A few thoughts to get the week started from the Warrensreport retail desk:
1. The Barbarians are back at Macy’s gate with another group of annoying and agitating investors trying to put pressure on the department store company to do a whole series of things that benefit them…and do a lot to harm Macy’s. It’s the usual gimmicks: sell the real estate, stop investing in the business, do more stock buybacks. In the entire history of retailing have we ever seen this strategy lead to a better company? Spoiler alert: the answer is no.
And in an almost comical reference, these two investor groups point to Dillard’s as an example of a company that has returned more money to shareholders instead of investing. What they conveniently left out is that the majority of the shareholders are the Dillard family who of course are quite happy to get cash out of the business. What a misleading comparison to anyone not digging a little deeper.
Hoping Macy’s can repel this next wave and continue to try to fix its problems…rather than creating new ones.
2. The Container Store is not looking too good these days as its potential tie-in with Bed Bath & Beyond looks to be collapsing due to lack of financing. While we need to know that the BBB deal was not going to save TCS and was in fact a dumb move for the former to the benefit of the latter it’s sad that Container may well end up filing for bankruptcy after the holiday season. They are one of the best stores in America, with a terrific culture and a niche that nobody else truly serves. That said, management has made lots of mistakes over the years and there were so many ways they could have saved this business: smaller stores, licensing the TCS and Elfa brands, setting up shops in Home Depot or Lowes to name just a few. I for one will be very sad if this is the fate of this company. It deserves better.
3. Say what you want about the dollar store format but Dollar General announced last week they would be opening 575 new stores next year and remodeling more than 4,000 current locations, including almost half of which will be full redos. Who else does this? Other retailers open 27 stores or fix up a few dozen and pat themselves on the back. DG knows what it has to do to stay current and improve its business. How many other retailing companies understand that?
4. Finally, tis the season for the usual headlines about Hobby Lobby declining to sell merchandise for Hannukah or Kwanza…once again. The Holiday season just means Christmas to this Christian-focused private company and we have to think that’s not just bad business, it’s just plain bad. Of course a retailer can choose what it does and does not want to sell but given all the bad press HL gets on its business model this just seems like a terrible strategy. The company goes to great lengths to talk about its commitment to Jewish organizations and causes but when you do a search on their site for Hannukah and Christmas ornaments show up that sends a terrible signal. I’d say especially these days…but come to think about it, maybe not.
Onto Tuesday….
WarrensReport 