Charming Charlie becomes 20th major retailer to file for bankruptcy this year
The company announced on Tuesday
Charming Charlie, the Houston-based jewelry and accessories retailer, announced Tuesday that it reached an agreement with lenders and equity sponsors to clear the way for its filing of Chapter 11 bankruptcy.
What went wrong: Charming Charlie's bread-and-butter, affordable jewlery, is an ideal product for online sellers, given that it can be warehoused and shipped cheaply. What's more, even as business migrated online, Charming Charlie overextended itself, opening 79 stores between 2013 and 2015.
Why it matters: It's the twentieth major retailer to have filed for bankruptcy protection in 2017.
Charming Charlie burst onto the retail scene in 2004, with stores uniquely organized by color, and offering products at prices between high-end jewlery stores and discount shops like Claire's, which is aimed at the teenage market.
Amazon has quietly become the second-largest seller of apparel in the United States, investing heavily in its own private-label offerings, which customers have flocked to for their value. As designer Jackie Wilson tells Bloomberg:
They are not concerned at all about how many units they sell, and they’re not focused on margins. They’re concerned about customer satisfaction. They want five-star reviews.
Why it matters: Younger shoppers have become much less loyal to name brands, and retailers like Amazon, Walmart, and Kohls have capitalized by recruting designers and Asian manufacturers to create their own lines of apparel. Amazon's clothes are so popular that 40% of all e-commerce clothing sales go through the platform.
The U.S. economy added 228,000 new jobs in November, while the unemployment rate stayed firm at 4.1%, the Labor Department said Friday.
Why it matters: As lawmakers rush to pass tax reform aimed at goosing the economy, the jobs market is running as hot or hotter than any time in the past decade.
One puzzling thing: Wage growth still remains muted, even with rock bottom unemployment. As economist Justin Wolfers frames it:
The key puzzle remains: With unemployment this low, why aren't we seeing faster nominal wage growth? Suggests that the economy still has room to run without igniting inflation.
— Justin Wolfers (@JustinWolfers) December 8, 2017
Implications for the Fed: Incoming Fed Chair Jerome Powell will have to navigate this vexing question as the central bank attempts to steer interest rates higher without puncturing the economic recovery.
Illustration: Rebecca Zisser / Axios
"Current bitcoin holders are the gazelles in the plain, and the tigers and lions are about to get released."
Data: CoinDesk; Chart: Axios Visuals
Photo: Charles Krupa / AP
Investors sent shares in Dollar General higher Thursday after the company announced better-than-expected sales growth and plans to open 900 stores in 2018.
Why it matters: Dollar General avoided the struggles of the broader retail industry by focusing on poor, rural communities overlooked by Walmart, which are home to customers living paycheck-to-paycheck with limited access to credit cards.
But the planned expansion is in part a bid to go after affluent shoppers. "We are encouraged by the early progress," Neil Saunders, managing director of GlobalData Retail, said in a research note to clients. "The company is capturing a more significant share of spending from middle income and more affluent Americans."
Walmart Chairman Greg Penner. Photo: Danny Johnston / AP
Walmart Chairman Greg Penner told an audience at the Fortune Global Forum in Guangzhou, China, today that "open borders and free trade have been good for our consumers." He added that each of the past 11 presidential administrations has sought out the opinions of the company on such matters due to Walmart's large size and U.S. employee base of more than 2 million.
Why it matters: Walmart has long been associated with red-state America, but the company has recently clashed with the GOP's anti-free trade faction, as evidenced by the lobbying it did to kill proposal earlier this year to increase taxes on companies that import goods from abroad.
What we're watching: Look for Walmart to increase pressure on lawmakers to stand up to the increasingly influential protectionist faction in the White House.
Here's what else Penner had to say:
Walmart is made better by "being paranoid" about the competition.
On the challenges of integrating Walmart's in-store and e-commerce businesses.
