentary	Comps grew by 20.7%, driven by a 17.9% increase in average ticket and 2.8% growth in transactions. The company saw growth across each of its three primary categories: apparel, footwear and hardlines. E-commerce sales surged 194%, with over 75% of online orders fulfilled by stores, which served as localized distribution points. By the end of June, the company had reopened 100% of its stores to the public. CEO Edward Stack said, “The favorable shifts in consumer demand that drove our strong comps during Q2 have continued into Q3, partially offset by softness in the key BTS categories. With the significant part of BTS already behind us, through the first three weeks of Q3, our consolidated comp sales have increased by 11%, with continued margin rate expansion.” The company’s private brands, such as CALIA and DSG, remained a key source of its strength and differentiation, outperforming the company’s average comparable sales growth by about 500 basis points in the second quarter.
Outlook	The company did not provide financial guidance for fiscal 2020, owing to the uncertainty related to the Covid-19 pandemic and economic stimulus as well as the potential impact of consumer confidence and employment on its business. Management said that the company is extremely pleased with its 3Q sales trend and remained enthusiastic about future prospects.
	The Gap Inc (NYSE: GPS) 2Q20
Commentary	Total comps were up 13%, primarily led by 95% growth in online sales. By brand, Old Navy and Athleta continue to outperform. During the quarter, the company acquired 3.5 million new customers through its online channel, representing over 165% growth year over year. The company activated curbside pickup and BOPIS (buy online, pick up in store) across 1,500 stores. As of August 1, 2020, Gap reopened about 90% of its stores, with inventory down about 4%. The company said that its inventory levels are more closely aligned with customer demand.
Outlook	The company plans to extend its loyalty program in September, deepening its customer relationship and inviting more loyalists to stick to its brands. In fall, the company is adding two new online payment options: Afterpay and PayPal. Gap expects the BTS season to extend over a longer period.
	L Brands (NYSE: LB) 2Q20
Commentary	Comps grew 33% at reopened stores. Bath & Body Works (BBW) comps surged 87%. Soap and hand sanitizer historically account for 14–15% of BBW business, which increased to 25% of sales in 1Q and increased even higher in 2Q. While BBW traffic was down in malls, this was offset by higher traffic in off-mall locations, higher conversion rates in the 30% range and a larger spend per customer. Victoria’s Secret comps were down 10% during the period that stores were open. Management reported that the 250 planned store closures at Victoria’s Secret are largely complete: The company expects to recapture 30–40% of sales from closed stores, with approximately 5% going to its digital business and the remainder to nearby stores. L Brands took steps to create standalone companies for Victoria’s Secret and BBW by reducing its home-office headcount by 15% and hiring advisors. Management will await holiday results to determine to a business valuation. Going forward, the company plans to be more conservative on its inventory levels and keep an eye on consumer demand. The company did not report any weakness for BTS merchandise sales.
Outlook	L Brands did not provide 3Q or full-year guidance. For the holiday season, it expects store capacity to be at approximately 30% of normal levels due to social distancing. The company is adding mobile point-of-sale checkout that allows customers and associates to spread out (since not all cash registers can be used under social-distancing guidelines). Management noted that at BBW, 50–60% of its customers are expected to purchase a gift during the holidays (30–40% during non-holiday time), and the company will continue to have a variety of gifting options available for consumers. Management said that online fulfillment has been experiencing “holiday-like” volumes since the start of the pandemic, and L Brands has ramped up fulfillment-center capacity and is further increasing capacity for the second half of the year in preparation for increased volumes.
	Ross Stores (NYSE: ROST) 2Q21
Commentary	Comps were down 12% for reopened stores. On average, stores were open for about 75% of the quarter, although operating on shorter hours compared to the prior year. By the end of May, all distribution centers had been reopened. Management reported that sales during the quarter were significantly impacted by Covid-19, particularly in Arizona, California, Florida and Texas, which represent about 50% of its store base. CEO Barbara Rentler said, “During the initial reopenings, overall sales were ahead of our conservative plans as we benefited from pent-up demand and aggressive markdowns to clear aged inventory. In the weeks thereafter, trends were negatively impacted from depleted store-inventory levels, while we were ramping up our buying and distribution capabilities.” Management said that post-Covid, the consumer is increasingly shopping for home and casual apparel categories including activewear and athletic wear, and the company will continue to focus on these areas. “The consumer during the quarter was very much more focused on home as opposed to apparel,” CFO Travis Marquette said. Rentler noted that home becomes a more significant category in the holiday quarter. For BTS, the company said it is planning its assortments conservatively.
