...J.C. Penney’s Real Problem: The Shrinking Middle Class * Rita McGrath April 12, 2013 Ron Johnson’s office seat has barely cooled off following his departure as business observers everywhere dissect what went so dreadfully wrong at J.C. Penney. The former Apple executive was too Silicon Valley for the Plano, Texas, retailer. He was arrogant. He didn’t test his ideas, maintaining the Apple mantra that customers don’t know what they want until you show it to them. He approved marketing campaigns that told loyal Penney’s shoppers that “you deserve to look better,” basically telling them that they looked less than glamorous wearing the brand they had trusted and been comfortable with for years. He hoarded information so that individual store merchandisers didn’t know how various lines were performing. He mocked J.C. Penney’s ways of doing things. He abandoned the discounting customers had come to expect from retailers. And he, and most of the team he recruited, were commuter leaders, jetting back to California after cramming in marathon work sessions at headquarters. These factors certainly couldn’t have helped. I think, however, there’s one major reason behind J.C. Penney’s sudden swoon that not enough commentators are picking up on. There’s one big reason JCP would never be “Bloomingdale’s for the mass market,” as Johnson wanted it to be, and that’s because the mass market is gone. Because the middle class is gone, or at least rapidly going. This reflects a troubling development...
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...Industry Surveys Retailing: General Jason Asaeda, Department & General Merchandise Stores Equity Analyst JUNE 2013 Current Environment ............................................................................................ 1 Industry Profile .................................................................................................... 12 Industry Trends ................................................................................................... 13 How the Industry Operates ............................................................................... 23 Key Industry Ratios and Statistics ................................................................... 29 How to Analyze a Retail Company ................................................................... 31 Glossary ................................................................................................................ 36 Industry References ........................................................................................... 37 Comparative Company Analysis ...................................................................... 38 This issue updates the one dated November 2012. The next update of this Survey is scheduled for December 2013. CONTACTS: INQUIRIES & CLIENT RELATIONS 800.852.1641 clientrelations@ standardandpoors.com SALES 877.219.1247 wealth@spcapitaliq.com MEDIA Marc Eiger 212.438.1280 marc.eiger@spcapitaliq.com S&P CAPITAL IQ 55 Water Street New York, NY 10041 ...
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...40 References 46 Appendix 49 List of Illustrations Figures Page Figure 1.0: Sears Brands 5 Figure 2.0: Respondent’s Gender 21 Figure 3.0: Past Six Months Mall Visits 22 Figure 4.0: Clothing Stores 23 Figure 5.0: Percent of Respondents that Purchased Fitness Equipment in the Past Two Years 24 Figure 6.0: Fitness Equipment Purchase Location 24 Figure 7.0: Most Popular Sears Brands 28 Figure 8.0: Incentives to Increase the Probability of Entering a Store 30 Figure 9.0: Social Media 31 Figure 10.0: Facebook Presence 32 Figure 11.0: Gender vs. Mall Visits 35 Tables Page Table 1.0: Respondent’s Age 22 Table 2.0: The Appeal of the Kardashian Kollection to Females 23 Table 3.0: Perception of Sears 25 Table 4.0: Cause Marketing Practices 29 Table 5.0: Mall Visits vs. Store Location 33 Table 6.0: Price vs. Trendiness 34 Table 7.0: The Relationship between Perception of Service and Age 36 Executive Summary Objectives This study was an investigation of college students’ perceptions of Sears Department Stores. These included specific aspects that improved consumers perceptions of Sears, and what didn’t. These were also used to...
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...Analysis of the Target Corporation Report by Valanium Analysts: Kaleb Adams, Liza Debus, Rebecca Fitzgerald, Ken Khouri, Chuck Pearlman Investment Recommendation: MARKET PERFORMER TGT – NYSE (11/30/01) 52 Week Range 2000 Revenue Market Capitalization Shares Outstanding Dividend Yield Avg. Daily Trading Volume Book Value per Share (mrq) Return on Equity (ttm) Return on Assets (ttm) Est. 5-Yr Growth of EPS Industry: Retail $36,903M $33,800M 901.7M 0.59% 3.67M $7.76 19.28% 6.26% 15% EPS Forecast EPS Ratios P/E Forward PEG M/B 1999A $1.28 2000A $1.40 TGT 27.01 1.80 4.84 2001E $1.48 2002E $1.69 12/03/01 Competitor Average 13.28 1.96 4.02 $37.54 $57.46 $43.52 $31.27 $11.03 $16.92 $43.63 12 mo 26 % -14% 24 mo -8% 18% Valuation Predictions Actual Current Price Forward P/E Valuation Forward PEG Valuation M/B Valuation EBO (Abnormal Earnings) Valuation DCF Valuation P/S Valuation Performance of TGT Trailing TGT Relative to S&P500 6 mo -0.1% -10% • • • • • • Target operates in the discount retail industry in its Target stores but also attracts fashion minded customers through its Marshall Field’s and Mervyn’s stores. Target uses it Super Target model as its growth engine and funds this with cash flows from its Mervyn’s operations. Target has also recently partnered with Amazon to develop its online sales and fulfillment. The overall retail industry is growing at 3.8% and is competitive. Those players who can aggressively manage costs are the market leaders. Indicators suggest...
