Wal-Mart (NYSE: WMT) has never been union-friendly, but China has a lot of leverage with the big retailer. It has pushed a union into Wal-Mart, and now organized labor wants some changes.
According to the FT, all China Federation of Trade Unions has been able to get 8% wage increases in two regions for this year and next. Inflation in China is currently running just under 10%.
The news is not especially good for Wal-Mart, which prides itself on controlling employment costs and running lean operations. The settlement is almost certain to spread to all Wal-Mart locations in the big Asian country.
Wal-Mart is beginning to pay the price for wanting to be in China's huge and fast-growing economy. The central government controls unions, giving them extraordinary power.
Wal-Mart will not be not the last U.S. company doing business on the mainland to come up against wage issues. China will make sure its citizens are taken care of. It could hardly be called capitalism.
Douglas A. McIntyre is an editor at 247wallst.com.
Not too long ago, I wrote about Wal-Mart Stores, Inc. (NYSE: WMT) and the entrance of the world's largest retailer more heavily into locally-grown fresh produce. As a way of differentiating itself, Wal-Mart is really on the right track here. Partnering with local merchants near each community it serves could help repair the rift between small-town merchants and the retailing behemoth that has steadily grown for the last two decades.
The retailer may finally be heeding the advice of many critics. That is, when it does good, it needs to actively market and promote that effort as much as possible. Last week, one of the retailer's locations in Manteca, California along with local growers, put the positive word out about how Wal-Mart is joining with the local merchants to ensure customers can buy produce with confidence. This is great -- but Wal-Mart needs these "workshops" at every location where it has a significant and growing relationship with local food suppliers.
Tiffany Moffatt, Wal-Mart's corporate affairs director for the western U.S. region, stated that "In the (West Sacramento, Calif.) store, we carry more than 120 locally grown products .. our partnerships with local farmers have grown by 50% over the last two years." This is great PR, and Wal-Mart needs even more of it moving forward. When you have local food suppliers describing Wal-Mart as a "a demanding but loyal customer," then one has to guess that Wal-Mart is indeed sowing the seeds to forming new relationships with communities outside its rather boring big-box store presence. Alerting the buying public is the next phase in Wal-Mart's efforts -- and it can't happen soon enough.
The wholesaler said that analyst estimates of a $1 per share profit would not be met, and then quickly talked about how rising energy prices would be to blame. Costco kept its prices steady even as its own costs have risen. It also experienced diminished profit in gasoline sales. The good news is that Costco's same-store sales have not trended downward recently. The company is still making a healthy profit, but the question is why it is holding many prices steady even as costs and transportation backend prices rise?
One answer is Wal-Mart Stores, Inc. (NYSE: WMT) and its Sam's Club operations. While in a Sam's Club just this past weekend to check out prices, I was amazed to see that once inside the store, any semblance to a credit, mortgage and credit crisis was gone. Prices were lower than ever on many items, and Wal-Mart faces the same kind of financial cost pressures as its competitors. It can afford to keep prices lower even through tough times, though. Costco has to keep up, and as a result, its profits will take a hit.
TheStreet.com's Jim Cramer says these stocks will be killed today, and attentive investors can get them on the cheap.
Oh my, Costco (NASDAQ: COST) (Cramer's Take). I didn't expect that one. That's the best -- it's a shocker. I can't recall how many years it has been since I have seen the words "well below" and "Costco" together.
You can see how it happened: Costco held out. They didn't raise prices. Almost everyone else is raising prices and many are losing customers -- look at Safeway (NYSE: SWY) (Cramer's Take) or Supervalu (NYSE: SVU) (Cramer's Take). But two held out: Costco and Wal-Mart (NYSE: WMT) (Cramer's Take).
When you lump in the ridiculous price hikes that Costco had to take in its gasoline business, you see that it simply wasn't making much money selling anything.
The experiment involves 15 stores in the Dallas, Texas region. These "Solution Stations by Dell" will focus on home theater installations, PC repair, and wireless network setup assistance. It's hard to see how in-store kiosks can assist customers who then have to take all that equipment home, but for a Dell brand builder alone, the partnership is quite unique.
I'm a bit puzzled how Dell will be able to assist with home theater questions and installations, but that's besides the point. If Wal-Mart really intends to compete with the in-store technical support concept, it needs to attack Best Buy Co., Inc.'s (NYSE: BBY) Geek Squad model and really add some value to that consumer experience. Consumer electronics are more confusing than ever for most U.S. consumers, and having some properly seasoned experts in many Wal-Mart stores to help with all those questions would be of enormous benefit.
Not only would Dell's image be polished if this experiment is successful and the Solution Station kiosk concept goes into more Wal-Mart store locations, but the retailer has a real chance to keep it on top of world in terms of consumer electronics purchases. Circuit City, Inc.'s (NYSE: CC) Firedog concept has been left behind as that retailer continues swirling down the drain, so Wal-Mart and Best Buy may be the only ones that could give technical support on a national stage in all locations. Best Buy, though, is already positioned well ahead of Wal-Mart here. It's Wal-Mart's game to lose.