Outlook	The company did not provide sales or earnings guidance. Management reported that it expects to add about 39 locations this fall for a total of 66 new stores for the full year. The company did not announce its holiday plans and hours, as it is still working through its plans.
	The TJX Companies (NYSE: TJX) 2Q21
Commentary	Comps for open-only stores were down 3%. Throughout the quarter, the company saw strength in several categories, particularly HomeGoods, which delivered a double-digit open-only comp growth. Some of the non-trending, weaker categories were apparel, traditional casual and career-related apparel. CEO Ernie Herrman said, “Following the wave of strong initial demand, traffic and sales moderated as we moved through the second quarter and into the third quarter. We believe that this was due to a number of Covid-related factors, including the impact on consumer behavior and demand and lighter store inventories than we planned. As we reopened, we weren’t able to optimize the inventory flow back to our stores like we would in a normal environment.” Some logistical delays with merchandise arriving to distribution centers occurred as vendors and transportation providers were ramping businesses back up.
Outlook	For 3Q, TJX expects overall open-only comp store sales to decrease by 10–20%, in line with the sales trends that the company has been seeing since the middle of July. Management said that its expectations reflect the uncertainty over the pandemic, consumer behavior, demand and store traffic, along with an anticipated slower BTS shopping season. Management commented that the company is monitoring consumer spending behavior closely for holiday and is prepared to quickly adjust inventory levels from warehouses to the stores for an early or late holiday season according to spending cues.
	Urban Outfitters (NasdaqGS: URBN) 2Q20
Commentary	Total comparable sales decreased by 13%. By brand, comps increased by 11% at Free People and decreased by 8% at Urban Outfitters and decreased by 25% at Anthropologie. Total new digital customers across all brands jumped by 76% year over year. The company’s athletic line FP Movement saw its customer base grow by 175%. This fall, the company plans to open the first FP Movement standalone location in Los Angeles. Management said that the home category produced very strong regular-price comps throughout the second quarter. The company’s Anthropologie brand was impacted by the pandemic, as it is known for offering more structured apparel geared for work and events. As the quarter progressed, the brand’s apparel team was able to adjust to more casual and less structured looks, resulting in lesser need for markdowns and driving notable improvement in sales. The company announced that it is building another large omnichannel distribution facility in Kansas that will support its growing digital business in North America. For the BTS shopping season, the company said that it is entering the fall with strong momentum.
Outlook	For 3Q, the company projects total sales growth to be mid-single-digit negative, with the Retail and Wholesale segments showing improvement from 2Q. For the holiday season, CEO Richard Hayne said, “We are planning for an extended holiday shopping period, with sales beginning earlier, reaching a plateau sooner but missing the peaks characteristic of prior years as consumers seek to avoid crowds. If our Covid-19 prediction is correct, we believe holiday sales could be positive but still heavily promotional. We expect continued strength in the digital business and have taken extra measures to ensure we have the capability to scale with customer demand during the holiday period. These include adding staff in our existing fulfillment centers earlier, installing additional equipment in those centers to boost efficiency, using a newly distribution facility to ship faster on items and staffing stores to allow for more pack-and-ship processing.”
	VF Corporation (NYSE: VFC) 1Q21
Commentary	Total revenues declined by 48% year over year, led by store closures and lower consumer demand due to the coronavirus outbreak and related restrictions. Global digital business increased by more than 80%, led by 115% growth in the Americas region and nearly 90% growth across its four big brands. Gross margin decreased by 340 basis points to 52.9%, primarily driven by elevated promotional activity to clear excess inventory.   During the quarter, all of the company’s retail stores reopened in the APAC region. In the US, BOPIS and ship-from-store capabilities have been fully launched in the vast majority of stores. Its business in Mainland China is strong and has been recovering sharply since February, with growth of 9% in the quarter. The company is applying many of its consumer-centric strategy learnings from China to other markets across the globe. VF continued to explore the divestiture of its Occupational Workwear business.
Outlook	For fiscal year 2021, the company expects more than 40% growth in its digital business and expects its digital penetration to be over 25% of total revenues. The company will continue to focus on key strategic choices around the transformation to a retail-centric, digitally led enterprise: By August end, its North Face brand will launch BOPIS and ship-from-store capabilities in EMEA; BOPIS and ship-from-store for its Timberland brand in EMEA and the US is under planning. The company is also applying curbside functionality in both the Americas and EMEA.

