How J.C. Penney could benefit, struggle from Sears’ Amazon partnership

With its partnership to sell Kenmore appliances on Amazon, Sears Holding Corp. hopes to rival other hard good retailers like J.C. Penney Co. Inc. (NYSE: JCP). But both companies stand to fight for more than appliance sales as they go head-to-head over hard goods.

Sears (Nasdaq: SHLD) announced July 20 an agreement to sell its Kenmore line on Amazon.com as the company struggles to bring customers into stores, and as its Canadian arm has gone into default.

The Kenmore name is more than a century old, and one of the country’s most iconic appliance brands. While selling the products on Amazon means Sears loses its exclusivity with Kenmore, the move may help bring much-needed revenue to the department store.

“The launch of Kenmore products on Amazon.com will significantly expand the distribution and availability of the Kenmore brand in the U.S.,” Sears CEO Eddie Lampert said in a prepared statement about the partnership.

Stocks of other appliance retailers stumbled the day of the Sears/Amazon announcement. Home Depot’s shares took a 4.5 percent hit, while Lowe’s Cos. Inc. declined 5.9 percent. Best Buy decreased 4.2 percent.

In comparison, shares of Sears were up 13 percent on the news.

J.C. Penney saw a much smaller impact, with its shares decreasing less than 1 percent. But the announcement has more ramifications for the Plano retailer than its stock price.

In January 2016, J.C. Penney began re-introducing appliances into its brick and mortar stores after a more than 30-year hiatus from the sales category. Since then, the company has introduced the products online and said it plans to roll out appliance showrooms to 600 stores by the end of 2017.

J.C. Penney declined to comment on how its appliance business is faring so far and does not separate appliance sales from overall revenue. In its first quarter 2017 earnings, reported May 12, the company said improvements in several departments, including appliances “ provide us with the confidence to maintain our sales guidance for the full year.”

The company’s second quarter earnings will be reported on Friday before market open.

While J.C. Penney has competed with Sears for appliance dollars since introducing the products, Sears’ Amazon partnership gives the rival company a larger platform to market its goods.

“That deal gives Sears the opportunity to remain somewhat relevant in a space where they have been completely marginalized otherwise,” said Jason Moser, an analyst with Million Dollar Portfolio at The Motley Fool. “This deal keeps Sears somewhat current, at least in the consumer’s eyes, which is a plus.”

To keep up, analysts say J.C. Penney must continue pushing its own e-commerce efforts.

And to differentiate itself, the retailer should continue improving its home department, which has been expanded to include Ashley Furniture; pilots of Empire Flooring and Trane heating, ventilation and air conditioning services; bathroom remodeling; quick-ship and installed blinds; home water solutions; awnings and smart home technology.

It also offers washers, dryers, refrigerators and microwaves to commercial and residential property groups.

“I think they can leverage their strength in home with window treatments and other things to create a back-to-front home design service that includes not only treatments and decor, but appliances and smart home features,” added Ed Fox, associate professor of marketing at the W.R. and Judy Howell director of the J.C. Penney Center for Retail Excellence at Southern Methodist University.

However, pushing appliances may hurt Sears and J.C. Penney in areas that both have been pushing to improve – in-store traffic and comparable sales. Because consumers buy appliances infrequently and usually have them delivered, they have little incentive to visit brick and mortar stores. And offering appliances online further reduces the need for a store visit.

In its first quarter earnings, J.C. Penney saw a 3.5 percent decrease in same-store sales, while Sears, which reported first quarter earnings on May 25, saw a roughly 12 percent dip.

“While they have a high-dollar value don’t bring people in stores frequently,” Fox said. “Now people can get competitive products rather than walking into a store.”

The good news for J.C. Penney is that while it continues to work on appliances other initiatives to return to profitability, analysts are unsure Sears will be able to battle store closures and lagging profits to stay in business.

“It’s becoming apparent that Sears is in what’s becoming a death spiral,” Fox said in January. “J.C. Penney will be around in three to five years, and Sears may very well not.”

That means while J.C. Penney might currently be losing customers now to the Sears/Amazon partnership, it could pick up those clients again in the case of a Sears bankruptcy.

“The core customers for the apparel and home businesses at Sears and J.C. Penney were quite similar,” Steve Dennis, president of retail strategy firm SageBerry Consulting, said earlier this year. “They were pretty price sensitive with fairly constrained incomes.”

Source:-bizjournals.

Trump’s immigration crackdown could increase modern day slavery

People hoping to reach the border.

Donald Trump’s plans to sharply reduce undocumented migrantscoming into the US. However, the president’s harder line on deporting these immigrants is likely to increase the number of people at risk of modern slavery, says a human rights analyst.

