Chillin' out till it needs to be funded
US retail was not only down on Economic data as Credit Card providers report results in the next few days. Leading the charge against their own was Sears Holdings, put down by its suppliers credit rainmaker CIT that clamped down on supplier credit erasing hope of a miraculous reecovery for the iconic Sears brand name. Sears (SHLD:US) has reported declining sales for the last 18 quarters, but Eddie Lampert reportedly accepted $150 mln worth management fees in more stock yesterday arresting the free fall even as CIT announced a fresh embargoon suppliers’ credit while it awaits Financial reports from Sears. CIT is the local lender providing unlimited suppliers’ lines to Sears stores’ providers. The company is likely to face problems in supplying inventory as CIT lines are replaced by upfront payments and banks lose capacity to pay Sears suppliers. Eddie Lampert owned 59% stake will thus rise to over 60% fromt he addl 3 mln shares if fully paid in equity. Sears and Radioshack report on Feb 23 and Feb 21 respectively.
Radioshack (RSH:US) in the meantime, will provide final earnings late in February (Feb 21). Despite increasing sales of $ 1.4 bln and 2% increase in Company operated locations’ sales the profits fell 80% from $0.51 in
December 2010 to an estimated $0.11 this quarter . Sears may be to blame for its high operating expenses and an unwillingness to restructure while Rado shack got burnt by the 50% share of mobiles in its topline, now that it runs Target’s mobility counters as well. The problem: Mobiles from Apple do not help the company’s case for Profits while Sprint is hardly your favorite network operator, esp with the new smart phones. It seems no one needs Radioshacks profitable ranges of spares and RCA compatible boom boxes either everything in music and entertainment now available on your phone or favorite Tablet.
(twice.com)Broken out by category, mobility sales at company-operated U.S. RadioShack stores increased about 16 percent; signature sales, comprised of headphones, wireless and tablet accessories, warranty services and technical products, declined about 1 percent, representing “a significant improvement” over the preceding quarter; and CE sales declined about 30 percent, reflecting continued product cycle declines, the chain said
Radioshack though has shown a willingness to restructure and is unlikely to be shut out like Circuit City ar flail around like Best Buy
Amazon’s 40 fulfilment stores in the US (Bloomberg) andits $30 bln sales from them are likely to keep revenues higher around the $49
bln mark in a few hours when 2011 results finally come out but earnings are down at the innovator that survived two different crisis marathons since its 1995 birth. Holiday sales kept up by the $4 bln Kindle Fire launch are likely to be supported by increasing margins even as earnings for the full year fall behind to less than $1.20 per estimates, after an equally profit less $0.14 Q3 . Last years earnings were a stupendous $2.53 per share However Amazon will give a likely improved guidance for Q1 2012.
Its Q1 this year as well as Q2 stayed near the $10 bln mark in sales. Profitability for the online chain has been compromised for the medium term however as analyst Scott Divett highlights on Bloomberg as well, given the founder’s penchant for under the radar low rise carpet bombing to expand new markets and the 25-30% returns from new advertising supported kindle sales expected to continue.
Its Kindles are selling at 50% of the lowest iPad pricepoint at $199 and it has invested in 17 fulfillment centers in 2011a llowing it to buy growth as it has been wont to in the crisis years, prividing free shipping and extereme incentives to buy online from its portal, its e books growing in the last two years at the expense of its physical book sales
Scott points to spending on building infrastructure to support the growth. Its last years R&D expenditure was $775 mln on $34 bln of sales. COGS margins will likely report better in the earnings report 3 hours later.
Meanwhile even as Starbucks(SBUX:US) decides on entering india, and Amazon(AMZN:US) sets up a fulfilment center in the country, the food franchises McDonalds , Starbucks and Pizza Hut finally were able to raise prices by CnY 1-2 per meal / coffee cup at their 1000-2000 stores each in China over the Year of the Dragon weekend, in many cases the price increases having waited three-four years