Newsletter: Macy’s, J.C.Penney accept that it’s Amazon’s world and they just live in it
First the good news: The Commerce Department reported last week that consumers went shopping in July. Retail sales rose 0.7%, after a 0.3% gain in June.
This is important because consumer spending accounts for about two-thirds of U.S. economic activity, so what’s good for retailers is literally good for America.
Now the not-so-good news. Major retailers such as Macy’s and J.C. Penney reported some dismal quarterly numbers, suggesting that things may not be as upbeat as the Commerce Department would have us believe.
Macy’s stock tumbled after the company reported that net income fell to $86 million, or about half what it earned a year earlier. Macy’s blamed the decline on heavy markdowns to move unsold inventory.
J.C. Penney, meanwhile, spun its earnings as a “could have been worse” scenario. The company acknowledged losing $48 million in the second quarter, but, hey, it beats the $101 million it lost a year before. Penney’s stock is in such miserable shape, it’s in danger of being delisted by the New York Stock Exchange.
Reinvention is the watchword for department stores. Some, such as Kohl’s, are inviting crowd pleasers like fitness clubs and yoga studios to share their space. Others, such as Nordstrom, are experimenting with micro-stores that don’t even sell things — they’re designed to promote online sales.
Macy’s and Penney both announced last week that they’re partnering with a company called ThredUp, which sells second-hand women’s duds. Yes, two of the most prominent names in retailing are getting into the used-clothing business. That’s what it’s come to.
That said, whatever works. It’s Amazon’s world and all other retailers have to live in it.
Meanwhile, here are some upcoming events and stories that caught my eye:
Big interest in interest: The Fed’s Jackson Hole Economic Symposium kicks off Friday, bringing central bankers and leading economists to Wyoming for policy talks. All eyes will be on Fed Chair Jerome Powell, whose remarks Friday morning will be closely watched after an especially bumpy period for markets. Investors want to glean any information they can about future rate cuts.
Scoot over: The dockless scooter firm Scoot got permission to operate in San Francisco by promising its two-wheelers would serve the whole city. But it turns out Scoot doesn’t serve two of the city’s poorer neighborhoods, drawing a red line in its app around the Tenderloin and a swath of Chinatown. The company is standing by that policy, saying sidewalks in those areas are too narrow for scooter parking. But late Friday it opted to change the red line to a gray box. Progress!
And a Shari on top: Shari Redstone was once on the outs of the media empire created by her father. But with CBS and Viacom reuniting in a $12-billion deal, she is the victor and the chair of the new entity. Her path to leadership of the family business, however, was not without obstacles.
Tesla turnover: Executive churn is a bit of a problem at Tesla — and a big problem if you happen to be an executive who reports to Chief Executive Elon Musk. While company-wide leadership turnover was high compared to a cohort of technology firms, turnover among those who call Musk their boss is “dramatically higher,” a stock analyst found. Over a nine-month period, 44% of those who report directly to Musk left the company.
WHAT WE’RE READING
A glimpse inside Google: The last three years have been tumultuous at Google, where the company’s once-content workforce has grown increasingly agitated during a moment of political polarization and skepticism about the tech industry. Wired tells the inside story of “a period of growing distrust and disillusionment inside Google that echoed the fury roaring outside the company’s walls.”
Rich getting obscenely richer: Turns out one of the easiest ways to make a ridiculous amount of money is to have a ridiculous amount of money. That’s the takeaway from Bloomberg’s latest look at dynastic wealth: “America’s richest 0.1% today control more wealth than at any time since 1929, but their counterparts in Asia and Europe are gaining too.”
Until next time, see you in the Business section.
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