Taking Stock

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Local Notes

After a year of criticism from me, Ahold USA and Delhaize America deserve credit for posting strong second quarter earnings. And those strong numbers seemed to energize deputy Ahold Delhaize CEO Frans Muller, who told the Dutch newspaper De Financiele Telegraaf that based on the company’s U.S. success, “We will open our eyes to opportunities for acquisitions to strengthen our position on the East Coast.” You’ve got to acknowledge the international retailer knows how to efficiently utilize process and systems that are designed to bolster profits. However, I remain concerned about two major issues that have yet to be confronted by the evolving organization: the state of the company’s U.S. culture and adding more store labor and training that would undoubtedly enhance the customer shopping experience at its more than 700 U.S. stores…also a tip of the hat to the folks at Weis for another excellent sales and earnings performance in its recently completed second quarter. Despite significant deflation (which thankfully has begun to subside) and highly competitive market conditions, the boys and girls in Sunbury, PA keep on keepin’ on – 13 straight quarters of positive comp sales. That’s impressive. And now that deflation has almost cycled, other retailer’s numbers are improving, too. Target rebounded from a nearly 18-month downward trend by earning $1.23 per share (up from $1.19 per share last year) in its second quarter. Even more encouraging for the Minneapolis-based mass merchant was a 1.3 percent gain in comp store revenue and a robust 32 percent jump in digital sales. Store traffic also increased by slightly more than 2 percent. At Target’s chief rival, Wal-Mart, its second quarter news was even better. Earnings improved to $1.08 per share, U.S. comp store sales (ex-fuel) grew 1.7 percent, digital revenue increased 60 percent and store traffic rose by 1.3 percent. Some internal changes of note at the “Behemoth” include a partial restructuring of its grocery management team, (perhaps in anticipation of the Amazon-WFM deal). Shawn Baldwin, who was senior VP-produce and global food sourcing, will now lead a new Hispanic initiative. Martin Mundo, a Wal-Mart veteran from its international unit, will fill Baldwin’s former spot. Additionally, Tyler Lehr will now supervise all of the Behemoth’s deli operations and Scott McCall will head the company’s GM unit…and speaking of Amazon, I’m surprised that “Godzilla” is getting a little more push back from a variety of analysts who believe that the FTC should not approve its $13.7 billion cash acquisition of Whole Foods, which posted disappointing profits for its second quarter. Even with the strong dislike President Trump has for CEO Jeff Bezos – and his independently owned Washington Post – I don’t believe that any government agency will deny the deal from being consummated. For the period ended June 30, the Seattle-based titan saw earnings decline 77 percent in its second period (from $857 million to $197 million). However, sales continued to grow at a robust pace (25 percent). Whole Foods, one of the few retailers that continued on a disappointing financial track, posted Q3 earnings where profits dipped from $120 million to $106 million. WFM’s sales continued in the opposite direction from its potential new parent, with ID revenue also falling 1.9 percent, marking the eighth consecutive quarter of profit decline. At Amazon, key drivers included a 51 percent growth in subscriptions from its Amazon Prime membership to $2.2 billion. Additionally, sales from Amazon’s annual “Prime Day” event held on July 11 reportedly increased more than 60 percent and analysts said that “Prime Day” (which is actually a 30-hour event) was the biggest sales event ever (topping any “Black Friday or “Cyber Monday” campaign). According to CNBC, Wal-Mart and its Internet delivery unit, jet.com, were aggressive in trying to match Amazon on “Prime Day,” but couldn’t come close to impacting the mighty sales clout of the “Big A” which has just begun rolling out pickup points near five college campuses where mobile app users can select from several hundred fast-selling items at each site (snacks, beverages, cell phone chargers). Amazon associates in a backroom then load the orders into lockers within two minutes and customers utilize personalized bar codes to access their orders… sadly, too many obits to report this month. Leaving us was Jeff Brotman who, along with Jim Sinegal, founded Costco in 1983. Brotman, who still served as the chairman of the club store giant’s board, was only 74 when he suddenly passed. Sinegal reflected on his friend’s passing by noting, “For over 35 years, he became not just a business partner, but a confidante and great friend. I’m not exaggerating for a second when I say I loved the guy.” Brotman’s spot as chairman will now be held