Alexandra Channer of risk-management consultancy Verisk Maplecroft says that the number of people at risk of becoming a modern slave will increase if the Trump administration doesn’t address the “drivers” of illegal immigration in tandem with introducing stricter rules on deportation.

“Policies that increase the costs of trafficking, such as tighter enforcement of deportation rules and restricting the protections offered by sanctuary cities, will push undocumented migrants further into the hands of the criminal gangs involved in border trafficking and the procurement of undocumented workers,” she said, ahead of the release of Verisk Maplecroft’s Modern Slavery 2017 index. She continued:

“Migrants will be ever more dependent on trafficking networks for survival and fewer will report entrapment and labor abuses to the authorities for fear of deportation. Increases in such violations pose a risk to companies sourcing goods from the US, especially from the agricultural sector, as well as within the services industry.”

Verisk Maplecroft uses “modern slavery” as an umbrella term for those forced into labor, servitude, and the trafficking of people. In its annual report, the group assessed 198 countries on the strength of their law enforcement and legal structures, effectiveness of their enforcement, and severity of violations to calculate its rankings.

The US ranked 135th, and is categorized as “medium risk.” Channer notes, however, that the country’s score “sits very close to the threshold for high risk.”

By comparison, the UK is 180th in rankings and Germany is 184th.

Selected countries in the Modern Slavery Index

Country Ranking (1=worst)
North Korea 1
Syria 2
South Sudan 3
United States 135
United Kingdom 180
Germany 184
Andorra 198
[Source”indianexpress”]

Upgrading appliances could save you money

Energy efficient.jpg

Focus on Energy’s Appliance Recycling Program is open to customers of participating Wisconsin utilities.

Participants must be residents of single-family homes or multifamily residences of three or fewer units. Two appliances may be recycled per household, per year.

Focus on Energy has recycled nearly 65,000 refrigerators and freezers since 2012.

[Source”timesofindia”]

Opinion: The Apple Car could run traditional automakers off the road

Apple’s brand extends far beyond technology and coolness. The company has accumulated incredible goodwill with consumers.

So whenever Apple AAPL, +0.40%  comes out with the Apple Car, it will grab a disproportionately large market share from General Motors GM, -0.70%   and other automakers precisely because of that deep well of goodwill. By the time my youngest child, Mia Sarah, who is almost two, learns to drive, internal combustion engines will likely be a relic consigned to museums (just like Ford’s Model T).

I had this “Aha!” moment recently when I visited a Tesla TSLA, +0.49%  store and saw its cars’ power train. It looks just like a skateboard — basically a flat slab of metal (which houses the battery), four wheels, and an electric engine the size of a large watermelon. That’s it — the Tesla has only 18 moving parts.

Wall Street nowadays is going gaga over the stocks of auto dealerships (especially after Warren Buffett’s Berkshire Hathaway bought Van Tuyl Group) and automakers. I am in the minority in thinking that party will come to an end. Just like Tesla, Apple is not going to be using a dealership model to sell its cars. Just as with the iPhone, the company will want complete control of the buying experience.

If both Tesla and Apple bypass the dealership model, the GMs of the world will be at an even larger competitive disadvantage. They will have to abandon the dealership model too. Yes, I know, selling cars directly to consumers is not legal in many states, but if the U.S. Constitution could be amended 27 times, the law on car sales (which is an artifact of the Great Depression) can be amended as well. The traditional dealership model is unlikely to survive anyway, as its economics dramatically degrade in the electric-car world. A car with few moving parts and minimal electronics has few things to break. Consequently, electric cars will need less servicing, throttling the dealerships’ most important profit center.

What is also amazing about electric cars is that they aren’t that much different from smartphones. Smartphone prices have declined significantly because their components became ubiquitous and commoditized. The simplicity of electric cars and the declining ambition of Tesla, Apple, and whoever else enters that space to be known as a “car” company will likely lead to commoditization of components and thus lower prices. Tesla today is more a software and battery company than a car company.

Think back to the day when Apple introduced the iPhone. No one suspected that it (and the smartphones that followed) would enable a service like Uber, which is putting cabdrivers worldwide out of business.

The baby boomer generation romanticizes cars. Most boomers can recite the horsepower and other engine specs of every car they have ever owned. For the tail end of Gen-X (my generation) and Millennials, a car is an interruption between Facebook FB, +0.44%  and Twitter TWTR, +0.15%  . We know the brand of speakers in our car but if asked would have to Google its horsepower. We feel little romanticism for our cars and have much higher brand loyalty to Apple and GoogleGOOGL, +0.26% than to GM or Ford Motor F, -1.51%

When Apple makes its entrance into the auto industry, it will likely be successful and highly disruptive. After all, Apple has the much-needed software know-how to design a car. (Apple is already working with car companies on CarPlay, the iPhone-centered car infotainment system.) Apple boasts a global network of stores, possesses unlimited resources ($150 billion of net cash and $50 billion of free cash flows annually), and its imagination has not been damaged by decades of producing cars with internal combustion engines.

