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Nestle has never filed for bankruptcy, it has global sales of over 107B chf and profits of over 10b chf in 2009. They probably have closed quite a few unprofitable plants over the years but I doubt WalMart had much to do with that...
The guy who financed the Sears / KMart merger almost 7 years ago, Eddie Lampert, is a billionaire dozens of times over. He is actively involved in running Sears Holdings as well as his hedge funds which own significant stakes in retailer AutoZone and car dealer firm AutoNation. Total holdings of his hedge firm are over $9B ...
Sears is the number three national retailer with mountains of cash flow, revenues of over $44B, and earnings per share of $1.55, which beats places like Macys & Penneys (1.52 & 1.33 respectively)... Yes, it is not as large / profitable as WalMart or Target, but cash stills piles into the till at an impressive rate.
A lot has to happen for Sears to fail, and Lampert seems to have a darned good handle on making sure that does not happen.
I had Nestle on the brain. I think the death toll is 17 companies now. Vlasic was one of them
Quote:
Some organizations seem to be in the same situation as Vlasic. Here is the short update on the world famous pickle producer. Fast Company magazine ran an in-depth piece on Vlasic and its relations with a Wal-Mart in December 2003. For many years, Vlasic built its product and its brand as a preferred pickle. It demanded and got a premium price for each jar.
Then came along Wal-Mart. With over 3,000 stores, Wal-Mart sold $244 billon in pliers, pasta, parkas and pickles last year. Wal-Mart sells four times as much as its next rival — Home Depot. As a result, Wal-Mart is a demanding customer. Wal-Mart folks noticed that Vlasic had a gallon jar of pickles.
Wal-Mart decided it wanted a “statement item.” It would sell a gallon of Vlasic pickles for $2.97. Wal-Mart thought their customers would get a charge out of a gallon of pickles at such a low cost.
They hammered the Vlasic folks on price. The Wal-Mart folks —you know the one with the yellow smiling face — told Vlasic it would supply the gallon pickles at a retail price of $2.97 or Wal-Mart would purchase no Vlasic pickles at all. None. Nada.
Vlasic complied. Wal-Mart and Vlasic each would realize about a penny or two per gallon. But Wal-Mart loved the image. They placed pallets of pickles in the passageways and portals for people to ponder and purchase.
On average, each Wal-Mart store sold about 80 gallons of pickles a week. You do the math: It's 240,000 gallons weekly. So why would a typical pickle lover buy the smaller jar? The gallon jar cannibalized Vlasic's small jar business (retail $2.39) at Wal-Mart stores. Buy the gallon jar and toss half or two thirds away, and you are still better off financially than buying Vlasic's smaller jars.
Vlasic never produced so many pickles but it was making almost no profit on the gallon jars. Sales of its more traditional sized (and higher -profit) jars plummeted.
CHICAGO - Sears Holdings Corp. reported a 99 percent drop in third-quarter profit Thursday on weak sales at its Sears and Kmart department stores and continuing investment losses under hedge-fund manager Chairman Eddie Lampert. Its stock price plummeted on the news.
Sears reports a 99 percent drop in profit - Earnings - MSNBC.com (broken link)
Let them go out of business already. Sears & KMart have both been dying for a long time. It was a merger of 2 weak companies. Weak + weak did not = strong.
This thead is 4 years old. Sears actually did pretty decently during this past holiday season.
However, the Sears/KMart merger was more about real estate than actually selling stuff. The combined company owns a lot of prime properties. With the commercial real estate downturn in recent years, they have lost quite a bit of value though.
Sears is one of those companies that leaves me scratching my head, trying to understand their business strategy. The whole idea to merge the two companies seemed like a good one, but that simply isnt enough to turn the company around..
No the idea of merging two mediocre companies into one mediocre company was NEVER a good one. Sears has no clear identity. The things that they do well i.e. hardware, and tools they don't advertise well enough to be successful. K-Mart is a retail disaster. K-Mart could never discount as well as Wal-Mart and they could never differentiate themselves on the basis of style and quality like Target. What is their niche and why do they exist? They would have been much better served getting rid of the K-Mart brand closing all but the best locations and focuses their marketing and advertising efforts on revitalizing the Sears image.
At this point in a week economy I have to wonder how long can Sears hang on.
Bottom line is every retailer has a target market, Sears has a brand a segment of the population identifies with. The real estate has strategic value in a world where infill development is gaining popularity over fresh buildings in distant suburbs.
I don't think the brand or this business will ever be sexy, but that is why its owned by a value investor who knows how to extract out value. He'll direct them to continue closing off stores not cutting it and selling off property which could be better used by others. When the business is shrunk more, he'll have them sell the name brands people identify in other businesses and pick up additional profits at no investment cost. And down the road beyond that he'll probably usher in an asset-light strategy much like hotels operate. He'll make others invest capital to own and operate branded stores and Sears will just run the inventory and distribution side with a set margin built in.
The best part is that if they made 1 dollar last year, 1 penny this year and 5 cents next year....then we will have someone posting about the evil corporation that increased profits by 400%!!!!! (I wish I were joking)
The news from Sears is looking grimmer by the year. They've just announced a net loss of $2.4B for 2011. That hurts. Sears stock was down over 50% last year, even though the DJIA was up about 5% for 2011. Oddly enough, Sears stock is up 9% today on this news.
Not sure why the hedge fund guy got into Sears, maybe he thought he was a turnaround genius, maybe he wanted the real estate and trademarked items (like Craftsman tools, Kenmore, etc).
Who knows, maybe he's a magician and pull off the restoration of one of the nation's oldest and proudest names. Myself, I think the merger with KMart was the beginning of the end.
Maybe we should start a betting pool on how long Sears will last....
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Closings Announced in Dec. 27, 2011 Sears Holdings Update
