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jerryking : overcapacity   7

Store wars: short sellers expect more pain in US retail
February 26, 2019 | Financial Times | by Alistair Gray in New York.

Short sellers who made big bets against US retailers a couple of years ago had hoped for carnage across the board. No one could compete with the rise and rise of Amazon...which would make life hard for every mall tenant across America.

But after a period in which internet shopping seemed to hit almost every brick-and-mortar retailer, the industry seems to be dividing into winners and losers. Casualties are still piling up: bankruptcies since the turn of the year....Payless Shoes ....Sears, the once dominant department store chain, narrowly avoided outright liquidation.

However, some of the biggest companies e.g. Walmart & Best Buy are reporting their healthiest metrics in years......For short sellers trying to profit from falling share prices, it makes for a perilous environment.

“It’s a slow death by a thousand paper cuts, and not the kind of ‘mall-mageddon’ originally anticipated by that trade,”.....“Retail has been much more volatile than many would have expected. It hasn’t been decidedly one way down.”....an over-reaction in 2017 and that led to pretty nice opportunities [for longs] in 2018,”.....Investors who put money on the demise of retail that summer have lost out in many cases......It was almost as if they [shorts] were acting like no retail real estate space can work,” ....overcapacity doesn’t mean retail real estate is dead.”...Shares in the sector have been volatile in part because investors have had to consider a series of seemingly contradictory data points about the health of both the US consumer and the retail business.....Traditional chains are also trying to take on Amazon by improving their online offerings and making their stores more enticing. Both require hefty investment, although successful examples include Lululemon, which offers yoga lessons in its stores. Shares in the company have tripled since a 2017 low.

“Those who are innovating and investing in ecommerce, marketing and social media tend to be doing well...“The US is still over-stored,” ...Ecommerce meant “more of the store base is not economic. That’s going be a secular pressure for years to come. For those retailers that don’t have a digital strategy, it’s just a matter of time before they fall.”
Amazon  apocalypses  bankruptcies  barbell_effect  bear_markets  bricks-and-mortar  commercial_real_estate  death_by_a_thousand_cuts  department_stores  digital_strategies  e-commerce  innovation  investors  investment_thesis  Lululemon  pain_points  overcapacity  retailers  shopping_malls  short_selling  structural_decline  Wal-Mart 
february 2019 by jerryking
Supermarkets Face a Growing Problem: Too Much Space - WSJ
By Heather Haddon and Julie Jargon
July 31, 2017

A massive retail build-out has taken a toll on earnings, leaving the industry vulnerable to closures; ‘There’s only so much food we can buy’....Supermarket chains operating in dense areas where shoppers have more online grocery options are particularly vulnerable to future consolidation, according to Barclays Capital Inc., which said that 38 of the top 50 grocery markets in the U.S. are already too saturated by food retail per capita or are on track to be so by next year......the growth in groceries has extended across many types of retailers in recent years. Part of the expansion comes from grocers, who accelerated their store openings as a way to drive sales growth after the 2008 recession. At the same time, club chains, dollar stores, pharmacies—and even gas stations—increased their fresh food offerings to drive traffic and boost profits.....The food-retail sector has become even more saturated at a time when competition is only getting fiercer, particularly at the two ends of the shopping spectrum. Growing European deep-discounters Aldi and Lidl are vying for U.S. market share, hoping their prices will win over the budget-conscious shopper while internet companies like Amazon.com Inc. are trying to lure higher-income grocery shoppers online. Regional supermarkets and conventional ones such as Kroger Co. and Albertsons Cos. are the most likely to get squeezed in the process, according to analysts....... enduring changes in eating and food-shopping habits toward cheaper and more convenient options means consumers will increasingly spread their dollars among a variety of retailers.
retailers  grocery  supermarkets  oversaturation  e-commerce  barbell_effect  real_estate  store_openings  commercial_real_estate  prepared_meals  convenience_stores  pharmacies  overcapacity  Aldi  Lidl  consolidation 
july 2017 by jerryking
Canada beware: We are suffering a great depression in commodity prices - The Globe and Mail
MICHAEL BLISS
Special to The Globe and Mail
Published Friday, Jan. 15, 2016

The Great Depression of the 1930s used to be understood as a worldwide structural crisis that was partly an adjustment to the great expansion of crop acreage and other primary industries undertaken to meet the demands of the First World War. Unfortunately the history of those years now tends to be viewed through the distorting lenses of economists fixated on monetary policy and financial crisis management.