General Motors’ answer to Tesla has been no different from Nokia’s response to the iPhone.

Let me stress that last point. There is a good reason why Nokia, which at one time was the dominant cellphone manufacturer, failed to compete with the iPhone. It had too much institutional knowledge. Nokia had hundreds of engineers who tried to add IQ to a dumb phone. The company was attempting to convert Symbian, a dumb-phone operating system, into a smartphone operating system. Despite Apple showing Nokia how the smartphone should look, the company couldn’t see its product as a smartphone but rather just as the next iteration of a dumb phone.

General Motors’ answer to Tesla has been no different from Nokia’s response to the iPhone. GM came out with the Chevy Volt, which was really one of its internal combustion engine (ICE) cars with an electric engine dumped in. Unless an ICE car company creates a silo unit isolated from the rest of the operation, it will be extremely difficult if not impossible to get engineers who have designed ICE vehicles all their lives to change their thinking and turn into electric-car engineers.

So, how does one invest in this overvalued market? Our strategy is spelled out in this fairly lengthy article.

Vitaliy N. Katsenelson is chief investment officer at Investment Management Associates in Denver, Colo.,and which holds a position in Apple. He is the author of “Active Value Investing” (Wiley) and “The Little Book of Sideways Markets” (Wiley). This article first appeared on Katsenelson’s Contrarian Edge blog.

[Source:-marketwatch]

Stand-alone Call of Duty: Modern Warfare Remastered could go on sale next week

all of Duty: Modern Warfare Remastered, the remake of the 2007 classic that came bundled with last year’s Call of Duty: Infinite Warfare, may be getting a stand-alone version. A call to Target puts the the current street date for the unannounced title at June 27.

The story began yesterday over on Charlie Intel. It received a tip in the form of pictures showing a shrink-wrapped version of Modern Warfare Remastered for PlayStation 4 as well as an image of a Target shelf tag listing the price as $39.99. Later that day, a reader sent in a picture of the Target computer system listing the game’s street date as June 20.

Polygon called several Targets in the Chicagoland area for more information. Several employees confirmed that they had a listing for a product that matched the SKU given to Charlie Intel. They could confirm that it was a video game, and that the street date was June 27. However, all other information on the product listing was redacted. One employee said this is common practice internally at Target for new titles entering the computer system prior to their street date.

Polygon has reached out to Activision for more information.

Last year’s Infinite Warfare didn’t achieve the kind of success at retail that Activision had hoped for. Fan reaction to the game, which took the series to outer space in the far future, was extremely negative when the first trailer was released on YouTube. Later, Activision admitted that the game “underperformed” and that the setting “just didn’t resonate” with players.

Modern Warfare Remastered has seen continued support from Activision, including new character models and new weapons.

The next Call of Duty title is called Call of Duty: WWII and will tell the story of the U.S. Army’s 1st Infantry Division. We had hands-on the game’s multiplayer mode at this year’s E3. The title is expected to be released on November 3 for PlayStation 4, Windows PC and Xbox One.

[Source”pcworld”]

Stand-alone Call of Duty: Modern Warfare Remastered could go on sale next week

Call of Duty: Modern Warfare Remastered, the remake of the 2007 classic that came bundled with last year’s Call of Duty: Infinite Warfare, may be getting a stand-alone version. A call to Target puts the the current street date for the unannounced title at June 27.

The story began yesterday over on Charlie Intel. It received a tip in the form of pictures showing a shrink-wrapped version of Modern Warfare Remastered for PlayStation 4 as well as an image of a Target shelf tag listing the price as $39.99. Later that day, a reader sent in a picture of the Target computer system listing the game’s street date as June 20.

Polygon called several Targets in the Chicagoland area for more information. Several employees confirmed that they had a listing for a product that matched the SKU given to Charlie Intel. They could confirm that it was a video game, and that the street date was June 27. However, all other information on the product listing was redacted. One employee said this is common practice internally at Target for new titles entering the computer system prior to their street date.

Polygon has reached out to Activision for more information.

Last year’s Infinite Warfare didn’t achieve the kind of success at retail that Activision had hoped for. Fan reaction to the game, which took the series to outer space in the far future, was extremely negative when the first trailer was released on YouTube. Later, Activision admitted that the game “underperformed” and that the setting “just didn’t resonate” with players.

Modern Warfare Remastered has seen continued support from Activision, including new character models and new weapons.

The next Call of Duty title is called Call of Duty: WWII and will tell the story of the U.S. Army’s 1st Infantry Division. We had hands-on the game’s multiplayer mode at this year’s E3. The title is expected to be released on November 3 for PlayStation 4, Windows PC and Xbox One.

 [Source”timesofindia”]