Gap going value
“The economic model of Outlet is the highest return on capital and is where customers gravitate," Gap CEO Glenn Murphy said at an investment conference in New York City, where he revealed the company will close 200 U.S. Gap stores and expand its outlet base.
But don’t expect the stores to be filled with last year’s castoffs.
"I don’t want them bringing stripes in the stores if stripes are last year’s idea,” Murphy said.
One shareholder proposal draws considerable support
All of the proposals voted on at Walmart’s shareholders’ meeting last Friday were defeated, but the official tally of results filed with the Securities and Exchange Commission last night revealed one proposal that drew a surprisingly large number of votes.
There were 539,951,596 shares voted in favor of a proposal that would give shareholders of 10% of the company’s outstanding shares the power to call a special meeting of shareholders. Walmart had recommended shareholders vote against the proposal on the grounds that the company has appropriate corporate governance provisions in place and the board acts in the best interests of shareholders.
“Permitting shareholders with as little as 10% of the outstanding shares to call special meetings for any reason and at any time could result in special shareholders’ meetings that are not in the best interests of our company and all of its shareholders,” was the rationale the company offered in the proxy statement encouraging shareholders to vote against the proposal. “Holding a special meeting of our shareholders would be a costly undertaking, involve substantial planning, and require us to commit significant resources and attention to the legal and logistical elements of such a meeting.”
While holders of nearly 540 million shares disagreed with that logic, the proposal was nonetheless soundly defeated as holders of 2,369,864,157 shares voted against the special meeting idea. That may sound like a lot, but shareholder votes at Walmart tend to be distorted by the fact that the Walton family holds 1,680,506,739 shares, slightly more than 48% of the total outstanding, and voted against the proposal. Remove those shares from the total and number of votes against the 10% meeting idea drops to 689,357,418, which is a lot closer to the number of shares cast in favor of the proposal. The exercise illustrates the futility of attempting to get Walmart to amend its bylaws by submitting proposals for consideration at the company’s meeting since adoption of any proposal at Walmart will require the support of the Walton family.
Fewer ads, but more pages per promotion
In keeping with its renewed focus on EDLP, the average number of promotional pieces per market decreased to two in May compared with 2.8 the prior year, but the average number of pages increased to 40 compared with 30, according to the Chicago-based firm Market Track.
On average, across a retailer set that includes many of the nation’s top companies, both the number of inserts and number of page counts decreased when comparing May 2011 to May 2010. Notable standouts for the insert counts include a decline of 39% for Home Depot and an 11% decrease for Lowe’s. While both Home Depot and Lowe’s dropped fewer inserts this year compared with last year, Home Depot’s decline was more pronounced from nearly seven inserts in 2010 to four in 2011. Interestingly, while home/hardware retailers experienced decreases in number of drops, the number of pages did not parallel the same level of decline. Home Depot’s pages only dropped by 7%, and Lowe’s actually increased their average page count by 9% in 2011 compared with 2010. Sears charted the greatest percentage increase in inserts with 37% increase this May over May 2010.
When looking at number of pages, Macy’s, Safeway and Walmart showed the strongest increase in number of pages on a year over year comparison, while Best Buy and CVS decreased their pages by 24% and 18% respectively.
It’s important to note a number of factors that should be considered when examining the number of inserts and pages retailers send into the marketplace. Market Track’s granular level of data reflects regional versioning and market specific differences. This is accomplished through an extensive collections process, including physically obtaining the ads from the various markets in which they are distributed. In the instance that retailers send additional circulars to a limited number of markets, Market Track’s information reflects these nuances through numbers with decimals (for average number of inserts per market) and odd numbers (for average number of pages).