Apparel-Online Only

	ASOS Plc (AIM: ASC) 2H20 Trading Update
Commentary	The company’s trading update reported, “The second half has been a period of tremendous change for ASOS. We have made real progress and shown resilience through the period and are exiting the year in a strong position. We have a robust balance sheet with a differentiated product offer and global infrastructure to leverage.” Management did not give indications of performance by region.
Outlook	For fiscal year 2020, the company expects revenue growth of 17–19%, with profit before tax of £130–150 million (around $170–$196 million), ahead of market expectations, supported by stronger-than-anticipated underlying demand and significant and sustained reduction in returns rates.

Beauty Brands and Retailers

	Coty (NYSE: COTY) 4Q20
Commentary	Revenues declined by 60%, with the Prestige segment plunging 73%, while the mass segment decreased by 48% as mass retailers remained partially open. The company said that Coty’s current category mix is skewed toward color cosmetics, fragrance and professional beauty, which were the categories most affected by Covid-19. However, the fourth quarter showed improvement, with strong momentum and market share gains in e-commerce. Within the e-commerce channel, Coty saw a good performance for its Covergirl Clean Fresh and Sally Hansen “Good. Kind. Pure” brands. The company also witnessed an improving market share in color cosmetics in key markets in the US and the UK. CFO Pierre-André Terisse said, “April was the lowest point, but every month since then has showed progress across the portfolio in both mass and luxury as well as for Wella. In particular, July and our latest expectation for the month of August showed significant progress, and sales stand at approximately 2.5x April levels, reflecting the reopening of number of stores, albeit with lower traffic than usual.” For August, Terisse expects sales declines of about 20%. In June, Coty signed a deal to sell 60% stake in Wella, its Professional Beauty division plus Retail Hair to investment banking firm KKR. The deal is expected to be completed by the end of 2020. Wella’s sales declined by 41% due to the closure of most salons during the quarter.
Outlook	The company did not provide a financial outlook. However, management said that the company plans to build platforms to address underexposure in skin care, Northern Asia and e-commerce, while at the same time create space for additional brand-building investment. By the end of the year, Coty plans to reduce fixed costs by $600 million.
	Estée Lauder (NYSE: EL) 4Q20
Commentary	Total sales declined by 31%. By category, skin care was the standout, growing 1% in the quarter and contributing 52% of total sales in fiscal year 2020, up from 44% in the prior year. Revenues for makeup, the second-largest category, were down 62% in the quarter. Management said that the company is innovating in this category and sees makeup “booming again” and consumer sentiment on makeup returning. Sales in fragrance declined by 57% and hair care was down by 35% in 4Q. By geography, 4Q sales in Asia Pacific rose 16%, while sales fell 39% in the Europe, the Middle East and Africa region (EMEA) and declined by 54% in the Americas. The company’s global travel retail business declined by less than 30%, supported by strong local tourism within China. The company is implementing sustainable office practices in Mainland China and is exploring green energy solutions. Management reported that its online business delivered nearly triple-digit organic sales growth. Online sales, including through retailers that the company supplies, represented more than 40% of total sales in 4Q—brand sites grew by nearly 90% globally. The company highlighted investments in its digital business, including offering video in a live-chat capability and deploying shoppable livestreaming globally. For example, Clinique’s livestreaming series led consumers to return more frequently, spend four times longer on site and convert at higher levels.
Outlook	For 1Q, the company expects sales to decline by 12–13%. Estée Lauder announced a Post-Covid Business Acceleration Program, which will begin in 1Q21. This is a two-year initiative that includes reducing the company’s retail footprint, primarily in EMEA and North America, and increasing digital investments. As a part of the program: • The company expects to close 10–15% of its freestanding stores, primarily in Europe and North America and to close its less productive department-store counters. • The company estimates a net reduction of 1,500–2,000 employee positions globally. • Estée Lauder will invest in digital and omnichannel capabilities to support continued market-share improvement and business acceleration. • In the light of the ongoing pandemic, the company will “implement increased confident beauty practices at retail and adopt new ways of working.”
	Ulta Beauty (NasdaqGS: ULTA) 2Q20
Commentary	Total transactions declined by 36.2% as health and safety concerns led to fewer physical shopping trips; however, average ticket increased by 14.9%. As stores reopened, sales trends have improved in the skincare, fragrance and bath categories, delivering double-digit comp growth in July. The makeup category continues to be challenged, although some subcategories of makeup performed better than others, including lashes, brow and eye. Sales from e-commerce increased by more than 200%. Curbside pickup and BOPIS totaled about 20% of total e-commerce orders. Since the beginning of the pandemic, Ulta Beauty reported it has seen more than 2 million online transactions from non-members, more than 4x the number over the same period a year ago. The company launched a guest-service chatbot on ulta.com to help enhance digital experience and is investing in its fulfillment capacity to support a larger e-commerce business. Ulta Beauty is expanding its ship-from-store program to 100 stores to increase shipping capacity. Guest engagement with the company’s virtual try-on GlamLab tool increased by 150% quarter over quarter. The company intends to expand virtual try-on with sampling capability. This fall, Ulta Beauty will launch Conscious Beauty, an initiative to certify brands under five pillars: cruelty free, clean ingredients, sustainable packaging, vegan and positive impact. The company pledges to ensure that by 2025, 50% of all packaging sold will be made from recycled or bio-sourced materials or will be recyclable or refillable.
Outlook	The company did not provide financial guidance but said it will take a cautious approach to the second half and expects comps to be down in the low-double-digit to mid-teens range, reflecting the following factors: •    The near-term environment relative to containing the pandemic and related economic impacts will continue to be dynamic and challenging. •    The volatility in the business will continue as the local markets experienced higher transmission levels of Covid-19. •    The company is pulling back on promotional activity to drive profitability. It will watch the competitive environment closely and will adjust if needed. Ulta Beauty expects store traffic this holiday season to be impacted by ongoing consumer health concerns and limited physical capacity in its stores, as well as the decision to close stores on Thanksgiving Day. In 2020, the company expects to open approximately 30 new stores and relocate five stores. For 2021, the company is still finalizing its new store opening plans but expects the total to be at least that of 2020.