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...JWCL165_c14_674-725.qxd 8/16/09 7:46 AM Page 674 14 Financial Statement Analysis Chapter STUDY OBJECTIVES After studying this chapter, you should be able to: 1 Discuss the need for comparative analysis. 2 Identify the tools of financial statement analysis. 3 Explain and apply horizontal analysis. 4 Describe and apply vertical analysis. 5 Identify and compute ratios used in analyzing a firm’s liquidity, profitability, and solvency. 6 Understand the concept of earning power, and how irregular items are presented. 7 Understand the concept of quality of earnings. The Navigator ✓ The Navigator Scan Study Objectives ■ Read Feature Story ■ Read Preview ■ Read text and answer p. 681 ■ p. 694 ■ Work Comprehensive Do it! p. 699 Do it! ■ p. 701 p. 703 ■ ■ Review Summary of Study Objectives ■ Answer Self-Study Questions ■ Complete Assignments ■ ✓ Feature Story IT PAYS TO BE PATIENT In 2008 Forbes magazine listed Warren Buffett as the richest person in the world. His estimated wealth was $62 billion, give or take a few million. How much is $62 billion? If you invested $62 billion in an investment earning just 4%, you could spend $6.8 million per day—every day—forever. How did Mr. Buffett amass this wealth? Through careful investing. You think you might want to follow Buffett’s example and transform your humble nest-egg into a mountain of cash. His techniques have been...
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...& Promotion 12 Trading Area & Site Selection 13 Store Layout & Design 14 Retail Strategic Plan Controllable & Uncontrollable Variables 18 Global Retailing 20 Positioning & Differentiation 20 Strategic Direction 21 Executive Summary 22 Appendices & References 24 In 1902 founder and one time CEO James Cash Penney opened a small dry goods store in Kemmerer, Wyoming named The Golden Rule. 110 years later this once small business manager grew a company we now know as JCPenney, which has flourished into a nationwide retail department store with over 1100 store locations throughout the United States. Throughout the years JCPenney has changed an adapted to the retail market. It wasn’t till the suburban boom of the 1950’s or the post WW2 era that JCPenney became relevant as the department store we know it as today. It was at this time that JCPenney began to run national advertisements and adopted its discounted goods strategy. During these years James Cash Penney held on to his humble beginnings and incorporated his standing on customer service and daily operations. The key...
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... Page 6-9 Private Label and Store Layout Page 9-11 Conclusion Page-11 Appendix Page 12 References and Bibliography Page 13-14 Wal-Mart- Origin Wal-Mart was the product of Sam Walton, a businessman from Arkansas. In the late 1940s, in USA, a retailer who was successful in obtaining a sufficient discount for his products from the whole-seller, used to sell the products at full price to the customers and thus enjoyed a substantial amount of profit. Sam Walton during that time was working as a retailer at a J.C. Penney store in Des Moines, Iowa.(Walton & Huey, 1993) Incidentally while working there, he was introduced to Butler Brothers, a big retailer who had chains of variety stores known as Ben Franklin and Sam was offered a store in Arkansas. There Sam excelled in operating the stores and soon huge amount of sales were generated which far exceeded the expectations. But during the lease renewal of the store, there were some problems and as a result an agreement could not be reached. This drove Sam in opening a new Ben Franklin franchise in Bentonville, Arkansas and called it “Walton’s Five and Dime”. The prices...
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... Page 6-9 Private Label and Store Layout Page 9-11 Conclusion Page-11 Appendix Page 12 References and Bibliography Page 13-14 Wal-Mart- Origin Wal-Mart was the product of Sam Walton, a businessman from Arkansas. In the late 1940s, in USA, a retailer who was successful in obtaining a sufficient discount for his products from the whole-seller, used to sell the products at full price to the customers and thus enjoyed a substantial amount of profit. Sam Walton during that time was working as a retailer at a J.C. Penney store in Des Moines, Iowa.(Walton & Huey, 1993) Incidentally while working there, he was introduced to Butler Brothers, a big retailer who had chains of variety stores known as Ben Franklin and Sam was offered a store in Arkansas. There Sam excelled in operating the stores and soon huge amount of sales were generated which far exceeded the expectations. But during the lease renewal of the store, there were some problems and as a result an agreement could not be reached. This drove Sam in opening a new Ben Franklin franchise in Bentonville, Arkansas and called it “Walton’s Five and Dime”. The prices...