The Associated Press reports that a "Depression Era" mentality is taking hold among consumers. This matters to the overall economy since 70% of Gross Domestic Product (GDP) growth depends on consumer spending. Maybe this is good news because it will make people care more about spiritual matters, and less about material ones.
AP bolsters its consumer mentality shift with excerpts from a Nielsen survey that interviewed 50,000 consumers by e-mail during the first week of June. The survey found that
63% of consumers are cutting spending due to rising gas prices, up 18 percentage points from a year ago;
78% of consumers are combining shopping trips;
52% are eating out less often;
Consumers are cutting more coupons;
They do more of their shopping at super centers; and
What would you do if you were fired from your job as a top advertising executive at Wal-Mart (NYSE: WMT) after a torrid love affair with a subordinate, and then read about the ensuing drama and steamy emails in The Wall Street Journal?
Head to reality television, of course! B-list reality shows have given disgraced former stars like Jose Canseco (The Surreal Life) another 15 minutes of fame, and Julie Roehm wants in on the act too: Fortunereports that Ms. Roehm will be a judge on Jingles, an upcoming CBS show where contestants compete to write jingles for TV commercials. I can't wait to see that one. What's next? Who Wants to be a Roadkill Collector? I'm going to go out on a limb and predict that Jingles will last one season.
She's still living in Bentonville because she hasn't been able to sell her house.
I give some props to Ms. Roehm for capitalizing on her fame, but I think she has to be careful about not marginalizing herself by morphing into a d-list celebrity on the strength of her relationship with a coworker. But she's also running her own marketing consulting firm, so maybe she's keeping it balanced.
Welcome to the 68th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
This week, I'll be taking a look at the most recent financial results from Wal-Mart Stores Inc. (NYSE: WMT). The retailer continues to state the the federal tax economic stimulus checks being used by customers in its stores have buoyed it results.
Overall, this is good news. When the tax stimulus checks run out, though, will Wal-Mart continue to post such great sales figures like it did in June 2008? Remember June 2007?
Last summer, Wal-Mart also easily defeated analyst calls and toasted the expected same-store sales growth. Is seasonality more a part of the picture than tax checks? How about gas pricing stamping out multiple shopping trips by many families? All of this contributes, I would posit.
Being a shareholder in Trans World Entertainment (NASDAQ: TWMC) hasn't been a lot of fun for the past decade or so. The company is the leader in mall-based music sales but, as you can imagine, iTunes and Wal-Mart (NYSE: WMT) have made that market position into a Pyrrhic victory.
Founder and CEO Robert Higgins withdrew his $5-per share takeover offer back in May, citing the poor credit market, and a $7-per share offer from a fund calling itself Sherwood Investments mysteriously evaporated. Now the stock is down in the $2.50 per share range and, with no going-private deals on the horizon, the company is making a last ditch effort to execute some kind of turnaround that might restore some modicum of shareholder value.
The company is in the process of rebranding all of its stores under the f.y.e. label, and is also embarking on an ambitious ad campaign featuring R&B star Ne-Yo and WWE star Batista in television commercials. The Business Review reports:
In one 30-second commercial, Batista and another WWE wrestler, MVP, drop-kick and body-slam each other in what seems like an impromptu fight inside an f.y.e. mall store. Bass-thumping rock music blares as fans cheer from outside the roll-down security gate.
In the other spot, teenage girls at an f.y.e. realize the chart-topping singer Ne-Yo is wearing headphones in the store, singing aloud to himself a cut from his yet-be-released album, "Year of the Gentleman."
The incredibly rapid fall of discount clothier Steve & Barry's continues. Newsday is reporting that the company told the bankruptcy court that it has no available cash or financing, and that it needs proceedings to be streamlined so it can sell its assets by July 31st. Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail and investment banking firm, told Newsday that the move is very unusual, and that it speaks to the tightness of the credit markets and the terrible state of Steve and Barry's finances.
The asset sale will be interesting -- many of the stores will be closed and it's possible that all of them will go. But Steve & Barry's model of ultra low-priced young adult-oriented apparel has value, as do its licensing deals with Stephon Marbury, Ben Wallace, Venus Williams, Bubba Watson, Amanda Bynes, Sarah Jessica Parker, etc. Wal-Mart Stores, Inc. (NYSE: WMT), Sears Holding Corporation (NYSE: SHLD), and every other retailer looking for inroads into the college demographic should be taking a look at this one. Acquisitions rarely create value, but buying this one off the scrapheap would likely entail very little risk.
Some of the country's largest retail chains had good June sales, benefitting from consumers looking for a place to spend their tax rebates, but this was not the case for higher-priced department stores. Retailers offering big discounts were among the privileges ones as consumers chose to stay away from high prices.
