Thursday, March 15, 2018

Wal-Mart Reacts to Tax Reform Through US Employee Wage Increase

A veteran Wall Street analyst, Chuck Grom leverages past experience with JPMorgan and Deutsche Bank as Gordon Haskett Research managing director. With extensive knowledge of consumer-facing retail segments, Chuck Grom’s firm recently provided insight within a Bloomberg article on Wal-Mart Stores, Inc.’s January 2018, announcement that it would increase its starting pay across the United States to $11 an hour.

This wage increase represents a 10 percent gain for employees of the largest retailer worldwide, which has global sales that generate nearly $500 billion annually. The total cost of the wage increase for Wal-Mart will be $300 million, not including one-time cash bonuses also planned. 

With Wal-Mart expected to generate $12 billion in net income in 2018 and achieving $57 million in hourly sales, this amount represents approximately nine days of profits. The wage increase is among the strategies undertaken, including buybacks and price cuts, to utilize the $2 billion in tax benefits realized under the new US tax system reforms. 

The cost of the wage increase, while substantial, is small relative to total operations. As a point of reference, the company’s US e-commerce chief Marc Lore received $244 million in 2016 as part of shares attached to his company, which was purchased by Wal-Mart.

Wednesday, October 25, 2017

Bright Spots in a Challenging Furniture Retail Landscape

Sunday, September 24, 2017

Department Stores' Sales Decline Continues as E-tailers Diversify

Chuck Grom holds responsibilities as managing director with Gordon Haskett Research Advisors in New York and provides knowledgeable analysis of consumer-facing sectors. Among the companies that Chuck Grom covers are traditional department stores such as Kohl’s, Macy’s, JCPenney, and Nordstrom.

A recent Denver Post article pointed to broad demographic shifts in the way in which consumers purchase clothes, with social media more influential than store displays within a mall setting. Eating at stores’ core margins is an increasing number of niche online retailers that are able to leverage low overheads to emphasize discounts and a wider array of styles. 

Deloitte analysts estimate that curated brands such as Bonobos and Stitch Fix, as well as discounters such as thredUP, have taken approximately $200 billion in revenues from the market’s leading 25 retailers over the past five years. The 3 percent overall increase in US clothing sales to $218.7 billion in 2016 masked a 4 percent decline in sales among national department stores and mall-based chains. Increased sales among brick-and-mortar retailers were led by off-price stores such as Ross and T.J. Maxx, which achieved 5 percent growth. 

With Internet e-tailers quick to come and go, one emerging trend involves companies such as Bonobos, Warby Parker, and Blue Nile setting up showrooms and positioning themselves as hybrid retailing forces.

Tuesday, September 19, 2017

Walmart Partners with Google to Deliver Voice-Activated Shopping

The recipient of a bachelor's degree in economics and accounting from Holy Cross College, Chuck Grom is an experienced stock analyst who serves as a managing director with New York's Gordon Haskett Research Advisors. In that capacity, Chuck Grom watches a variety of department store stocks, including Walmart’s.

Despite being the world's largest retailer, Walmart's online shopping platform is pale in comparison to Amazon. However, in an effort to compete with the e-commerce company, Walmart has partnered with Google to expand its voice-activated shopping services. Walmart will make hundreds of thousands of its items available for ordering on Google Express, all of which can be purchased through Google Assistant via a smart speaker or smartphone. 

Beginning in October, United States residents who own a Google Home smart speaker can simply speak into the device to order from an extensive list of Walmart products and have them delivered quickly and free of charge to their home. The smart shopping system will integrate previous purchases made through Walmart retail locations and on, meaning Google Home owners will receive personalized shopping recommendations. Amazon has the advantage of being the first to market the notion of virtual assistants to help with online purchases, but the Walmart and Google partnership could help change the landscape of the e-commerce sector.