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... G5 Investment Group December 4, 2004 Retail – Broadline Buy Stock Data Price (52 weeks) Symbol/Exchange Beta Fully Diluted Shrs Average Daily Vol Current market cap Book Value / Share Current ratio $31.21 - $55.90 S / NYSE 1.3 230.4 million 5,028,000 shrs 10.82B $28.3 1.32 Valuation (per share) Current Price Comparables DCF Analysis Residual Income DD Analysis Abnormal Earnings $34.78 $36.60 $36.94 $38.38 $27.97 $46.49 Summary Financials (in millions) for 2004 Revenue Earnings $36.6 billion $550 million 1 Executive Summary Sears is following a differentiated approach in a competitive industry. Consequently, Sears has lagged behind other broadline retailers such as K-Mart, Target, and Wal-Mart. Should Sears adjust its marketing approach, it would have great potential for success. Growth prospects for Sears include continuation and growth of sales and expansion. The development of subsidiary brands such as Lands’ End and the acquiring of 61 of-mall stores from K-Mart and Wal-Mart. of new stores abroad will fuel this growth. Financing the acquisitions should not be overly burdensome for Sears, given the company’s large cash. Also, the company’s Z-Score of 5.9 will provide easy access to financing if needed Sears has began to shift to an off-mall emphasis for its stores as it acquired stores from K-Mart and Wal-Mart. It has named this process Sears Grand and it is progressing well for the company. This...
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...AnywhereBloomberg TradebookIndustry ProductsBloomberg BriefsBloomberg GovernmentBloomberg LawBloomberg BNABloomberg New Energy FinanceBloomberg SportsEnterprise ProductsCompliance SolutionsData SolutionsTechnology SolutionsTrading Solutions Premium Bloomberg Businessweek Businessweek Global Economics Europe's Carmakers Want to Shrink. Unions Stand in the WayUnion resistance to job cuts has saddled manufacturers with costs Global Economics The Hot New Target for B-School Applicants: GermanyConclave to Elect Pope Starts on TuesdaySkype's Been Hijacked in China, and Microsoft Is O.K. With ItFor Chávez's Successor, Venezuela's Economy Looms LargeRecent Pride and Concrete: Romania's Migrant WorkersThe U.S. Jobs Engine Was Strong Heading Into SequestrationDid They All Retire?Coke, Unilever, Colgate-Palmolive Seize India's Biggest Marketing OpportunityFederal Reserve's Stress Testing Shows Politics, Not MathSections ChinaCurrent Events CalendarU.S. EconomyIndiaEnergyHousingEuropeGlobal EconomicsJobsBlog: EconochatCompanies & Industries Facebook vs. Twitter: Want Your Feed Filtered or Unfiltered?Twitter's unfiltered method can be overwhelming; Facebook's is secretive and invasive but helps with the oceans of content Companies & Industries Britain's Wonga: Payday Lender and Proud of ItAutomakers Cashing in on High-End ModelsThe Economic Benefits of Educating WomenHow Facebook's New Design Can Increase Ad RevenueRecent The Man Who's Trying to Free Sherlock HolmesSkype's Been Hijacked in China...
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...From the rich walnut paneling and carved arches to the molded Italian Renaissance patterns on the ceiling, the circa 1925 council chamber room of Akron's municipal hall evokes a time when the America's manufacturing heartland was at the peak of its power. But when the U.S.-China Economic & Security Review Commission, a congressionally appointed panel, convened there on Sept. 23, it was not to discuss power but decline. One after another, economists, union officials, and small manufacturers took the microphone to describe the devastation Chinese competitors are inflicting on U.S. industries, from kitchenware and car tires to electronic circuit boards. These aren't stories of mundane sunset industries equipped with antiquated technology. David W. Johnson, CEO of 92-year-old Summitville Tiles Inc. in Summitville, Ohio, described how imports forced him to shut a state-of-the-art, $120 million tilemaking plant four football fields long, sending Summitville into Chapter 11 bankruptcy protection. Now, a tenfold surge in high-quality Chinese imports at "below our manufacturing costs" threatens to polish Summitville off. Makers of precision machine tools and plastic molds -- essential supports of America's industrial architecture -- told how their business has shrunk as home-appliance makers have shifted manufacturing from Ohio to China. Despite buying the best computer-controlled gear, Douglas S. Bartlett reported that at his Cary (Ill.)-based Bartlett Manufacturing Co., a maker of...
