J. C. Worth a Penny!

The JCPenney brand may have been worth something to stakeholders once upon a time, but its recent performance has left its future hanging in the balance.

J. C. Penney Company Inc. (JCP) is a chain of over 1,100 departmental stores that sell apparel, electronic and furnishing products all over the US. The company was founded in 1902, incorporated in 1913, and at one point employed Walmart’s (WMT) founder Sam Walton.

But with its best days behind it, JCPenney has recently seen its performance drop to all-time lows following successive restructuring failures. Its stock price is down 50% year-to-date (YTD), and investors have increasingly started questioning its chances of survival.  Read more.

Love Thy Neighbor-hood!

As consumers lose interest in commuting to far-flung Supercenters, Walmart is bringing its stores to their neighborhood.

The largest retailer in the world, Wal-Mart Stores, Inc. (WMT), has recently been facing stiff competition from Target Corporation (TGT) and Costco Wholesale Corporation (COST), its major rivals in the US.

Walmart’s same store sales (SSS) have grown slower than its competitors’ over the last three years, leading to calls for greater innovation and changes to its business model. More worryingly, its SSS fell 1.2% in the first quarter of this year, and remained constant during the second quarter. Read more.

Prices Aren’t the Only Things Low at Walmart

Even though Walmart and other large retailers have succeeded in getting the living wage bill shot down, they stand to lose much from their stance on the issue

In February 2013, President Obama had proposed an increase in the minimum federal wage to $9 an hour from $7.25 to address the problem of worsening income inequality in the country. His proposal was echoed in nationwide demonstrations for higher wages, following which the ‘living wage’ bill was passed by the D.C. Council in July 2013 with the support of eight of the 13 council members.

The $8.25 minimum wage in D.C. is already a dollar higher compared to the federal minimum wage, but the D.C. bill required all large retailers with revenues above $1 billion to pay non-union workers at least $12.50 an hour. Read more.

Wal Mart Stores, Inc. Wal-Mart to Hire 55,000 Seasonal Employees

Wal-Mart Stores Inc. (WMT) plans to hire 55,000 seasonal employees and will transition tens of thousands of its workers to full-time positions, as the world's largest retailer ramps up staffing for the holiday season. "In addition to the traditional hiring of seasonal help, we are expanding opportunities for the people that already work for us," said Gisel Ruiz, chief operating officer of Wal-Mart U.S.

Wal-Mart said it is transitioning 35,000 part-timers to full-time jobs and more than 35,000 temporary workers to part-time positions. Last year, the company said it hired more than 50,000 seasonal employees.

As of Jan. 31, the company and its subsidiaries employed nearly 2.2 million employees worldwide, with more than 1.3 million employees in the U.S. Read more.

Wal-Mart's Troubles Augur Ill for U.S. Economy

While investors rightly focus on Washington as politicians play Russian Roulette with the future of the U.S. economy, they should not overlook another important concern. Namely, there is a slowdown taking place at the world’s largest retailer. Bloomberg recently reported that Wal-Mart Stores, Inc. (WMT) was reducing orders placed with its suppliers. Why? Because the merchandise is not selling as well as the company’s management had planned.

Indeed, a quick look at WMT’s most recent Form 10-Q filed with the SEC makes the problem quite clear. Inventories, which are the company’s largest current asset by far, stood at $42.8 billion on July 31, up 5.5% over the past year. Yet, during the same time, total revenues (which include membership fees) were up only 2.3%. What’s a worse, same-store sale in the company’s U.S. stores actually fell 0.3%. Over the past six months, same-store sales in the U.S. have dropped 0.8%. The company is blaming at least part of the decline on higher payroll taxes, which are leaving core customers with less disposable income.

Of course, there are some firm-specific issues that also explain the slowdown at WMT. For example, the company has reduced headcount so much over the years that it is now having trouble keeping the shelves stocked with the things that customers want. This reminds me of an incident I experienced at Kmart in 1988. Read more.