by Hamilton “Tony” James, who has been on Costco’s board since 1988 and served as the club merchant’s lead independent director for the past 12 years. James also serves as COO of private equity firm The Blackstone Group…from the world of show business, I’m sad to report the passing of Sam Shepard, the Pulitzer Prize winning playwright and actor who wrote such great plays as “Buried Child,” “Curse of the Starving Class” and “True West.” Shepard, 73, was also an accomplished actor and was nominated for an Academy Award for his role as Chuck Yeager in “The Right Stuff” (1983)…if you like French films, especially new wave cinema, you will be saddened to hear of the passing of Jeanne Moreau, the beautiful French actress who starred in such classic films as “Jules and Jim” (1962, directed by Francois Truffaut) and “Lift To The Scaffold” (1961, directed by Louis Malle). Moreau, 89, also turned down a part that would have surely enhanced her popularity in America: that of Mrs. Robinson in the Academy Award winning film “The Graduate” (1967)…Glen Campbell, 81, has also left us after a long battle with Alzheimer’s disease. While Campbell is best known for a string of late 60s and early 70s pop hits, including “By The Time I Get To Phoenix,” “Wichita Lineman,” “Rhinestone Cowboy” and “Southern Nights,” I’ll best remember the Arkansas born entertainer as one of the best guitar players of the past 50 years. In fact, he cut his teeth as a session player for The Wrecking Crew, a cracker jack ensemble of Los Angeles musicians who were featured on hundreds of hit recordings for artists including the Beach Boys, Frank Sinatra, The Monkees and Elvis Presley…June Foray is also dead. You may not know her by name, but you would know her by voice. She voiced characters in more than 1,000 cartoons, including episodes of “Tom and Jerry,” “Mr. Magoo,” “Yogi Bear” and “The Flintstones.” But Ms. Foray’s signature roles came in the great “Rocky & Bullwinkle” cartoon series. Foray was the voice of Rocket J. Squirrel (“Hey Bullwinkle, we’re in real trouble now!”) and sultry Russian villainess Natasha Fatale (“Boris, dollink.”). She was 99 when she left us…three sports notables I particularly admired have also passed away. Ara Parseghian, 94, the great Notre Dame football coach, is now finding peace way above the uprights. In his 11 seasons as head coach of the Fighting Irish, his teams won 95 games and only lost 17, placing him with other legendary Golden Dome coaches Knute Rockne and Frank Leahy. His 1966 and 1973 teams were voted national champions. I personally admired Parseghian for his grace and the leadership he provided to the young men who played for him. Leaving us too soon was major league baseball’s Don Baylor, the former American League MVP who began his career with the 1970 Baltimore Orioles. Baylor remains one of my favorite Orioles because of his aggressive and intimidating style. He was the epitome of the “play hard but play clean” player of past generations. In addition to his MVP award, he was part of the 1987 World Series champion Minnesota Twins team and managed the Chicago Cubs and Colorado Rockies. In 1985, Baylor won the Roberto Clemente Award as the player who “best exemplifies the game of baseball, sportsmanship, community involvement and the individual’s contribution to his team.” He had a reputation for being as tough as nails (he was hit by a pitch 267 times during 19 seasons as a player, which was a record at the time), but was one of the most beloved players of his era. Don Baylor was only 68 when he died. Also passing on was the Phillies’ longtime catcher Darren Daulton, a player cut from much the same cloth as Don Baylor. Daulton, who was a three-time All-Star in his 14 seasons in the big leagues, served as the Phillies’ inspirational leader for many years, including its 1993 World Series championship year. Daulton, only 55, played with constant pain due to two damaged knees (which required five surgeries), but always found a way to suit up and lead by example. “Darren was a true leader of men,” said Phillies chairman emeritus Bill Giles. “In addition to being an outstanding clubhouse leader, he was also a fighter. I really enjoyed watching him for 14 years in uniform. Darren was a super human being. His teammates loved him. I loved him like he was one of my own.”…and, finally, Godzilla is dead. No, not the fictional monster (who will apparently live forever), nor Amazon’s nickname, but Haruo Nakajima, who wore the Godzilla body suit in the first nine Godzilla films, from the original 1954 flick to 1972’s “Godzilla vs. Gigan.” BTW, the original Godzilla costume weighed about 200 pounds and was created from mostly concrete since commodities like rubber were in short supply after World War II. He was given little direction on how to portray the monster and formulated his character by conducting his own research at the Tokyo Zoo. Nakajima was 88.