Consumers spent on the basics, looking for bargains, boosting sales at some companies like Wal-Mart (NYSE: WMT), but resulting in losses for the others like Nordstrom (NYSE: JWN) and American Eagle (NYSE: AEO). This confirmed that retailers will face further weak demand even during the back-to-school shopping season, and more deep discounts will be needed.
As June is considered a key month for sales, merchants were hoping for a "stimulus" effect from tax rebates, despite worries tied to soaring gasoline and food costs. However, only companies offering cheaper gas like Wal-Mart, Costco (NASDAQ: COST) and BJ's Wholesale Club (NYSE: BJ) saw their dreams accomplished. Thus, Wal-Mart came with June sales growth of 4.3%, Costco reported a 9% increase in June same-store sales, while BJ's Wholesale saw a growth of 16.5%.
Martha Stewart Living Omnimedia's (NYSE: MSO) recent announcement that its crafts line would be debuting in Wal-Mart Stores, Inc. (NYSE: WMT) stores nationally sent MSO up more than 5% at first, but the stock has since given all that back and then some: the stock is down nearly 10% from where it was before the announcement. The company needs to replace the guaranteed licensing fees from K-Mart that are in the process of phasing out, and revenue from that business is likely to plummet when the guarantee declines from $65 million this year to around $20 million next year.
But Wal-Mart? Haven't their been entire books written on how tough it is to make money selling to Wal-Mart? It's easy for me to understand Wall Street's skepticism about this deal, and there have been a lot of uninspiring developments for the company in recent months: first the company paid $45 million for the Emeril empire, what was supposed to be company transforming acquisition. Then a few months later, CEO Susan Lyne resigned abruptly -- which doesn't speak well for the new strategy.
Maybe the Wal-Mart deal will work out splendidly -- but the company appears to be all over the place.
Wal-Mart Stores, Inc. (NYSE: WMT) continued its string of excellent results in 2008 by announcing a 5.8% same-store sales increase in June sales this morning. Wal-Mart has turned in some impressive same-store sales figures in recent months on its core strength -- the marketing and selling "low prices" to its customers.
Save Money, Live Better is not just a marketing slogan for the retail giant, but a way of life it's trying to help provide to customers. After all, the more money you save on everyday items and groceries, the more you can afford that gas for the short vacation you've planned.
To achieve Wal-Mart's command over taking more customer money in a tough economy, the retailer announced that the U.S. federal tax stimulus checks were mostly responsible for the June sales upswing. In May, Wal-Mart also indicated that those checks were helping lift its sales -- so it's not the first time. Until those checks have all been distributed, it will most likely be a major beneficiary.
Following the strong sales, Wal-Mart increased its guidance for second-quarter results that ended June 30. Second-quarter earnings per share results are now expected be between $0.82 and $0.84.
An article over at MSNBC.com talks about Wal-Mart (NYSE: WMT) and its potential to thrive during the economic downturn. It got me thinking that maybe I should dump some of my underperforming financial stocks and invest in the controversial retailer.
Indeed, the article's thesis is almost undeniable. Whether you like Wal-Mart or not, it has an ironclad reputation for having low prices. Does it actually have the lowest prices around all the time? That I couldn't tell you. But a lot of items are pretty reasonably priced in any given store, and more importantly, people at least perceive that they are getting great deals when they shop there. In fact, in the latest Wal-Mart Weekly, Brian White analyzes the impact of Wal-Mart's initiative to purchase locally-grown produce to reduce the cost of doing business. This is a competitive move designed to help the company and its shoppers weather the financial storms pounding the markets and wreaking havoc on consumer-confidence levels. Wal-Mart is all about keeping things cheap, and this is going to resonate with the consumer so long as the bear market remains and the negative-wealth effect casts a pall over the nation.
Okay, that's the thesis in a nutshell. But what about the stock? How has it been performing? If you take a look at the AOL Finance snapshot for Wal-Mart, you'll see that the stock has performed rather well for most timeframes. It's dipped 3% in the last month, but it's only a few bucks away from its 52-week high (unlike my financial stocks, which seem to be making new 52-week-lows a daily habit!). That shows strength in my opinion. Compare Wal-Mart to competitors Target (NYSE: TGT) and Sears (NASDAQ: SHLD) and you'll see that the stock is doing reasonably well.
Not too long ago, I wrote about 
With 
Welcome to the 68th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
Being a shareholder in 
The incredibly rapid fall of discount clothier Steve & Barry's continues.
Some of the country's largest retail chains had good June sales, benefitting from consumers looking for a place to spend their tax rebates, but this was not the case for higher-priced department stores. Retailers offering big discounts were among the privileges ones as consumers chose to stay away from high prices.
An article over at 
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Cramer on BloggingStocks: Banks fail to raise money when they could 
