The year is 1886, nearly twenty years have gone by since the culmination of the American Civil War, and America is 38 states strong. The entire population of the country was 58 million people, with nearly 70% of these people residing in rural areas. Enter our protagonist, Richard Sears, an agent of the Minneapolis railway station in North Redwood, Minnesota. Sears’ position as station agent was not full-time so, during his time off from work, he sold lumber and coal as a side hustle.
One day, he received a shipment of unwanted watches from a jeweler he knew, and Sears immediately purchased the watches with what little money he had. He began selling the watches to the other station agents along the railway system and made a solid profit from doing so. Months later, Sears founded the R.W. Sears Watch Company in Minneapolis. As Sears new business began to grow, he decided to relocate to Chicago in hopes of attracting a larger customer base.
Farmers in rural America during the late 19th century were struggling to stay afloat. They would sell their crops to buy tools and other goods from local retailers, but the markup from wholesale to retail was nearly 100%, so Farmers grabbed their already near-by pitchforks and protested these prices. Sears, and his new partner Alvah. C Roebuck, saw this as an opportunity because the volume of product they were purchasing for railroad station customers allowed them to offer wholesale prices to the angry agricultural community. In1895, Sears, Roebuck, and Co. sent a 532-page mail-order catalog full of wholesale items like shoes, women’s clothing, wagons, fishing supplies, furniture, plus their watches and jewelry, to the rural farmworkers of the country.
Fast-forward to the mid-20th century and the Sears catalog is selling it all and making a killing doing so. In the 1920’s, Robert E. Wood, the new president of the company, recognized that people living in the city had very little interest in shopping by mail-order, so the company opened their first brick-and-mortar shop in 1925 in Chicago. The success of the retail store spread like wild-fire and, within the year, seven more Sears stores popped up. In 1932, Sears created the retail experience we’ve come to know as “departments.”
Sears could not be stopped. The department store chain entered a realm that few companies today exist in. Sears was a cultural icon for the American retail experience. Sears stores appealed to everyone from the working man in search of Craftsman brand tools to a middle-America family looking to replace their broken dishwasher with a Kenmore-brand appliance. Everyone in America knew that if you needed a great set of tools or a household appliance built to last, you chose Sears brands like Craftsman and Kenmore.
“Sears was a cultural icon for the American retail experience.”
Sears was the first mass-market retail store, and they were damn good at supplying Americans with what they needed. However, the nature of innovation means that ideas can always be improved upon and, in the case of Sears, these improvements would ultimately lead to their decline.
Companies like Walmart and Target noticed why Sears had been so successful for all these years and sought to up the ante. Both companies appealed to more fashion-savvy consumers who were less interested in the quality and functionality of brands like Craftsman and Kenmore, and more interested in their products having a more design-oriented aesthetic. The success of Target, Walmart, K-Mart, and other large department retail stores, coupled with the invention of the internet and subsequent founding of Amazon, Inc. were all debilitating factors for Sears.
It is with great sadness that Sears Holding Corp.(SHLD) on Wednesday, hired M-III Partners LLC to prepare to file for bankruptcy, as they face a massive debt payment deadline.
Sears (SHLD)’s stock dove 30.08% to $0.40 per share, as of Wednesday.
The Company reportedly has $134 million in debt due after 125 years in business. Analysts are suggesting that the filing has not been submitted and could still be avoided if Sears’ CEO, Eddie Lampert, pours his own money into the company as he has done on several occasions. Lampert, a hedge fund manager for ESL Investments, owns 3`% of the company’s outstanding shares, according to FactSet, as well as owning Kmart from a 2004 acquisition. Though Lampert merged the brands in hopes of reviving the dying department store industry, Sears could not be saved.
I spoke with my mother this morning, as we always do, about headlines in the news. When we spoke about Sears, she was very troubled. “I remember growing up with a Kenmore dishwasher always in the house,” she said. “Sears had a fleet of repairmen who would, upon a customer’s request, make house calls and fix the broken appliance.” The way she reminisced about Sears made it sound like she was speaking on an old friend whose health was in bad shape.
People don’t speak about brands today, like my mother and millions of Americans recount their experience shopping and ordering from Sears. In a time before the instant gratification of internet shopping, when patience was truly a virtue, Sears was there to meet the demand of a nation’s people, no matter their socioeconomic standing.
Nothing is certain but death and taxes, I’m hoping Sears does not fall prey to both.
Target (TGT) Stock Price Hits All-Time High: Time To Sell Or Hold?
In recent years Target Corporation (TGT Stock Report ) stock has attracted divided opinion from both bears and bulls. Bulls have held the sentiment size of Target and digital transformation will help Target maintain a competitive edge in the market. Bears, on the other hand, had warned that the company will struggle and play catch up to Walmart Inc. (WMT Stock Report ) and Amazon.com Inc. (AMZN Stock Report )
Robust Growth In Q2
Recently the company reported a better than expected second quarter and it’s stock surged to an all-time high of $100 per share. The company bettered revenue estimates by $100 million after reporting a 4% increase in revenue to $18.4 billion. Equally adjusted earnings rose by 24% to around $1.82 per share beating expectations by $0.20.
