The race that began at the start of November, peaked on Thanksgiving — or Black Friday or Cyber Monday — is nearly over. Only 10 shopping days remain until Christmas. Among the retailers and shipping companies, the home stretch could be the difference between a good holiday, a mediocre one or a disaster.
United Parcel Service Inc. (NYSE: UPS) and FedEx Corp. (NYSE: FDX) are bound to do well no matter what. Along with the U.S. Postal Service, they have a monopoly. Hundreds of millions of packages will pass through their hands. Market share is important, but the market is massive.
Amazon.com Inc. (NASDAQ: AMZN) will have a spectacular quarter no matter what. The problem is that management has already flagged that it will not make money. Investors are more than annoyed about this and have driven the stock down, because of a very few words from management when it posted its most recent quarterly results:
Fourth Quarter 2014 Guidance
- Net sales are expected to be between $27.3 billion and $30.3 billion, or to grow between 7% and 18% compared with fourth quarter 2013.
- Operating income (loss) is expected to be between $(570) million and $430 million, compared to $510 million in fourth quarter 2013.
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In the meantime, Amazon has cut prices, particularly on its failed phones and troubled tablets. The price for the Fire HD7 has been chopped from $139 to $114. Amazon will take the lion’s share of 2014 online sales but could still be the goat on Wall Street.
For several retailers, this holiday could be the watershed for viability. Without any question, this applies to RadioShack Corp. (NYSE: RSH), the shares of which have traded below $1 for weeks. The company disclosed when it posted earnings this week:
Joseph C. Magnacca, chief executive officer, said, “Overall our sales for the quarter declined 16.1 percent year over year, including a comparable store sales decline of 13.4 percent. This primarily reflected challenges in the postpaid mobility business. However, in our retail segment, the other half of our business, comparable store sales at U.S. company-operated stores were only down 2.0 percent compared to last year, and improved throughout the quarter as we focused on higher margin products, including private brand, and innovative new programs like Fix It Here. Moreover, our core network of “Interactive Remodel” stores collectively performed 12 percentage points better than the total chain on a comparable basis, and in the retail segment performed almost 15 percentage points better on a comparable basis.
While the retailer’s management wants to close more than 1,000 stores, its lenders have pushed it hard to close fewer. There is plenty of speculation that RadioShack will file for Chapter 11.
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In shape to hold on through the holidays, maybe, are J.C. Penney Co. Inc. (NYSE: JCP) and Sears Holdings Corp. (NASDAQ: SHLD), which has Sears and Kmart stores under its umbrella. Each company has enough cash to make it into 2015. How far into the year is another matter, especially if holiday sales are a disaster.
Merry Christmas.
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