Department Stores

	Kohl’s (NYSE: KSS) 2Q21
Commentary	Total sales declined by 23%, while digital sales increased by 58% and represented 41% of total sales in the quarter, up from 20% one year earlier. Stores fulfilled nearly 50% of digital sales. Store pickup accounted for 15% of digital demand, with the company’s Drive Up service accounting for nearly half of it. Kohl’s saw strong demand in the home, active and children categories. Home-goods sales grew by double digits overall and surged 90% digitally. The company saw softness in apparel (including dress attire). Management reported that its BTS season sales have been impacted by the pandemic but noted that the BTS assortment sells year-round as it comprises core basics, including activewear and denim.
Outlook	The company expects Covid-19 to continue to impact the business and is planning conservatively. For the holiday season, Kohl’s expects consumers to shop earlier, starting in October, leveraging the department store’s digital and omnichannel capabilities. The company is emphasizing active, “cozy and comfort,” home and toys as the holiday assortment. The company remains focused on its active business through its brand partners and expansion of its Champion brand; it is dedicating more space to active and is introducing new casual brands, such as Lands’ End and TOMS Shoes.
	Macy’s (NYSE: M) 2Q20
Commentary	Companywide comps were down 34.7% on an owned basis. Digital sales grew 53%. Interim CFO Felicia Williams said, “Our stores saw a sales decline of 61% in the quarter. The trend in store results was closely correlated with the pace of reopening as performance improved sequentially each month as the quarter progressed, and we exited the quarter with July [sales] down 40%. With stores [sales] improving as the quarter progressed, digital strength moderated at the end of the quarter. We expect this moderation to continue into the fall season.” By banner, strong categories at Macy’s included home, fine jewelry, fragrances, activewear and sleepwear. The retailer saw softness in men’s tailored apparel and women’s dresses—both saw a nearly 70% sales decline in the spring season. Backstage performed better than the main Macy’s stores but still saw sales erosion of nearly 45%. At Bloomingdale’s, strong performers were home, handbags, fine jewelry and women’s shoes, while men’s and women’s clothing saw challenges. Bluemercury.com experienced 105% sales growth. Macy’s said the BTS season started off slowly, but the company is seeing a much more elongated BTS season. For holiday, the company is adjusting promotional cadence to support an elongated holiday shopping season and focusing on newness for nearly 50% of gifts assortment, led by items in home and beauty. In its supply chain, the company is seeing bottlenecks in the port as well as challenges with ground freight. In light of current customer demand and future potential, the company has highlighted its “Focus 4” categories for Macy’s: jewelry, beauty, furniture and mattresses. For Bloomingdale’s, the Focus 4 are luxury, advanced contemporary, textiles and Bloomingdale’s The Outlet off-price. The company said that its “G 150” stores (Macy’s best 150 department stores dubbed as “Growth” stores, contributing nearly 50% of the total brick-and-mortar sales) continued to perform well.
Outlook	For 3Q and 4Q, the company expects total comps to be down in the low to mid-20s range. For the second half, Macy’s forecasts slightly stronger digital growth and slightly weaker store recovery. Macy’s believes that the off-mall format and smaller format have high potential. Over the next two years, the company plans to open several smaller-format, off-mall Macy’s—and test a smaller-format, off-mall Bloomingdale’s. In off-price, the company plans to open several additional freestanding Backstage stores, continue the expansion of Bloomingdale’s The Outlet and test Backstage online. In 2021, the company plans to build its second Market @ Macy’s concept store, in Dallas. The company also plans to open three freestanding Backstage stores in three different markets.
	Nordstrom (NYSE: JWN) 2Q20
Commentary	The company’s full-price sales declined by 58%, while off-price sales decreased by 43%. Top-performing categories included home, kidswear, accessories, beauty and active in both full-price and off-price businesses. Owing to Covid-19, the department store shifted its Anniversary Sale event from July to August, which negatively impacted its digital sales in the second quarter—digital sales declined by 5%. Excluding this shift, digital sales increased by about 20% in the second quarter. Through its digital platforms, Nordstrom saw over 50% growth in new customers. The company reported increased customer engagement of curbside pickup and returns, which represented one-quarter of order pickup volume—total order pickup is approaching 15% of its digital sales. For its Anniversary Sale, the company is taking actions to meet evolving customers preferences. CEO Erik Nordstrom said, “We are expanding our assortment to reflect growing preference for categories focused on casualization, comfort, wellness and home. For the first time, customers could preview items through a digital catalog and build a wish list to enable them to check out faster when it was time to shop. Our customers created nearly 20 million wish lists, which was not only a great way for them to engage early, but also allowed us to adjust in real time to high-demand items.” With regard to BTS, President Peter Nordstrom said, “Back-to-school is not exactly what it used to be… but what makes it a durable business is that kids keep growing regardless of the pandemic. So, we’ve had good kids results—and it’s clear that if we have the relevant product for kids, there is upside potential for us in kids, and that’s another place where we’ve gotten some clear signals. We have a sizable kids business, particularly we have a pretty big kids’ shoes business, but I don’t think the physical school part of it is much of a limiting factor. It’s our ability to make sure we’re in relevant product as those kids grow and they need new clothes.”
Outlook	The company did not provide financial guidance. However, based on current trends and inventory plans, Nordstrom is expecting sequential and gradual improvement in sales, earnings and cash flow in the back half of the year. The company is planning for an early holiday start this year. Erik Nordstrom said, “For holiday, we plan to continue to build on last year’s success, with an emphasis on expanding our assortment of giftable products, with greater breadth at lower prices and across categories. We are focused on making it festive and easy for customers to shop by emphasizing our convenience services and experiences in stores and online. Using an approach similar to what has been successful in Anniversary, we will continue to leverage data to inform our assortment and categories that are resonating with our customers.”

E-Commerce

	Amazon (NasdaqGS: AMZN) 2Q20
Commentary	Amazon’s online grocery sales tripled year over year in the quarter. The company also increased grocery delivery capacity by more than 160%. The growth rate of Prime membership accelerated both in the US and worldwide, while existing Prime member renewal rates also improved.   Revenues from third-party-seller services grew faster than Amazon’s online stores revenue, with strong growth in fulfillment by both Amazon and merchant-fulfilled or merchant-fulfilled-network (MFN) seller sales.   The company confirmed that this year’s Prime Day shopping event will take place in the fourth quarter (with the exception of Amazon India, which hosted Prime Day on August 6 and August 7). Amazon is investing in international businesses, including Australia, Brazil, India, the Middle East and Turkey. The company has also launched new technology products and services, including new live interactive video services for streaming and Ring Video Doorbell for improved home security.
Outlook	For the third quarter, Amazon expects net sales to be $87.0–93.0 billion, representing year-over-year growth of 24–32%. Management said that the company is focused on making more room in its fulfillment centers as it prepares to head into the peak holiday shopping season in November.

Electronics Retail

	Best Buy (NYSE: BBY) 2Q21
Commentary	Best Buy’s enterprise comp growth was 5.8% despite its stores being open by appointment only for the first six weeks of 2Q20, driven by strong performance in computing, appliances and tablets categories. The growth was partly offset by declines in mobile phones and digital imaging. After the company reopened its stores for shopping, trends for most categories improved through the quarter, particularly for large appliances and home theater that benefit more from experiential shopping. Digital revenue in the US grew by 242%, owing to higher conversion rates and increased traffic. In the US, online revenue as a percentage of total revenues rose to approximately 53.1% versus 16.1% in 2Q19. There was also strong digital demand for some of the company’s new categories, such as digital health and fitness, at-home fitness equipment, sustainable living, outdoor activities and camping equipment.
Outlook	Best Buy CFO Matt Bilunas said, “We are planning for Q3 sales to be higher compared to last year but likely will not continue at the current quarter-to-date level of approximately 20% growth. Also, as our stores are fully reopened, we are planning for Q3 SG&A expense to be more in line with last year’s third quarter.” Bilunas added, “Overall, as we plan for the back half of the year, we continue to weigh many factors, including potential future government stimulus actions, the current shift in personal consumption expenditures from areas like travel and dining out, the possible depth and duration of the pandemic, the risk of higher unemployment over time and the availability of inventory to match customer demand.”

