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The Weekly Consensus

Ideas, observations, and news on the consumer products and retail industries
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The Weekly Consensus – May 21, 2018 (Volume 10, Number 21)

The Big Story
Department Stores: No Turnaround Yet, But Reasons for Optimism
Mark Lenz

Last week was a roller coaster ride for the department store segment.  After Macy’s released positive first quarter results early in the week, there was upbeat analysis everywhere.  Was this the beginning of a long-hoped-for turnaround in the segment?  Then the rest of the public companies in the space released their numbers later in the week and the enthusiasm was diminished.  While Dillard’s beat sales and bottom line expectations easily, JC Penney and Nordstrom disappointed with anemic sales growth.  And then there was Sears, which reported a precipitous drop in sales and spoke about selling one of their strongest remaining brands, Kenmore.

What are the takeaways and highlights from this mixed bag of reports?

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The Weekly Consensus – May 14, 2018 (Volume 10, Number 20)

The Big Story
Walmart is Small
Douglas Stebbins

It was just over nine years ago, in this very space, that I did a deep dive into inner workings of Walmart and, based on empirical evidence, made the bold declaration that “Walmart is Big.”  As an update to that ground-breaking piece of journalism, I went back to see how things stand currently.  Walmart, in 2017 had revenue that, for the first time ever, topped half a trillion dollars in annual sales.  Walmart’s revenue in 2017 was about equal to the next five largest US retailers (Costco, Walgreens, Kroger, Home Depot and Target), combined.

At year end January 30, 2018 Walmart had 11,700 retail units across the globe.  Having opened their first store in Rogers, AR in 1962, Walmart, on average, has opened nearly 210 stores a year every year since; almost one store opening for every work day of the year for 56 years.  Who knew that ribbon cutting could be a full-time job?

The data seemed to confirm my hypothesis that yes indeed, Walmart is, and continues to be, big.  But where do they go from here?  The more I looked at the numbers, the more it became clear that there is still plenty of opportunity for growth, especially internationally.

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The Weekly Consensus – May 7, 2018 (Volume 10, Number 19)

The Big Story
Moral Hazard (Again) at an American Icon
Marshall Schleifman

Mount Rushmore National Memorial depicts the familiar faces of four presidents chosen by sculptor Gutzon Borglum because of their importance to the history of the United States.  When the monument was completed in 1941, the undisputed “Mount Rushmore” of retailers would have featured Sears Roebuck & Company.  A dominant retailer across several generations, Sears was the largest U.S. retailer as recently as the early 1990s, when it was then displaced by Walmart.  In 2004, Sears was acquired by Kmart Holding Corporation, controlled by hedge fund ESL Investments run by Eddie Lampert, which marked the beginning of a long chapter of struggles and decline.

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The Weekly Consensus – April 30, 2018 (Volume 10, Number 18)

The Big Story
Why Consensus Joined the Terra Alliance
Michael A. O’Hara

On April 16, 2018, after a 6-month trial period, Consensus was invited to become the 16th member of a global network of investment banking firms called The Terra Alliance (  The alliance includes members in Europe, Asia, Australia, the Middle East, Africa and North America.  The alliance intends to add health care- and technology-focused firms in the U.S. to complement our firm’s consumer orientation and Chicago-based InterOcean Advisors’ strength in industrial markets.

The alliance was founded in September 2002 by the corporate finance departments of several independent private banks in Europe to enhance their ability to serve their clients on cross-border opportunities.  The group has now evolved well beyond Europe, and its member firms advised on more than 200 M&A transactions with a total value in excess of $8.5 billion in recent periods.

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The Weekly Consensus – April 23, 2018 (Volume 10, Number 17)

The Big Story
Who Needs Brick and Mortar?
Paul Alexander, CFA

Last week’s news that Best Buy and Amazon had struck a partnership for Best Buy to become the exclusive brick and mortar retailer of Amazon’s Fire-edition televisions raised some eyebrows. On the face of it, it seemed strange that a big box retailer that has long struggled against “showrooming” (the consumer behavior in which shoppers conduct research on products at a store, and then make their purchase online – often Amazon) would voluntarily enter into an agreement with Amazon to become an actual showroom. Best Buy seems to want to capitalize on the foot traffic that might be generated by consumer interest in Amazon products. However, Amazon’s motivations for entering into this partnership are also interesting. This move seems to be a signal that Amazon again realizes that there are certain situations in which ecommerce has limitations relative to brick and mortar retailing.