They thought that the crisis of 2008 might become a replay of the 1930s. For the most part they have not realized that it is today’s global depression in commodity prices that has eerie echoes of the great crack-up. If it’s true that we have overexpanded our productive capacity to meet the demands of Chinese growth, and if that growth is now going to slow, or even cease, then history is worrisomely on the verge of repeating itself....One sign of the beginning of wisdom is to be able to shed illusions. Make no mistake. Right now, the world is experiencing a great depression in commodity prices, led by the collapse of oil, that represents an enormous shrinkage in the valuation of our wealth. As a country whose wealth is still highly dependent on the returns we can get from selling our natural resources, Canada is very vulnerable. In a time of price depression, our wealth bleeds away.
'30s  adjustments  commodities  commodities_supercycle  economic_downturn  Great_Depression  historians  history  illusions  Michael_Bliss  natural_resources  overcapacity  pricing  overexpansion  slow_growth  wisdom  WWI 
january 2016 by jerryking
Former Xstrata boss Mick Davis a slimmer, trimmer predator - The Globe and Mail
Mar. 13 2015 | The Globe and Mail | by ERIC REGULY - EUROPEAN BUREAU CHIEF
LONDON.

Mick Davis runs X2 Resources, which has 10 employees and zero assets other than $4-billion of investor capital, some of it from Canadian pension funds, sitting idly in the bank.

X2 was launched a year ago and has been shopping for mining assets or operating companies, but has come up short....Mr. Davis is wealthy. He recently donated £1.1-million ($1.5-million) to David Cameron’s Conservative party to support its re-election bid in the May general election. He admits he doesn’t need to launch X2 to support his lifestyle, though he would like to donate more money to his charities. What’s really driving him is the urge to build once again....Xstrata began life in 2001 as a small lump of coal assets discarded by Glencore. Big Mick had emerged as the industry’s premier predator. “What motivates me is to be able to create and build,” he said back then. “If you’re going to be productive in your time in this world, you have to add to it. I have the capability of adding commercially.”....Commodities recovered shortly after the 2008 financial crisis, then went into a long slump that continues today – copper is down more than 15 per cent in the past year, iron ore by 50 per cent. The culprit was not waning demand, Mr. Davis explains; it’s still rising, albeit at a slower pace. Instead, it was epic miscalculation by the corporate captains and the investors who threw money at them. When prices were strong, the biggies invested fortunes in new mines and smelters and all the ports, ships and railways that went with them. These projects were vast, expensive and took many years to build.

All that new production is now hitting the market like a sledgehammer.
Xstrata  Mick_Davis  mining  Glencore  Eric_Reguly  miscalculations  Second_Acts  commodities  private_equity  mergers_&_acquisitions  natural_resources  X2  entrepreneur  privately_held_companies  overcapacity  overexpansion 
march 2015 by jerryking
Don’t blame the flu for ER congestion - The Globe and Mail
ANDRÉ PICARD
The Globe and Mail
Published Tuesday, Jan. 06 2015,

Our emergency rooms are overflowing because of bad planning and misplaced priorities....Influenza is one of the most common and predictable infectious diseases on Earth. In Canada, it spreads from west to east and peaks at roughly the same time each year, near the end of December or early January.

Just as predictably, hospital ERs are besieged, most notably during the Christmas to New Year’s period.

There is more illness in the winter – not just flu, but gastroenteritis, colds and other pathogens spread by coughing and sneezing in close quarters....The larger issue is that our health system does nothing to anticipate and adjust to these problems. On the contrary, it is irresponsibly inflexible.

During the holiday season, retail outlets extend their hours, add additional staff, stock more supplies, and so on. All sensible stuff – Planning 101, if you will – designed to make life easier for the consumer.

Hospitals, and the health system more generally, do the opposite: During the holiday season, they reduce or close a range of services, from hospital beds to primary care clinics, and funnel patients to jam-packed emergency rooms.
adjustments  André_Picard  anticipating  community_care  congestion  emergency_rooms  flu_outbreaks  pathogens  planning  primary-care  healthcare  home_care  hospitals  inflexibility  influenza  overcapacity  overflow 
january 2015 by jerryking
Jonway Auto's Big Plans Points to Chinese Consolidation - WSJ.com
April 9, 2013 | WSJ | Rose Yu.

Overcapacity worries aren't confined to cars. China has a glut of factories in industries ranging from steel to construction equipment to solar panels. Beijing encouraged heavy investment in those industries to move away from its dependence on low-level manufacturing. While central government officials signal that they want to tamp down on capacity, local governments are still backing local champions that are major employers.

China's car-making capacity is set to soar in coming years. General Motors Co., GM +3.05% Volkswagen and Ford Motor Co F +2.50% . are building new factories and assembly lines. China's top 10 auto groups—which make both foreign and domestic brands—are expected to have combined capacity to build about 35 million vehicles a year by the end of 2015, according to their previous announcements, compared with 18 million vehicles in 2012.

But sales growth is slowing.
automotive_industry  China  overcapacity  consolidation 
april 2013 by jerryking
Rona’s new chairman vows ‘quick return’ to profit - The Globe and Mail
SOPHIE COUSINEAU AND BERTRAND MAROTTE

MONTREAL — The Globe and Mail

Published Monday, Jan. 21 2013
RONA  Quebec  turnarounds  retailers  hardware  overcapacity  big-box  Sophie_Cousineau 
january 2013 by jerryking

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