OPERATIONS

NRF: Labor fears drive higher retail imports

BY Staff Writer

Washington, D.C. — Import volume at major U.S. container ports is expected to increase 7.5% in June as retailers bring unusually high quantities of merchandise into the country early to avoid any potential disruptions after the labor contract with West Coast dockworkers expires. According to the monthly Global Port Tracker report released by the National Retail Federation (NRF) and Hackett Associates, in June U.S. ports followed by Global Port Tracker are expected to handle 1.46 million Twenty-foot Equivalent Units (TEU), up 7.5% year-over-year.

One TEU is one 20-foot cargo container or its equivalent. May was estimated at 1.47 million TEU, up 5.8% from the same month the prior year. In April, the most recent month for after-the-fact numbers, major U.S. container ports handled 1.43 million TEU, up 10.3% year-over-year.

U.S. ports followed by Global Port Tracker handled 1.43 million Twenty-Foot Equivalent Units in April, the latest month for which after-the-fact numbers are available. The number was up 9.9% from March and 10.3% from April 2013. One TEU is one 20-foot cargo container or its equivalent.

July is forecast at an even-higher 1.51 million TEU, up 4.4% from last year; August at 1.52 million TEU, up 1.9%; September at 1.45 million TEU, up 0.8%; and October at 1.48 million TEU, up 3.4%.

The first half of the year is expected to total 8.3 million TEU, up 6.5% from the first half of 2013. The total for 2013 was 16.2 million TEU, up 2.3% from 2012’s 15.8 million TEU.

The import numbers come as NRF is forecasting 4.1% sales growth in 2014. Cargo volume does not correlate directly with sales but is a barometer of retailers’ expectations.

The Pacific Maritime Association and the International Longshore and Warehouse Union began negotiations last month on a new contract to replace the agreement that expires June 30. NRF has urged both sides to avoid any disruptions that could affect the flow of back-to-school or holiday merchandise.
West Coast ports handle more than two-thirds of U.S. retail container cargo, including the bulk of cargo from Asia. The last major coast-wide shutdown there occurred in the fall of 2002, closing ports for 10 days and creating a months-long backlog to be cleared.

“We don’t want to see disruptions at the ports but retailers are making sure they are prepared in case that happens,” said NRF VP for supply chain and customs policy Jonathan Gold. “Whether it’s bringing cargo in early or other contingency plans, retailers will keep the shelves stocked for the back-to-school and holiday seasons.”

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Wal-Mart names Greg Penner, Rob Walton’s son-in-law, as vice chairman

BY Marianne Wilson

New York — Wal-Mart Stores named Greg Penner, 44, to the new role of vice chairman, a move that positions him to be a successor to chairman Rob Walton. Penner, 44, is Walton’s son-in-law and has served on the board since 2008. The appointment was announced Friday morning at the company’s shareholders’ meeting.

The move strengthens the Walton family’s control of the board. Walton, 69, is the son of Wal-Mart founder Sam Walton.

“One of the board’s most important responsibilities is long-term succession planning, and the company spends considerable time planning for stability and continuity, both at the board and management level,” said Walton, who will remain chairman of the board of directors. “In keeping with this commitment, I’m pleased with Greg’s appointment. Walmart has benefited from his broad expertise in strategic planning, finance and investment matters.”

Penner has served on Walmart’s board since 2008. He is chair of the technology and eCommerce committee and also serves on the global compensation and strategic planning and finance committees.

“I am committed to the long-term success of Walmart,” said Penner. “My first Walmart experience was in 1994 and over the years I’ve developed a deep appreciation for our associates and their service to our customers. I look forward to contributing to a stronger Walmart in any way possible including how we develop new digital capabilities to add to our store offering. This is an exciting time to be part of Walmart.”

Penner has been a general partner of investment management firm Madrone Capital Partners since 2005. From 2002 to 2005, he served as Walmart’s senior VP and CFO, Japan. Prior to that role, he was SVP of finance and strategy for Walmart.com.

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Report: Coach to discount handbags

BY Dan Berthiaume

New York — Coach Inc. will reportedly start offering 25% discounts on its luxury handbags at its stores in twice-a-year sales during June and December. According to Bloomberg, Coach will reduce prices on end-of-season and discount merchandise from 30-50%.

Coach has never before discounted items in its own full-price stores, although it does operate outlet stores and has conducted sales with third-party retail partners. The first discount period starts with an invite-only presale June 6-12, followed by a general sale. Coach is launching the discount strategy after reporting declining net income, net sales and same-store sales during its third quarter fiscal 2014.

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