Nomura Securities on Retailers: Earnings Transcripts - Buzz Words Like Customer, Employee and Shareholder

Nomura Securities on Retailers: Earnings Transcripts - Buzz Words Like Customer, Employee and Shareholder

Analyst, Paul Lejuez, said, "We believe that there is much to be learned from earnings conference calls. Of course, we learn about the most recent quarterly performance, but we also find clues about where management is focused. Toward that end, we searched through the earnings conference calls of all of our companies for the four quarters of F11 and counted mentions of the words “customer,” “employee” and “shareholder.”"

For Softline/Dept Stores:

“Customer” – JCPenney (NYSE: JCP) and Talbots (NYSE: TLB) used the word most frequently, but we believe they are more talk than action. JWN ranked high on the list, and we believe that this appropriately reflects JWN’s customer centricity.

“Employee” – Fewer than half of the companies in our coverage group mentioned their employees.

“Shareholder” – American Eagle (NYSE: AEO), Gap (NYSE: GPS) and Ann Taylor (NYSE: ANN) talked most about shareholders, and we believe this makes sense. For AEO, the focus on shareholders accelerated when Robert Hanson became CEO. GPS has returned more than $5bn in cash to shareholders in the past four years.

For Hardlines:

“Customer” – The top 3 “mentioners” are companies replicating strategies forged by industry leaders. Lowe's (NYSE: LOW), Family Dollar (NYSE: FDO) and Advanced Auto (NYSE: AAP) all “out mentioned” Home Depot (NYSE: HD), Dollar General (NYSE: DG) and AutoZone (NYSE: AZO). Companies that, in our view, understand the customer best (e.g., Bed Bath & Beyond (Nasdaq: BBBY)) ironically hit the bottom of the list. Perhaps actions speak louder than words.

“Employee” – In many cases, employee development is an important part of better servicing the customer. It is perhaps no surprise, then, that AAP tops the list of “employee” mentions, even going out of its way to highlight an exemplary team member at the beginning of each call.

“Shareholder” – Here, we were surprised that BBBY came in second only to AAP, although it does not typically mention investors. AZO, on the other hand, neared the bottom of the list, despite its group-high ROIC and an aggressive program for returning capital to shareholders.

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