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Posted
Aug 14 2008, 08:46 AM
by
Todd Harrison
Rating:
On the topic of Wal-Mart's earnings report, it was an interesting apparel inflation number this morning. Here's why: China makes 25% of U.S. clothing, give or take. "The Chinese Consumer" is always assumed to be a great thing (as in, "they'll love our iPhones!").
Americans buy more clothes than iPhones. Chinese lifestyles going higher means that A) companies like Liz Claiborne and the private labels of discount chains like Wal-Mart and Target are starting to have to pay much more to produce clothing (or find a new impoverished nation to make the clothes) and B) the end prices will go higher for consumers (who, as we recall, are making less all the time).
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Posted
Aug 12 2008, 10:36 AM
by
Kim Peterson
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I've argued that Best Buy should spin off Geek Squad, its service that installs and repairs TVs, computers and other devices. It's not getting any easier to set up components, and an independent Geek Squad could partner with other retailers and turn this service thing into a real industry. Too late. Wal-Mart is working with Dell on a similar service, and Target has a clone up and running as well. That's enough for Citigroup analyst Kate McShane to slap a "hold" rating on Best Buy. Geek Squad was a competitive advantage for Best Buy, she writes, but now its share is threatened.
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Posted
Jun 23 2008, 05:41 AM
by
Douglas McIntyre
Filed under: Citigroup, Sprint, Wal-Mart, Intel, AMD, AT&T, Starbucks, Target, Sears, IBM, Circuit City, Sun Microsystems
Rating:
With the trading year almost half over and results from the first quarter out, 24/7 Wall Street has created the latest installment of its Ten Worst Managed Companies In America list. This is a companion piece to the "CEO of the Year" list and "Large Companies that May Disappear" series.
This analysis is based on: 1) one-year and five-year stock performance relative to the major indexes and other companies in the industry, 2) the company's position in its industry both now and over the last five years, 3) whether management made identifiable and critical decisions which hurt the company, 4) a change in the company's relative market strength compared to its competition, and 5) whether the company could have identified mistakes and changed course quickly enough to avoid a catastrophe.
Some readers will think it is not fair to include companies which have had a recent
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Posted
Mar 14 2008, 07:33 AM
by
Anthony Mirhaydari
Rating:
Target, everyone’s favorite cheap-chic retailer, has a big ticking time bomb on its balance sheet. After rapidly expanding its in-store credit card program over the past year, taking on questionable risks, the company is now desperately trying to offload the decaying $8.6 billion portfolio. According to news out today, J.P. Morgan has stepped up and is interested in acquiring roughly 50% of the Target Red card and Target Visa accounts.
No doubt this was spurred by activist investor William Ackman, who back in December snatched up a 10% share in the company through his Pershing Square hedge fund. Ackman pushed management hard to sell the cards business, but they replied that “market conditions” were delaying the decision. Well, unless I missed something, the “market conditions” have been getting a heck of a lot worse since then. So why sell now? With the big banks hoarding cash, margins being called, and blood on the Street, the terms couldn’t have gotten any sweeter.
Unfortunately, details aren’t forthcoming as the company’s press release describing the deal was rather vague. Portales Partners analyst William Ryan noted “the company created more confusion than it provided detailed information.” Everyone is still trying to figure out what’s going on and determine whether this is good news or not.
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Posted
Mar 06 2008, 01:39 PM
by
Robert Walberg
Rating:
Not skyrocketing energy prices, not the rising foreclosure rate, not even the slowing U.S. economy will stop GameStop from posting monster sales and earnings gains when the company reports its fiscal fourth quarter earnings in less than two weeks.
Bolstered by strong demand for video game hardware systems such as the Wii and Xbox 360, and continued strength in software sales, the world's leading video game retailer is expected to deliver Q4 earnings of $1.12 per share on revenue of $2.9 billion, -- well above last year's results of 82 cents and $2.3 billion.
Normally, a stock would rally into such news. But these aren't normal times. GameStop is down 32% from its December 2007 high, as investors flee any and all stocks tied to the consumer. However, unless you're a gamer or are related to one, you might not understand that GameStop actually stands to benefit competitively from a downturn. Unlike Target, Best Buy or Wal-Mart, GameStop sells used games and game consoles. In fact, sales of pre-owned merchandise now represent about 25% of total sales.
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Posted
Feb 13 2008, 02:17 PM
by
Robert Walberg
Rating:
To paraphrase Mark Twain, the report of the American consumers' death has been greatly exaggerated.
As evidenced by Wednesday's retail sales report for the month of January, which showed a gain of 0.3%, we're all out there spending like usual despite the high price of gasoline, the credit crunch and the fear of recession. Given that consumer spending accounts for more than 70% of GDP growth, the data were a strong sign that maybe, just maybe, all this recession talk is much ado about nothing.
Now I don't want to put too much stock into one piece of data, especially given that the month of January now benefits from all the gift cards given at the holidays. Spending that used to be recorded in December now gets registered in January (or later when the cards are used). Nevertheless, the data seem to suggest that even under the stress of current economic conditions, consumers will fork over their money for a new shirt, a pair of pants or yet another product from Apple.
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Posted
Jan 14 2008, 11:16 AM
by
Robert Walberg
Rating:
The "softer side of Sears" no longer refers to its apparel merchandise, but to its sales and earnings history.
Citing difficult economic conditions and growing competition, the company warned that fourth-quarter sales and earnings would fall well shy of Wall Street estimates. Management now expects quarterly earnings of between $2.59 to $3.48 per share, a whopping 20% to 40% below the Street's consensus estimate. The stock responded by falling to its lowest level in three years.
It's a bit surprising to me that so many investors were surprised by the company's dismal quarter -- especially given that Sears issued an even bigger warning last quarter. The company has also had a history of underperforming expectations over the past several years. Let's face it, the Lampert experiment has been a total bust. You can prop up numbers only so long by cutting costs and repurchasing shares -- at some point you have to improve the core business and Lampert, chairman and architect of the merger with Kmart, never had the retailing experience necessary to get the job done.
The idea of merging two struggling retailers in hopes of creating a thriving one was doomed from the start -- especially since management was more concerned with pleasing Wall Street analysts than store customers. The folks on Wall Street might not be the brightest bunch in the world, but even they are beginning to realize that Lampert's financial razzle dazzle hasn't done anything to make Sears or Kmart more relevant to shoppers.
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