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The Weekly Consensus – April 16, 2018 (Volume 10, Number 16)

The Big Story
Retailers Don’t “Like” or Want to “Share” Facebook’s Problems
Maeghan Thompson

Perhaps nothing else captured the country’s attention last week more than the questioning of Facebook founder and CEO Mark Zuckerberg on Capitol Hill. The hearings were spurred by recent revelations that political consulting firm Cambridge Analytica accessed the personal information of 87 million Facebook users over a period of years. For nearly ten hours across two days, House and Senate legislators grilled Zuckerberg on his company’s privacy policies and the security of its users’ private data. Underpinning the hearings was the question of whether Congress needs to regulate social media specifically, or internet companies generally, in order to protect consumers’ privacy. Regulation could provide comfort for social media users, but it could create issues for internet marketers and groups that employ them, including retailers.

Both marketers and sketchier actors such as Cambridge Analytica use data about people collected on the internet to achieve their goals. “Likes,” friends, demographics, geographical locations, purchase histories, browsing histories, and more can be cataloged and attributed to individuals associated with unique IP addresses. Those individuals can then be targeted with great precision with various ads and messages online, ranging from the innocuous (picture a promotional offer for baby shampoo), to the devious (such as fake news stories designed to influence an election).

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The Weekly Consensus – April 9, 2018 (Volume 10, Number 15)

The Big Story
Retailers Anxiously Eye A New Challenge: Tariffs

Last week, President Trump proposed tariffs on more than 1,300 Chinese imports centered around consumer electronics and machinery. While the list doesn’t target most apparel, footwear, or accessories categories, it is not final, and concerns abound that this economic brinksmanship is likely to ensnare more industries. The White House has said the tariffs are being assessed to retaliate against China for intellectual property theft from American businesses. Many observers, however, question whether the action will have its desired effect, and representatives in the sporting goods, apparel, footwear and outdoors industries have made clear their concerns that the tariffs would harm primarily American companies and consumers without accomplishing its intended directive.

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The Weekly Consensus – April 2, 2018 (Volume 10, Number 14)

The Big Story
Advantage, Walmart
Betsy White

Last week, while the current resident of the White House was tweeting negative comments about the retail behemoth Amazon, the Wall Street Journal reported that Walmart, the Amazon of the 80s and 90s, is in discussions to buy health insurer Humana.  A transaction involving Humana, with a market cap of $38 billion, would be the largest in Walmart’s history, but still smaller than other recently announced transactions in the space, including the proposed acquisitions of Aetna by CVS for $69 billion and of Express Scripts by Cigna for $67 billion.

As big as Walmart is with $500 billion in total sales, according to a 2016 report, it is only the fourth largest retail pharmacy, with CVS, Walgreens and Express Scripts each generating more than twice the pharmacy revenue as Walmart.  Combining forces with health insurer Humana, which has over 14 million policyholders, could help drive traffic and additional pharmacy (and other) business to the 4,700 Walmart stores with pharmacies and to Walmart’s online business.  Further, aligning with a health insurer would have the added benefit of helping to control healthcare costs and benefits for Walmart’s 1.5 million U.S. employees.

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The Weekly Consensus – March 26, 2018 (Volume 10, Number 13)

The Big Story
Apocryphal Apocalypse
Billy Busko

“How the words are dark and dire: It is later than you think.” – Robert Service


“The reports of my death are greatly exaggerated.” – Mark Twain


Claire’s Stores Files for Bankruptcy

Duluth Trading to Increase Store Base 50% This Year

Toys ‘R’ Us Going-Out-Of-Business Sale Begins Friday

Land’s End to Open Dozens of Stores in 2018

Starbucks Opening 750 Locations this Year

These are headlines just from this past week.

In the past year, reports under the heading “Retail Apocalypse” have been made by many media outlets, including the BBC, Bloomberg, the Financial Times, Forbes, Fox, the Los Angeles Times, MSN, the New York Times, the New Republic, Newsweek, USA Today, Vogue, the Wall Street Journal and the Washington Post.  But as our sample size of one week shows, is there really more going on than just doom and gloom for retail stores?

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The Weekly Consensus – March 19, 2018 (Volume 10, Number 12)

The Big Story
RetailWire Discussion: Walmart Goes Big, Goes Nationwide with Online Grocery Delivery
George Anderson, RetailWire

Walmart currently offers online grocery delivery in only six markets, but by the end of the year, it will expand the service to more than 40 percent of all U.S. households.

“Ninety percent of Americans live within 10 miles of a Walmart store, and we serve more than 150 million customers a week, which gives us a unique opportunity to make every day a little easier for busy families,” said Tom Ward, vice president, Digital Operations, Walmart U.S., in a statement. “Today, we’re expanding this promise by helping even more customers save time and money without leaving their homes.”

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