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This basket consists of brick and mortar who have lost considerable market share to online competition.
Target (TGT) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
Dick's (DKS) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.
(Bloomberg) -- Nike Inc. is breaking up with Amazon.com Inc.The athletic brand will stop selling its sneakers and apparel directly on Amazon’s website, ending a pilot program that began in 2017.The split comes amid a massive overhaul of Nike’s retail strategy. It also follows the hiring of ex-EBay Inc. Chief Executive Officer John Donahoe as its next CEO -- a move that signaled the company is going even more aggressively after e-commerce sales, apparently without Amazon’s help.“As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail,” the company said in a statement. “We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally.”Some big brands shun Amazon’s platform, where fakes flourish and unauthorized sellers undercut prices -- a recipe that diminishes the value of sought-after labels. The unraveling of the Nike arrangement threatens to reinforce retailers’ unease. Under the pilot program, Nike acted as a wholesaler to Amazon, rather than just letting third-party merchants hawk its products on the site.Amazon operates an online marketplace, essentially a digital mall where merchants can sell products. More than half of all goods sold on Amazon come from independent merchants who pay the Seattle-based company a commission on each sale. Amazon also operates as a traditional retailer, buying goods from wholesalers and selling them to customers.Nike said it will continue to use Amazon’s cloud-computing unit, Amazon Web Services, to power its apps and Nike.com services.Amazon, through a spokeswoman, declined to comment. The company has been preparing for the move, according to two people familiar with the matter. It has been recruiting third-party sellers with Nike products so that the merchandise is still widely available on the site, they said. Amazon has also been working to stem the flow of counterfeits on the site through various initiatives, including one project that lets brands put unique codes on their products to make it easier to identify fakes.Nike shares rose as much as 1.4% in New York trading Wednesday, while Amazon was off as much as 0.6%.‘Enormous Reach’The question now is whether other Amazon partners follow Nike’s lead. Few other brands possess the kind of muscle Nike has, so it may be harder for them to leave.“Nike has enormous reach and its products are in demand, so it can afford to be selective about where its products are distributed because customers will come find Nike where it is offered,” said Neil Saunders, an analyst at GlobalData Retail. “I don’t think as many brands can be as selective as Nike.”For years, the only Nike products sold on Amazon were gray-market items -- and counterfeits -- sold by others. Nike had little control over how they were listed, what information about the product was available and whether the products were even real.That changed in 2017, when Nike joined Amazon’s brand registry program. Executives hoped the move would give them more control over Nike goods sold on the e-commerce site, more data on their customers and added power to remove fake Nike listings. The news of the Amazon tie-up, which Nike executives called a “small pilot,” sent shoe-retailer stocks tumbling and left many wondering if other major Amazon holdouts would quickly follow.But Nike reportedly struggled to control the Amazon marketplace. Third-party sellers whose listings were removed simply popped up under a different name. Plus, the official Nike products had fewer reviews, and therefore received worse positioning on the site.Leaving Amazon won’t necessarily solve Nike’s problems, which represent a big brand struggling to adapt to selling products in the digital age, said James Thomson, a former Amazon employee who now helps brands sell products online through Buy Box Experts.“Just because Nike walks away from Amazon doesn’t mean its products walk away from Amazon and doesn’t mean its brand problems disappear,” Thomson said. “Even if every single Nike product isn’t on Amazon, there will be enough of a selection that someone looking for Nike on Amazon will find something to buy.”Fewer PartnersShortly after its Amazon pilot began, Nike unveiled plans to overhaul its retail strategy. With more attention aimed at direct-to-consumer avenues, particularly the Nike app and Nike.com, executives said the company would drastically reduce the number of retailers it partnered with.In 2017, Nike did business with 30,000 retailers around the world. Elliott Hill, currently the company’s head of consumer and marketplace operations, told investors that year that Nike would focus its future efforts primarily on about 40 partners.Nike wasn’t specific on what would separate those 40 partners from what it called “undifferentiated retail.” Reading between the lines, it appeared to want partners that gave its Nike brand separate space -- such as Nordstrom Inc.’s “Nordstrom x Nike” shop on its website -- and was less interested in retailers that just placed Nike alongside its smaller competitors.The Wall Street Journal reported at the time that Amazon was one of those 40 that Nike intended to prioritize.Analysts said physical sporting-goods retailers would benefit from Nike’s departure from Amazon. The pilot program was an “overhang” to the stock valuation of Foot Locker Inc. that’s now removed, Raymond James analyst Matthew McClintock wrote in a note. Michael Baker of Nomura Instinet called Nike’s decision a modest positive for Dick’s Sporting Goods Inc.Foot Locker was down 0.4% at 9:51 a.m. Wednesday in New York trading, while Dick’s was up 0.6%.What Bloomberg Intelligence Says“Nike’s decision to end its wholesale pilot with Amazon.com is likely aimed at putting more focus on its own direct-to-consumer business, which is a key pillar of its Triple Double strategy. We still believe Nike’s goal for 33% of sales to be digital could be attained ahead of 2022.”