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...Strategic Audit of Starbucks Traci Hall Jones College Business Policy and Administration Professor E. Smith June 20, 2011 I. Current Situation A. Current Performance Starbucks is the fastest growing food chain and shows no signs of slowing down. it plans to boost earnings by 20% to 25% annually over the next three to five years and to bring its number of storefronts to 40,000 worldwide which is 10,000 more than McDonald’s. Starbucks is conservative in how it finances its goals. Operating cash flow from existing stores pays for new-store development. So far, the return on new stores has been excellent. Increasing same-store sales has been a tougher order, though, and Chairman Howard Schultz has expressed worries that moves to improve same-store sales with automatic equipment and off-brand merchandise could be turning consumers off. The return on investment (ROI) for Starbucks in 2010 was 22.50%. The market share was $27.33 billion while the profitability was at 30.4% (Donald, 2007). B. Strategic Posture Starbucks has an impressive mission statement because it addresses their product as a whole and their mission for different relationships. “The Starbucks Mission Statement-To inspire and nurture the human spirit - one person, one cup, and one neighborhood at a time. Here are the principles of how we live that every day: Our Coffee-It has always been, and will always be, about quality. We’re passionate about ethically sourcing the finest coffee beans, roasting them...
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...STANFORD GRADUATE SCHOOL OF BUSINESS CASE: A-186A DATE: 06/19/03 CosTco WHOLESALE CORPORATION FINANCIAL STATEMENT ANALYSIS (A) INTRODUCTION Margarita Torres first purchased shares in Costco Wholesale Corporation in 1997 as part of her personal investment portfolio. Between 1997 and 2002, she added slightly to her holdings from time to time when the company sold stock for what she felt was a reasonable valuation, and up to that time she did not sell any of her shares. Having watched Costco grow from 265 warehouses to 365 worldwide, and from sales revenue of $21.8 billion to $34.1 billion, she wondered what factors led to such successful growth. She also wanted to determine whether those factors would hold consistent going forward. At this point, Costco was one of a special breed of retailers called wholesale clubs. Unlike other retailers, wholesale clubs required that customers purchase annual memberships in order to shop at their stores. Costco operated a chain of warehouses that sold food and general merchandise at large discounts to member customers. The company was able to maintain low margins by selling items in bulk, keeping operating expenses to a minimum, and turning inventory over rapidly. Costco’s closest competitors were SAM’S Club (a division of Wal-Mart) and BJ’s Wholesale, which both operated as wholesale clubs. Other competitors included general discounters (such as Wal-Mart), general retailers (such as Sears), grocery...
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...CHAPTER: 1 INTRODUCTION In modern years consumer goods markets, and often bought categories in products were clearly showing the increasing presence of private label products. Personal or own label products were defined as consumer products produced by retailer itself and sold under the retailers’ own name, logo or trade mark throughout their own outlets. Most often private label brands were manufactured by retailer itself by putting any name or private log on that products. Retail products mostly reduce the cost of production because manufacturer or producers usually do not need to spend heavily amount on that products even private label brands were less advertised. Private or own-label brands enable the manufacturers to achieve the economies of scale in producing or distribution of the products and utilization of more capacity. However, it appears that most own-label suppliers were small regional players not unintentionally playing on the major manufacturers’ field (Hoch, 1996). Past research examined circumstances which craft it nice-looking for a store brand to be introduced to exacting product categories (Hoch et al 1993; Sethuraman and Dhar, 1995). Raju et al. (1999) classified three conditions below which a store brand raises a retailer's categories earnings. First, if the cross price compassion amongst the national brands was low down. Second, if the cross price compassion among the national brand and the store brands was high. Third, if the category has...
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...Toyota (Chapter 1) Overview. This case concerns the systems used by Toyota to become the third largest automobile manufacturer in the world. The case illustrates how this organization strives to serve customers and achieve a profit. The case intentionally emphasizes features of Toyota's manufacturing system, rather than its marketing strategies per se, to show how the whole organization is focused on serving customer wants and needs, not just the marketing department. Suggestions for Discussion Questions 1. In what ways is Toyota's new-product development system designed to serve customers? There are a number of features to this system that make it customer oriented. The Toyota system responds more quickly than competitors, allowing the company to correct any mistakes and react to market trends faster than competitors. The system has a chief engineer responsible for the product from design to marketing. This may allow consumer research to function as a direct input into engineering specifications rather than become a secondary concern after the product is designed. Since the corporate philosophy is to serve customers, consumer inputs are more likely to be used develop better new products. 2. In what ways is Toyota's manufacturing system designed to serve customers? There are a number of features in Toyota's manufacturing systems that are designed to serve customers, including the following features. Employees, even on the assembly line, are trained to consider their...
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