Retail
Ahead of the Holidays, Walmart Shares Flat as J.C. Penney and Sears Collapse
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Wall Street must believe that holiday sales at Wal-Mart Stores Inc. (NYSE: WMT) will not be a total disaster this holiday season. Its shares are nearly flat year to date. Not so for Sears Holdings Corp. (NASDAQ: SHLD), which has suffered a 28% drop this year, and J.C. Penney Co. Inc. (NYSE: JCP), which is down 18% over the same time frame.
The reason Walmart’s prospects are at least even has to do with the advantages it has over ever other retailer in America, despite recent pessimism about its American sales. It remains by far the largest retailer in the United States by sales. Its website, Walmart.com, has terrific traffic. Research firm comScore recently ranked Walmart as the 25th most visited of all U.S. sites, with total unique visitors of 33.3 million on desktop computers. Amazon.com Inc. (NASDAQ: AMZN) was first among sites in the same industry at 98.4 million. No other retail site made the top 50. Walmart also has a massive marketing budget, as would befit the largest company in the United States by revenue. Because of its balance sheet, it has a near perfect relationship with suppliers as well.
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Sears is at the other end of the spectrum. Within the past month, Bloomberg reported Sears and its Kmart and Sears stores might have trouble getting inventory for the holidays:
Three of the biggest insurance firms for Sears Holdings Corp.’s suppliers are seeking to reduce coverage, prompting at least one medium-sized vendor to halt shipments to the department-store chain, people with knowledge of the matter said.
The financial situation at Sears is so poor that it needed to borrow $400 million from its CEO, hedge fund manager Eddie Lampert.
Sears said the loan “allows us additional financial flexibility, particularly as we enter the holiday season.” The company said it wants to be “proactive” in showing vendors and others it will “continue to generate liquidity needed to invest in our business and meet all of our financial obligations.”
J.C. Penney sits between Sears and Walmart in terms of its fortunes. It has raised enough money to remain financially viable for at least several quarters. However, the company recently cut same-store sales forecasts — a very negative piece of news as the holiday sales period, which covers the final two months of the year, is already underway.
Wall Street sentiment, which is reflected in its valuation, shows that J.C. Penney may make it into next year, troubled but viable. Sears will not.
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