Food, Drug and Mass Retailers: Discount Stores

	Big Lots (NYSE: BIG) 2Q20
Commentary	Comparable sales grew 31.3%, the best quarterly comp in the company’s history, driven by a close-to-doubling of e-commerce traffic, a double-digit increase in store traffic and strong growth in average basket size across both channels. CEO Bruce Thorn said, “Q2 got off to a very good start in May. This strength was a continuation of a stimulus-driven sales surge that occurred in mid-April as customers looked to improve their living spaces with indoor and outdoor furniture and home-related accessories in the margin-rich categories of Furniture, Seasonal and Soft Home. And while sales trends moderated near the end of May, the pace was still robust and continued through June with our home-related merchandise categories experiencing the highest level of demand.”
Outlook	Management noted a high-single-digit comp in July and continued to see the acceleration of comps into August. In fiscal 2020, the company expects its store count to be flat to last year, with approximately 25 stores opening and 25 closures.
	Dollar General (NYSE: DG) 2Q20
Commentary	Comps were up 18.8%, driven by a substantial increase in average transaction size. The company saw comp growth in several categories, including home products, consumables, seasonal and apparel categories, with home products witnessing the largest percentage increase. CEO Todd Vasos said, “We experienced significant growth in our non-consumable business in the month of April and through May 26. These trends continued through the end of Q2, and we’re pleased to note that for the second quarter, our three non-consumable product categories in total delivered a combined comp sales percentage increase well in excess of our consumable businesses. In terms of our monthly comp cadence, sales increased by 21.5% in May, 17.9% in June and 17.2% in July.” The company highlighted that between the end of the second quarter and August 25, it experienced elevated overall comp growth of about 15%.
Outlook	Dollar General expects its comp sales trends to moderate in the second half of the year. For the full year 2020, the company plans to incur capital expenditure of $1.0–1.1 billion. It expects to open 1,000 new stores, remodel 1,670 stores and relocate 110 stores, representing 2,780 real estate projects in the fiscal year. By the end of 2020, the retailer also plans to roll out its Non-Consumable Initiative (NCI), which consists of a new and expanded assortment in key non-consumable categories—such as home, housewares, domestics, party and occasion—to more than 5,400 stores.
	Dollar Tree (NYSE: DLTR) 2Q20
Commentary	Comparable sales increased by 7.2%. Family Dollar comps increased by 11.6% and Dollar Tree comps grew by 3.1%, driven by strong performance of discretionary businesses. During the quarter, Family Dollar saw a comp of 28.9% in the discretionary business and witnessed a 15% increase in new customers. CEO Michael Witynski said, “As the quarter progressed, we saw a shift from kitchenware and tabletop into more home decor and soft home, as customers are investing in their homes and spending more time in their homes. Anything related to staying at home, such as lawn and garden and outdoor grilling, continues to perform very well. And on the apparel side, we have had strong sell-through of our spring and summer apparel with a focus on our at-home items like loungewear, sleepwear, slippers, athleisure, children’s clothing as well as newborn and onesies.” During the quarter, the company completed over 250 real estate projects, including 131 new stores opening, 22 relocations, 76 Family Dollar H2 renovations (H2 format is a new model for both new and renovated Family Dollar stores) and 26 store closings.
Outlook	Management noted that Family Dollar is delivering very strong comps in the early third quarter despite less government assistance as compared to the second quarter. Witynski said, “Early indicators on fall and Halloween are strong, and we think we are well positioned for that. We think, based on what we are seeing from the customer, since they’re spending more time at home, they want to decorate their homes and invest in their homes more—and we are seeing that in our sales.” For fiscal 2020, the company plans to renovate 750 Family Dollar stores and open new stores in the H2 format.
	Five Below (NasdaqGS: FIVE) 2Q21
Commentary	Comparable sales were down 12.2%, driven by a 20% decrease in comparable operating days. For the reopened period, comps were up 6%. The company reopened virtually all of its stores by end of June. The company is seeing continued demand for fun tees and tops as well as home-related merchandise, including items for pets. The company reported four-times-higher e-commerce sales compared to last quarter, although the online channel still represents a low-single-digit percentage of its total sales. Five Below also highlighted its efforts to enhance its e-commerce capabilities, including by launching a Five Below app and transitioning Hollar.com’s Ohio e-commerce fulfillment to Five Below and migrating its site to a new platform. Hollar.com, an online dollar store featuring apparel, beauty, home essentials and electronics, was acquired by Five Below in January 2020. During the quarter, the retailer opened 63 new stores in a new format that features Five Below Beyond products, self-checkout services and an expanded snack area.
Outlook	Management noted that the third quarter is off to a strong start, and the trend of a higher average ticket size coupled with lower transactions continued in August as consumers are still limiting their trips to stores. The retailer plans to open 110 stores in 2020, taking its total store count to 1,020 stores by end-of-year. Management said that the company is making significant progress on strategic investments across people, infrastructure and systems to scale its business to over 2,500 stores.
	Ollie’s Bargain Outlet (NasdaqGM: OLLI) 2Q21
Commentary	Comps grew 43.3%, driven by growth in both average basket and transactions. During the quarter, the company opened six new stores for a total of 23 new store openings in the first half of the year. The company’s new stores continued to perform above its expectations across both new and existing markets. CEO John Swygert said, “What we saw during the quarter is with the customers’ lifestyle changes, they were buying very broadly and all of the products we were selling in our stores really resonated with the consumer. So, all of our departments were moving along very, very well and comping very strongly. We sold out of our lawn and garden and summer furniture earlier this year than ever because of the demand. So those departments are not performing nearly as well, because we don’t have the inventory to back the sales. From our perspective, it’s actually a good thing, because the season is over, and it is lower markdowns for us to have to deal with. Other than that, the consumer is still responding to all the offers we have in our stores.”
Outlook	So far in 3Q, the company has opened four new stores and plans to open 46 net new stores by the end of 2020, including one relocation and one closure. CFO Jay Stasz said, “Comps are now tracking in the high teens, and we expect slower growth as we progress through the year. There remains a great deal of uncertainty around the number of factors, including consumer demand, the impact of economic stimulus and, on the competitive front, the potential for a highly promotional environment.”