On how the company is managing its expansion into China by partnering with JD.com:
On managing a company of Walmart's size and scope:
On what American companies can learn from East Asia:
Editors note: Penner is an investor in Axios.
Illustration: Rebecca Zisser / Axios
Retailers think this is the holiday season of the smart speaker, with Google, Amazon, and other tech firms spending big on marketing and discounts to get their voice-assistant technology into as many living rooms as possible.
David Watkins of Strategy Analytics tells Axios that 14 million smart speakers will be sold globally during the final three months of the year, driven by recent, heavy discounting of Google's Home and Amazon's Echo devices, as well as evidence that Alibaba's Genie is outselling expectations in China.
Why it matters: That is a lot of smart speakers: these devices tend to be bought one or two per home, and there are just 125 million households in the U.S.. Amazon and Google are going all out to move them, not because they earn a profit on heavily discounted sales, but to hook consumers and open up e-commerce and advertising revenue down the road.
Why retailers and brands should worry: Those revenues have to come from somewhere. One possibility is that they will be driven by new marketing spending by retailers and brands specifically aimed at these platforms; another is that these devices will motivate shoppers to do more shopping over the Internet.
Thumbs on the scale: According to Suzanne Tager, senior director of Bain & Company's retail and consumer products practices, Alexa-enabled Amazon devices steer customers toward Amazon private-label, in addition to items they have previously bought. Bain conducted a voice-ordering test across categories using Amazon Echo and found:
Google to the rescue? Chris Taylor, who formerly ran Target's experimental Store of the Future, cites retail partnerships involving Google Assistant as an example of what might work.
South African retail conglomerate Steinhoff, which owns the U.S.-based MattressFirm, announced Wednesday that CEO Markus Jooste had tendered his resignation from the company after the board learned of information relating to "accounting irregularities requiring further investigation." Steinhoff is the world's second-largest furniture dealer with operations in Europe, Africa, Australia, and the U.S.
Why it matters: The company's stock fell more than 60% during trading Wednesday in Frankfurt, where the stock is listed. "This story has the smell of Enron, which rocked financial markets, starting in 2000," Writes Raymond James analyst Budd Bugatch in a note to clients Wendesday. "It is too soon, obviously, to know the ultimate impact of this mess."
The European Court of Justice ruled Wednesday that luxury brands have the right to prevent retailers from selling their products on third-party marketplaces like Amazon.com if the restriction is motivated by the desire to preserve the brand's exclusive image.
Why it matters: Brands have chafed at their inability under U.S. law to prevent retailers, who sometimes acquire products without the brands' consent, from reselling that merchandise through online marketplaces.
"The quality of luxury goods is not simply the result of their material characteristics, but also of the allure and prestigious image which bestows on them an aura of luxury," the decision reads, further arguing that restricting where luxury goods are resold isn't anticompetitive, but necessary to protect the integrity of the product.
The ruling resulted from a suit in which U.S.-based Coty, which manufacturers luxury cosmetics brands like like Marc Jacobs and Chloe as well as more mainstream brands like Covergirl, argued that German retailer Parfümerie Akzente was violating the terms of its contract by reselling its brands on Amazon.com.
Amazon CEO Jeff Bezos. Photo: Ted S. Warren / AP
Amazon likes to call itself "the everything store," but it's also on it's way to being the everywhere store, launching its 12th global marketplace Tuesday in Australia. But the retail reckoning that many observers had predicted when Amazon finally unveiled its Australian website didn't materialize, as customers shopping on Amazon.au found selection to be lacking and prices high, Reuters reports.
Why it matters: Stocks of Australian retailers like Myer Holdings department store rose on the news of Amazon's lackluster debut, but Australian retailers shouldn't get too comfortable. As the Australian Financial Review warned earlier this year, "While other companies dread making colossal mistakes, [Jeff] Bezos seems just not to care," arguing that Amazon's deep pockets and long-term outlook allow it to profit from the lessons learned through initial failure.