In the second quarter Target’s comparable-store sales topped expectations of 3% growth by registering 3.4% in a segment that has been tough for most retailers. In the third quarter, the company expects to keep the momentum and maintain the 3.4% comp growth. The growth is attributed to bigger purchases per shopper, increasing traffic at the company’s stores, and steady demand for grocery and home beauty products.
Digital Growth Increase By 34%
The company’s digital comp received a 34% boost in the quarter which was 1.8% of total comps growth. The growth is attributed to the growing popularity if same-day fulfillment services such as Shipt, Drive Up and Order Pick Up which have widened its moat against other retailers. Its massive network of retail stores has been vital as they act as fulfillment centers.
Although digital growth weighs down on margins of retailers, Target nonetheless managed to report expanded gross and operating margins sequentially and annually in the second quarter. This is a result of new strategies to optimize prices, costs, and promotions as well as an enhanced mix of products on shelves.
Target has predicted that its steady sales, string margins, and buybacks will enhance its adjusted EPS to increase by 5% in the first half and by 12% for the full year. The company expects positive sales and earnings growth in 2019.
Walmart (WMT) Stock Price Jumps On Latest Earnings Beat
BENTONVILLE, Ark.–(BUSINESS WIRE)–Walmart Inc. (NYSE: WMT):
- Total revenue was $130.4 billion, an increase of $2.3 billion, or 1.8%. Excluding currency, total revenue was $131.7 billion, an increase of $3.7 billion, or 2.9%.
- Walmart U.S. comp sales increased on a two-year stacked basis by 7.3%, which is the strongest growth in more than 10 years. Segment operating income increased 4%, marking the fifth consecutive quarter of growth.
- Walmart U.S. eCommerce sales growth of 37% includes strong growth in online grocery.
- Sam’s Club comp sales increased 1.2%, and eCommerce sales grew 35%. Reduced tobacco sales negatively affected comp sales by 300 basis points.
- Net sales at Walmart International were $29.1 billion, a decrease of 1.1%. Excluding currency, net sales were $30.4 billion, an increase of 3.3%. Strength in Walmex and China were offset by softness in the U.K. and Canada.
- Operating income declined 2.9%, or 2.4% in constant currency, which was better than planned with strong results in the U.S. businesses. As expected, the inclusion of Flipkart this quarter negatively affected profit results.
- Adjusted EPS excludes an unrealized loss, net of tax, of $0.01 on the company’s equity investment in JD.com for the second quarter of FY20.
- FY20 adjusted EPS is now expected to range between a slight decrease and a slight increase compared with FY19 adjusted EPS.
- Walmart U.S. surpassed 1,100 grocery delivery locations and has more than 2,700 pickup locations.
- The company’s NextDay delivery service from Walmart.com now covers about 75% of the U.S. population.
Walmart Inc. (NYSE: WMT) helps people around the world save money and live better – anytime and anywhere – in retail stores, online, and through their mobile devices. Each week, over 275 million customers and members visit our more than 11,300 stores under 58 banners in 27 countries and eCommerce websites. With fiscal year 2019 revenue of $514.4 billion, Walmart employs over 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity.
Facebook (FB)’s LIBRA Sees Warning Bells Even Before Launch
Libra – which is the name of Facebook (FB)’s upcoming cryptocurrency- has already managed to cause quite a stir among bankers and politicians across the world. Along with the present difficulties with the regulations and the consequences it would bring, the currency is now also dealing with opposition and cautions from international communities. Needless to say that this move has also boosted tech stocks related to cryptocurrency as well
Policymakers Worldwide Speak Against The Crypto-Currency
France was one of the many countries to resist making Libra a sovereign currency. Bruno Le Maire, the Finance Minister of the nation protested vehemently against Libra, claiming that the idea of a private company becoming a state doesn’t sit well. The country further is levying a new tax on the technology giants like Amazon pay, Google, etc which has caused some controversy. Even Jerome Powell, the Chairman of Federal Reserve disputed against the cryptocurrency being anxious about privacy and consumer protection.
Mark Carney, the Governor of Bank of England, also spoke against Libra claiming that it could either succeed or fail, but it would have no scope for improvement and development once it is launched. If successful, it would definitely prove to be a great asset; however, there can be no guarantee that it would be rock solid from the very beginning without which it is bound to fail. These types of scope around currencies demand strict and definite vigorous regulations to be set. The hurdles seem to be big enough to delay the launch of Libra into the market- which has been scheduled for next year.
Tech Giants Ban Together For Crypto?
Uber, Mastercard, Visa, and Facebook came together as an association to oversee the launch of Libra. This is a cryptocurrency different from bitcoin which is aimed to have a stable value without any volatility. It would help the World Bank-claimed 1.7 billion adults to have access to financial institutions and banking services. At the same time, it could help Facebook make big money through its app wallet -Calibra.
Facebook’s executive David Marcus maintained that the company knows of the risks that Libra might pose if proved unsuccessful. Therefore the company requested the help of bankers, lawmakers, and regulators so as to do away with issues of money laundering, terrorist financing, etc.
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