Food, Drug and Mass Retailers: Drugstores

	CVS Health (NYSE: CVS) 2Q20
Commentary	Total revenues increased by 3.0%, supported by the chain’s health-care operations as people pushed back elective procedures and discretionary use of their healthcare benefits during the pandemic, resulting in much lower medical costs for the company. CVS Health witnessed continued demand for MinuteClinic virtual-care visits amid the pandemic, which grew 750% in the second quarter. Revenues growth by segment: Pharmacy Services, 0.1%; Retail/LTC, 1.0%; and Health Care Benefits, 6.1%. CVS Health witnessed comp growth of 2.4%. By major goods/service line, pharmacy saw a comp growth of 4.6%, while front store’s comp declined by 4.5%. CFO Eva Boratto said that renewals for Pharmacy Services for the 2021 selling season are about 90% complete, with a strong 98% retention rate. Boratto further added that the company has won $4.3 billion in gross new business for 2021. CVS Health continues to increase its pharmacy penetration within the Aetna business, with $250 million in incremental revenue. Boratto said, “Within the Pharmacy Services and Retail/Long-Term Care segments, we saw prescription volume growth accelerate in June as members refilled 90-day prescriptions from March. In June, front-store growth started to benefit from states reopening, followed by customers stocking up on key preventative and treatment items in the Sun Belt states during July. In Health Care Benefits, medical cost utilization largely returned back to normal levels in June and July but obviously varies by geography and lines of business.”
Outlook	The company raised its full year fiscal 2020 guidance and now expects EPS of $7.14–$7.27, up from the prior forecast of $7.04–$7.17. For the full year, CVS also increased its cashflow guidance to $11.0–11.5 billion, up from the prior forecast of $10.5–11.0 billion. Management noted that the company is on track to open about 1,500 HealthHUB locations by the end of 2021 despite the disruptions caused by the pandemic. Boratto said, “We expect approximately $2 billion of Covid-19-related investments for the year, of which about 40% was incurred in 2Q. Approximately $1.5 billion of the $2 billion will impact the Health Care Benefit segment, benefiting customers and members, including premium credits and contractual requirements. About 35% was reflected in Health Care Benefit’s 2Q results. For the Retail/Long-Term Care segment, we expect approximately $400 million of investments, with $240 million reflected in 2Q. Clearly, the timing of these investments will affect the earnings cadence for the back half of the year.”

Food, Drug and Mass Retailers: Mass Merchandisers

	Target (NYSE: TGT) 2Q20
Commentary	Comps grew by 24.3%, the strongest ever reported by the company. Store-originated comps grew 10.9%, while digital comps surged 195%, accounting for 13.4 percentage points of Target’s comp growth. Stores drove more than 90% of Target’s second-quarter sales growth by enabling over 75% of the company’s digital sales. Same-day services (Order Pick Up, Drive Up and Shipt) grew 273% and accounted for approximately six percentage points of total company comp growth. Target saw the most dramatic comp acceleration in apparel, which moved from a 20% decline in the first quarter to double-digit growth in the second quarter. Hardlines generated the strongest comp overall at more than 40%. This was the result of an even stronger increase in electronics of more than 70%, as shoppers focused on office equipment, home electronics and gaming. The company will feature its BTS assortment for an extended period this year, moving its in-store shopping events outside into parking lots and highlighting contactless options such as Drive Up. The company will give away “boo bags” to its Drive Up guests in October, featuring surprises along with tips and suggestions for celebrating the season. This fall, Target will roll out the third and final phase of its Good & Gather assortment, adding more than 600 items to bring the total number of items to nearly 2,000.
Outlook	The company withdrew its guidance, given the unusually wide range of potential outcomes, in light of the highly fluid and uncertain outlook for consumer shopping patterns and government policies related to Covid-19. For the holiday season, Target will expand the range of products available via same-day services—the company plans to include more gifts and essentials. Furthermore, the company will offer grocery items via Order Pick Up and Drive Up at more than 1,500 Target stores this fall.
	Walmart (NYSE: WMT) 2Q21
Commentary	Total sales grew by 7.5% on a constant-currency basis. In the Walmart US segment (which excludes Sam’s Club), comps increased 9.3%, led by strength in general merchandise and food. E-commerce sales at the Walmart US segment grew 97%, contributing nearly two-thirds of the segment’s comp growth. Sam’s Club saw comp growth of 17.2%, ex fuel and tobacco, with positive contributions from both increased transactions and average ticket. Sam’s Club’s e-commerce sales grew by 39%. Walmart saw significant increases in repeat rates and weekly active digital customers. On BTS, the company noted that items such as laptops, tablets and home-office furniture are performing well, while demand for basic school supplies, backpacks and apparel is soft. Walmart expanded pickup and delivery services within the US, including Express Delivery that delivers customers’ orders within two hours. The company has also expanded internationally: It launched same-day delivery from 70% of Sam’s Clubs in Mexico and launched Flipkart Wholesale, a B2B solution, in India.
Outlook	The company did not provide financial guidance. However, management noted that the currency headwinds remained quite strong, and if this continues, it could negatively impact 3Q revenues by about $1.1 billion.