\--Poonam Goyal, senior retail analystClick here to read the research.About 68% of Nike’s annual sales come from wholesale channels, down from 81% in 2013. Though wholesale is still the bulk of the company’s sales, in that span Nike’s direct business has grown three times faster than top-line revenue.Nike’s departure will rob Amazon’s brand registry program of a big name -- and potentially stoke the concerns of its partners. Nike’s participation had signaled that Amazon was taking the concerns of major brands seriously.Such brands have expressed frustration that Amazon doesn’t do enough to fight counterfeits. They also fear that giving Amazon too much control over prices will devalue their products.Amazon’s foray into private-label products has added to the fears. The company now sells everything from batteries to mattresses to snacks, further complicating the relationship between Amazon and brands.(Updates with shares in ninth paragraph, analyst comments in 21st paragraph.)\--With assistance from Robert Williams.To contact the reporters on this story: Eben Novy-Williams in New York at email@example.com;Spencer Soper in Seattle at firstname.lastname@example.orgTo contact the editors responsible for this story: Nick Turner at email@example.com, ;Jillian Ward at firstname.lastname@example.org, John J. Edwards III, Cécile DauratFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Sally Beauty's (SBH) Transformation plan and acquisitions are expected to boost growth in the near future. However, softness in the SBS segment and high costs are concerning.
Lowe's (LOW) third-quarter fiscal 2019 results are expected to reflect strength in the Pro business and gains from other sales growth initiatives. Soft margins might have been a drag.
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Kohl's (KSS) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
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(Bloomberg) -- Amazon.com Inc. plans to launch a new supermarket brand distinct from the Whole Foods Market chain the company acquired two years ago, a sign of the retail giant’s hunger for a slice of the grocery market beyond high-end organic food.The company has posted four job listings for “Amazon’s first grocery store” in the Woodland Hills neighborhood of Los Angeles. An Amazon spokeswoman confirmed the listings, and said the store would open in 2020. The brand will be distinct from Whole Foods and will have a conventional checkout line, unlike the cashierless Amazon Go convenience stores, she said. Amazon’s plans for the store were reported earlier by CNET.The e-commerce company purchased Whole Foods in a splashy $13.7 billion deal two years ago, but has yet to make much headway in the $900 billion U.S. grocery industry. The Whole Foods brand, finicky about what is allowed on store shelves based on its healthy image, clashes with Amazon’s desire to give customers whatever they want. Amazon rival Walmart Inc., which captures about 25% of all U.S. grocery spending, sells items such as Pepsi and Cheetos that shoppers can’t find at Whole Foods. Grocery industry analysts have speculated that Amazon might branch out with a new store where such products won’t be seen as betrayal to the brand.Online grocery shoppers prefer in-store pickup options to home delivery by nearly a 2-to-1 margin, and Amazon needs more stores to meet that growing demand, said David Bishop, a partner with research firm Brick Meets Click. In-store pickup requires more stores closer to shoppers -- about 3 to 5 miles from their homes -- than grocery delivery services, he said.“The reason Amazon needs to expand its physical footprint is an accelerated demand for grocery pickup service as opposed to delivery,” he said. “Shoppers have a greater sense of control when they pick up their groceries at the store in a secure location rather than worrying about it being left at their house.”Amazon’s sales from physical stores, the vast majority of which are purchases at Whole Foods stores, declined 1.3% from a year earlier to $4.19 billion in the third quarter. Amazon said the total doesn’t include online sales from Whole Foods, but the Seattle-based company doesn’t break out that figure.Woodland Hills is an upscale suburban neighborhood in the San Fernando Valley. The Wall Street Journal reported earlier this year that Amazon planned to open dozens of grocery stores under a new brand, starting with an outpost in Los Angeles.(Updates with analyst’s comment in fifth paragraph)To contact the reporters on this story: Matt Day in Seattle at email@example.com;Spencer Soper in Seattle at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.