* Australia's Jan exports dip 6.5 percent from Dec - Eikon
* Qatar exports rise back to overtake Australia
* Chevron's Gorgon train 3 remains shut - sources
* Asian demand tepid due to mild winter - sources
By Jessica Jaganathan
SINGAPORE,ffxiv it takes two hairstyle Feb 1 (Reuters) - Australia's liquefied natural gas (LNG) exports fell in January due to lower production from an LNG plant and a bout of hot weather, pushing exports below rival Qatar, according to export data in Refinitiv Eikon.
Monthly exports from Australia, which overtook Qatar as the world's top LNG exporter last November, dipped 6.5 percent from December to about 6.26 million tonnes of the super chilled fuel.
Qatar, meanwhile, ramped up exports in January by about 4.3 percent from the previous month to about 6.8 million tonnes, the data showed.
Australia's exports have grown rapidly following the start-up of new projects.
However, one of three production trains at Chevron Corp's Gorgon LNG project in Western Australia remains shut after it was halted in mid-January to address a mechanical issue, industry sources said on Friday.
A Chevron spokesman declined to comment.
The Gorgon train shutdown was the main reason for the drop in Australian LNG exports, with east coast LNG plants around Gladstone performing well, said Wood Mackenzie analyst Nicholas Browne.
"Under extremely hot temperatures the efficiency of liquefaction plants will be impacted somewhat," he added.
Australia endured its hottest month on record in January, with the west coast facing hot, dry weather over the next three months.
Asian spot LNG prices (LNG-AS) have also fallen to a nine-month low on subdued demand in North Asia due to a warmer than winter season.
"With (Asian spot prices) in the $7s, there is less incentive to push the trains," an Australia-based industry source said, declining to be named as he was not authorised to speak with media.
Further out, Australia is expected to regain its position as world's largest LNG supplier by capacity as output is ramped up from new projects such as Ichthys, run by Japan's Inpex Corp , and Royal Dutch Shell's Prelude, said James Taverner of energy consultancy IHS Markit.
However, export growth will depend on the availability of feedstock from east coast coal seam gas wells, he added. (Reporting by Jessica Jaganathan; editing by Richard Pullin)
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As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
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