Home and Home-Improvement Retailers

	Home Depot (NYSE: HD) 2Q20
Commentary	Total comps grew by 23.4%, while US comps rose 25%, driven by the broad-based strength across stores and geographies in both professional and DIY segments. The comparable average ticket grew 10.1%, led by an increase in basket size and customers trading up to new and innovative items. Comparable transactions grew by 12.3%, driven by strong online and in-store transactions. Home Depot stated that sales through its digital channel grew by approximately 100%, with customers choosing to pick up their online orders at a store over 60% of the time. The retailer specified that big-ticket categories, such as appliances, riding lawnmowers and patio furniture, recorded strong performances, which was partly offset by weaker performances in certain indoor installation-heavy categories, such as special-order kitchens and countertops.
Outlook	CEO Craig Menear said, “We are focused on continuing the momentum of our strategic investments to enhance the interconnected shopping experience and position ourselves for continued share capture over the long term.” CFO Richard McPhail said, “We are committed to completing our strategic investments. However, given the priority around safety and the complexities of the operating environment we find ourselves in, we are deferring certain in-store investments and now expect some of the projects we initially earmarked for fiscal 2020 to be completed in fiscal 2021.”
	Lowe’s (NYSE: LOW) 2Q20
Commentary	Comps grew by 34.2%, driven by transaction growth of 22.6% and ticket growth of 11.6%, with strong repeat orders from new and existing customers. US comps grew by 35.1%, driven by strong project demand from both DIY and professional customers, with DIY comps outpacing Pro comps. Management noted that there was a broad-based growth across channels, product categories and geographies and a significant rise in total new Pro, DIY and millennial customers. E-commerce sales grew by 135%, driving online penetration to 8% of sales.
Outlook	In the second half of fiscal 2020, Lowe’s will reinvest in the business to improve its product offering, simplify its store environment and elevate its service offering. The company clarified that these investments would include store resets to “improve product adjacencies, bay productivity and sales per square feet.” Furthermore, Lowe’s is enhancing its supply-chain infrastructure and plans to open 50 cross-dock delivery terminals, seven bulk distribution centers and four e-commerce fulfillment centers over the next 18 months.
	Wayfair (NYSE: W) 2Q20
Commentary	Wayfair became profitable for the first time since it went public in 2014, reporting a net profit of $273.9 million during the quarter, driven by the consumer shift towards buying home goods online due to the ongoing coronavirus crisis. The company’s active customer base increased by 46% year over year to 26 million at the end of the quarter.   CEO Niraj Shah said, “We experienced unprecedented demand in the second quarter and saw record numbers of new and repeat customers choose Wayfair.”
Outlook	Wayfair did not provide guidance for the third quarter given the uncertain environment, particularly in the US, but it expects another profitable quarter on the back of expectations that customers will continue to invest in their homes in the second half of the year.
	Williams-Sonoma (NYSE: WSM) 2Q20
Commentary	Williams-Sonoma saw comp growth of 10.5% and record operating profit growth of 115%, driven by strong performance in the e-commerce channel, which grew by 46% (including purchases made through omnichannel services such as curbside pickup and ship-from-store). Brand-wise, the Williams Sonoma brand was the strongest, delivering comp growth of 29.4%, while Pottery Barn and West Elm registered comp growth of 8.1% and 7%, respectively. E-commerce penetration touched a record high of about 76% of the company’s total revenues. Management said that the performances of the reopened stores were better than expected through the quarter.
Outlook	The company said that the quarter-to-date sales in 3Q are strong across all brands and will continue to improve over the rest of the year. From a margin perspective, Williams-Sonoma said that shipping will be a key headwind in the second half of the year because of various surcharges announced by third-party shippers on all retailers. The company highlighted that its long-term plans include: •    Acceleration of digital growth and a fundamental shift of the channel mix of its business. •    A marketing strategy focus on content and building customer relationships. •    Stepping up profitability and longer-term earnings outlook. CEO Laura Alber said, “Longer term, we believe the behavioral changes and industry shifts that have emerged from the pandemic will persist and continue to favor our business. We are investing in the next phase of our growth and the opportunities that position us for accelerated market share gain.”

