Sears chairman submits revised takeover bid
Sears has been given an eleventh hour lifeline.
Sears chairman Eddie Lampert submitted a revised takeover bid of more than $5 billion for the embattled company, according to a regulatory filing made on Thursday. Similar to Lampert’s earlier bid of $4.4 billion, the new offer was made through an affiliate of his hedge fund, ESL Investments Inc. It assumes $663 million in liabilities, including taxes, vendor bills and other expenses Sears has incurred since filing for bankruptcy protection last October. The addition of up to $139 million in administrative priority claims would seem to resolve one of the key sticking points of Lampert’s rejected $4.4 billion offer. One of the main points of contention in the negotiations between Lampert and Sears was whether Lampert’s bid fully addressed the bankruptcy costs that Sears has racked up.
Similar to the first offer, the new one aims to preserve up to 50,000 jobs.
If Sears considers the new offer as viable, ESL will be able to participate in an auction set for Jan. 14 against other bidders. Sears is expected to receive other bids for some store leases and other assets, but Lampert’s bid is likely to be the only one that would keep the retailer maintaining operations.
In a final step, any offer will need to be approved by the bankruptcy court in a hearing scheduled for Jan. 31, reported CNBC. The bankruptcy judge will also have to eventually sign off on a credit bid, should Lampert rely on one, the report said.
Target’s same-store sales rise during holiday season
Target posted stronger-than-expected holiday sales amid a surge in traffic to its stores and website.
Target’s same-store sales in the combined November/December period rose 5.7%, ahead of 3.4% growth in the year-ago period. The results reflected strong traffic, positive store comps and comparable digital sales growth of 29%, the retailer said. All of Target’s core merchandise categories posted growth, led by toys, baby and seasonal gifts.
Target said store pickup and drive-up for online orders surged more than 60% from a year ago, and accounted for a quarter of the company’s digital sales in the holiday period. The company expects that 2018 will be the fifth consecutive year in which its online sales grow more than 25%.
“We are very pleased with Target’s holiday season performance, which came on top of really strong results in the same period last year,” said Brian Cornell, chairman and CEO, Target. “This performance demonstrates the benefit of placing our stores at the center of every way we serve our guests, including both in-store shopping and digital fulfillment.”
Target reaffirmed its full-year earnings and sales forecast, putting it on track for the strongest full-year comparable sales growth since 2005.
The company also forecast market-share gains across all of its core merchandising categories and double-digit growth in adjusted EPS.
“In 2019, we expect to build on this momentum as we gain further scale in our fulfillment capabilities and deliver profitable growth throughout the year,” the retailer stated.
Analyst Neil Saunders, managing director of GlobalData Retail, commented that Target gave everything it had to this holiday season, “pulling out all the stops on merchandise, omnichannel services, and marketing” and that its efforts paid off.
“Over the past couple of years, Target’s store execution on festive products has been patchy,” said. “However, this year Target won Christmas with a very compelling and well-executed assortment of decorations, decor, gifting, and food. Conversion rates for holiday products were up sharply on last year and we believe that Target was a key destination for many households buying Christmas essentials.”
Target continues to expect fourth quarter 2018 comparable sales growth of approximately 5%. For the full year, the company continues to expect adjusted EPS of $5.30 to $5.50 and GAAP EPS of $5.41 to $5.61. The 11-cent difference between expected full-year adjusted EPS and GAAP EPS is driven by discrete items already reported through third quarter 2018.
Survey: Consumers use mobile discounts on in-store purchases
More than half of consumers use mobile apps in-store, but not necessarily to buy things.
According to “Surviving the Retail Apocalypse,” a new survey of more than 1,000 consumers of all ages from Yes Marketing, 57% of consumers have used a retailer’s mobile app while shopping in the store. The top three reasons respondents offered in-store mobile app usage all revolved around obtaining discounts: redeeming coupons (65%), finding coupons (57%) and locating items that are on sale (46%).
Meanwhile, only 33% of surveyed consumers prefer to make purchases on smartphones. Instead, they would rather use tablet and desktop (49%) for a more frictionless purchasing experience.
“To survive the retail apocalypse, retailers need to prioritize the mobile experience,” said Jim Sturm, president of Yes Marketing. “Consumers will not hesitate to turn to another brand if it offers a more user-friendly experience. Retailers can bridge the mobile-to-store experience by introducing apps that support the in-store shopping with features like maps of store layouts and access to product ratings.”
Other survey findings include:
• Half of respondents (49%) say visually appealing stores would motivate them to shop at a brick-and-mortar location.
• Centennials (consumers born after 2000) are more likely than all other generations to shop in stores for visually appealing displays (58%), while Millennials are most interested in local events (36%) and additional services (42%).
• Nearly all consumers (90%) purchase in stores at least monthly, and 60% say they shop in stores because they want to see items in person.