Luxury

	Canada Goose (TSX: GOOS) 1Q21
Commentary	Total revenues declined by 63.3%, due to temporary store closures, reduced operating hours and lower traffic. By geography, Asia posted the weakest revenue decline at 45.3%. CFO Jonathan Sinclair said, “In North America and Europe, reopened stores are seeing slow starts as a result of lower traffic in and around our locations due to the impacts of the pandemic. This is as expected and consistent with earlier experiences in Greater China. In e-commerce, we are in the late innings of our slowest period, and we are on track in our preparations for peak demand.” Canada Goose is concentrating its new-store expansion in China. In June, the company opened its first store in Chengdu. This year, the company plans to double its retail footprint in Mainland China, opening four new stores this year out of seven stores planned globally. CEO Dani Reiss said, “Thanks to our digital insights, we knew demand in the region was strong going in, and the store is performing well relative to our expectations. Overall, the retail recovery in Mainland China is ahead of other regions. We believe that our strategic approach to growing our Mainland China DTC [direct-to-consumer] business this year has us very much on the right track.”
Outlook	Reiss said, “While there has been a gradual sequential improvement in performance, the negative financial impacts of Covid-19 have continued in the second quarter of fiscal 2021, with a significant revenue decline expected. On an annual basis, the company expects lower wholesale revenue and later shipment timing, relative to fiscal 2020.” The company plans to launch a cross-border e-commerce solution this fall and winter, expanding the international reach of its business. Furthermore, Canada Goose will expand its mobile omnichannel capabilities to its US stores, following its successful pilot in Canada.
	Capri Holdings (NYSE: CPRI) 1Q21
Commentary	Total revenues declined by 66.2% on a constant-currency basis. CEO John D. Idol said, “While our performance was significantly impacted by the Covid-19 pandemic, revenue and earnings exceeded our initial expectations—and as our stores reopened, revenue exceeded our original expectations. Similarly, our wholesale partners, e-commerce sites and reopened stores are performing above our expectations. Total revenue declined by 66%, with trends improving progressively each month.” CFO Thomas J. Edwards said, “We are experiencing more rapid recovery in China as luxury sales are benefiting from domestic demand. In the balance of Asia, as well as the Americas and EMEA, we expect the recovery to take longer. Across all geographies, we anticipate a slower recovery in tourist activity, which impacts our travel retail channel as well as many important flagship locations in major tourist destinations.” In EMEA, Capri began reopening its store fleet in May and ended the quarter with about 70% of stores open.
Outlook	For the second quarter, the company expects total revenues to decline by 40% year over year, with retail sales performing significantly better than wholesale. In the third and fourth quarters, Capri Holdings forecasts sales across regions to gradually improve as consumer confidence and the economy begin to recover. For the full year, the company expects a revenue decline of about 35%. Management expects the company to return to generating positive EPS in the second half of fiscal year 2021 as revenue trends gradually improve. Capri Holdings is optimistic on its long-term growth potential. Over the period, the company expects its revenues from the Versace and Jimmy Choo brands to more than double—to reach $2 billion and $1 billion, respectively—with a mid-teens operating margin in percentage terms for both. The company expects inventory to sequentially decline throughout fiscal year 2021 and end the year almost in line with its full-year revenue decline. Over the next two years, the company plans to close about 150 Michael Kors stores.
	Ralph Lauren (NYSE: RL) 1Q21
Commentary	The company witnessed a comp decline of 57% as stores were closed for eight to 10 weeks across many of its largest markets in the first quarter. By region, the largest declines were in North America and Europe, where stores were closed for the longest period. The company saw strong digital momentum in the quarter. Own digital comps were positive in all regions: 68% growth in Asia and 44% growth in Europe, and North America also reported positive digital comps. All of the company’s stores are open in Asia, Europe and North America. CEO Patrice Jean Louis Louvet said, “As stores reopened, we experienced significant traffic and comp declines initially, but strong growth in conversion rates and average basket size. In the weeks that followed, we saw sequential improvement in brick-and-mortar traffic and comps, although both metrics were still negative as we exited the quarter. Our Europe and North America comp declines in June were roughly half the rate we experienced in April. Asia comps improved from more than 50% declines in April to a single-digit decline in June.” The company said that home and loungewear are emerging as high-potential, underdeveloped lifestyle categories.
Outlook	Louvet said, “We continue to expect our financial results for both the second quarter and full fiscal year 2021 to be significantly adversely impacted by the pandemic and prolonged demand recovery. Though the timing and path of recovery in each market presents many uncertainties, including the potential for second waves of outbreaks across various markets, we have developed scenarios through which we plan to safely return our businesses to growth and value creation.”
	Tapestry (NYSE: TPR) 4Q20
Commentary	Total sales declined by 52% on a constant-currency basis, but digital sales grew at a triple-digit rate. Interim CFO Andrea Shaw Resnick said, “We achieved sequential improvement throughout the quarter, supported by phased store reopenings in key regions, notably North America, Europe and Japan, while we drove a return to positive growth in Mainland China in May. June was the best performing month of Q4, and we exited the quarter with revenue down approximately 30%. Importantly, with the vast majority of stores opened as we entered the new fiscal year, we drove further material progress in July.”
Outlook	Tapestry expects fiscal 2021 revenues to be roughly in line with fiscal 2020 revenues; this includes pressure on the top line in the first half and the expectation of a sales inflection in the second half, assuming a continuation of a slow and steady recovery from the pandemic.

Looking Forward

With the e-commerce channel helping retailers to offset the lost sales from brick-and-mortar store closures and reduce in-store inventory, some retailers are looking to strengthen their digital model, including through the expansion of BOPIS and ship-from-store capabilities. In discretionary sectors, we continued to see strength in home and furniture categories. In the apparel and footwear categories, the demand for activewear, loungewear, sleepwear, children’s clothing and women’s shoes remained strong, while men’s and women’s tailored clothing and dresses saw weaknesses. Most discount stores have reported strong comp growth and have substantial new store openings planned for the second half of the year. The BTS season started off slow for most retailers, and many are planning to feature a BTS assortment for an extended period this year. The holiday shopping season is likely to start as early as October, also providing for an extended shopping period. We believe that the holiday season will be highly promotional and expect the e-commerce channel to drive a significantly greater share of sales than last year. For the holiday season, retailers should be prepared to quickly adjust inventory levels at stores by ensuring the capability to scale with customer demand—such as by expanding ship-from-store capabilties or partnering with logistics firms that understand delivery needs and can help brands and retailers with transportation of inventory into stores during the holidays.