CVS Health exec named CEO of department store giant
Hudson’s Bay Company, parent company of Lord & Taylor, Saks Fifth Avenue, Hudson’s Bay and other retail banners, named CVS Health veteran Helena Foulkes as CEO, effective February 19.
Foulkes has been with CVS for 25 years, most recently as executive VP of CVS Health and president of CVS Pharmacy. At HBC, she will be responsible for global strategy and operations for all of the company’s banners, overseeing more than 66,000 associates worldwide across a portfolio of more than 480 stores, related e-commerce platforms, supply chain, logistics and technology. She takes the reins of HBC as it deals with declining traffic and ongoing pressure from an activist investor.
Upon joining HBC, Foulkes will also be appointed the company’s board. Richard Baker, who has been acting as interim CEO since the abrupt departure of Jerry Storch from the job last fall, will continue as governor and executive chairman.
“Helena is a transformational leader who will invigorate the business with a new perspective as we position HBC for the future,” said Richard Baker. “Throughout her 25 year tenure in retail, she has a proven track record of making bold, strategic choices that, at their core, put the customer first and have proven enormously impactful to business success.”
Foulkes joined CVS in 1992. She has served as executive VP of CVS Health and president of CVS Pharmacy since January 2014. In the role, she led the strategic vision as well as the operations for all aspects of the company’s retail business, including its nearly 9,700 retail stores, 20 distribution centers and e-commerce sites, as well as merchandising, supply chain, marketing and real estate. She helped lead CVS’s move to discontinue sales of tobacco products. Most recently, she led the company’s decision to eliminate air-brushing of models from the imagery used to promote its in-house beauty brands.
Founded in 1670, HBC is the oldest company in North America. Its portfolio includes formats ranging from luxury to premium department stores to off-price fashion shopping destinations, with more than 480 stores. HBC’s banners include Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, Saks Off 5th, Galeria Kaufhof, the largest department store group in Germany, and Belgium’s only department store group, Galeria INNO.
Amazon is creating a health care company—with two big-name partners
Amazon is teaming up with two influential companies to try to improve a system that others have tried and failed to change over the years.
Amazon, Berkshire Hathaway and JPMorgan Chase will form an independent company, as yet unnamed, that will address health care for the U.S. employees of their respective companies with the aim of lowering costs and improving satisfaction — outside a focus on profit making and other constraints.
The initial focus of the new company will be tech solutions that can make quality, transparent health care accessible at a manageable cost, the three companies said. They noted that this new long-term venture would leverage the scale of each of them alongside their various specialties.
“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” Amazon founder and CEO Jeff Bezos said. “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”
The three companies bring significant financial and operational scale to healthcare. Berkshire Hathaway had $27.4 billion in comprehensive income for the full-year 2016, Amazon is projected to report earnings around $177.3 billion for its full-year 2017 on Thursday and JPMorgan Chase controls $2.5 trillion in assets. Amazon also brings to the table its Whole Foods Market retail footprint.
“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Warren Buffett, CEO, Bershire Hathaway said in a statement. “Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”
The effort currently is in the planning stages, and its initial formation will be helmed by Todd Combs, a Berkshire Hathaway investment officer; Marvelle Sullivan Berchtold, who is a managing director of JPMorgan Chase; and Beth Galetti, an Amazon senior VP.
“The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” JPMorgan Chase chairman and CEO Jamie Dimon said.
Sears narrows loss but sales tumble for 24th straight quarter
Sears Holdings Corp. reduced its third quarter loss by $190 million helped by lower operating costs from its reduced store portfolio, but it saw no improvement on the revenue side as same-store sales plunged 15.3%.
Sears reported a net loss of $558 million ($5.19 loss per diluted share) for the quarter ended Oct. 28, compared to a net loss of $748 million ($6.99 loss per diluted share) in the year-ago period.
Revenue fell 27% to $3.66 billion, with store closures contributing to over half of the decline, the company said. Revenues were also negatively impacted by reductions in the number of pharmacies in open Kmart stores, and the reduction in consumer electronics assortments in both Kmart and Sears stores.
Same-store sales declined 15.3% during the quarter. Kmart comparable sales decreased 13.0%, while Sears comparable store sales declined 17.0%.
Neil Saunders, managing director, GlobalData Retail, said he saw nothing to celebrate in Sears’ third quarter performance despite the improvements in its bottom line.
“Much has been made of the improvement to the bottom line,” Saunders commented. “In our view, these warm words — a bromide which has been trotted out at every results announcement for years — do not stack up against reality. It is true that losses have narrowed, but Sears was still in the red by well over half a billion dollars during the quarter.”
Saunders said he saw no chance of Sears’ sales losses leveling off anytime soon.
“The dramatic loss of customers at existing stores continues apace, and we believe that there is a danger this trend could accelerate into the new year,” he said. (For more, click here.)
Adjusted EBITDA improved $100 million to $275 million in quarter of 2017, from $375 million in the prior year third quarter. It was the second consecutive quarter of at least $100 million improvement in adjusted EBITDA as the restructuring actions taken in the first three quarters of 2017 have resulted in meaningful year-over-year improvement, Sears said.
Going forward, Sears said it will continue to maintain “extreme cost discipline,” and continue to diversify revenue streams through third-party partnerships in several of its businesses including Sears Home Services, Innovel, Kenmore and DieHard. It also plans to build on the “momentum” around its dedicated concept format, such its Sears Appliances and Mattress stores.
Sears’ third quarter results were in line with its earlier forecast released in October. In that release, the retailer said it had entered into a deal with the Pension Benefit Guaranty Corp. over its pension obligations, clearing the way for the company to sell 138 additional properties. “Once complete, the estimated contributions of $550 million to the pension plans in 2018 and 2019 is eliminated (with the exception of a $20 million payment in July of 2018),” Sears CFO Rob Riecker stated Thursday. “Additionally we will be taking action in the near term with respect to certain upcoming debt maturities to provide the company with further financial flexibility and enhanced liquidity.”
In a statement, Sears Holdings chairman and CEO Edward Lampert focused on the company’s positive developments.
“In the third quarter, we continued to narrow our losses and delivered another quarter of adjusted EBITDA improvement of at least $100 million,” said Sears Holdings chairman and CEO Edward Lampert. “With the challenging retail landscape continuing to pressure sales, the improvement in adjusted EBITDA is reflective of the success of the strategic priorities we outlined earlier this year to streamline our operations, reduce inventory and minimize operating expenses, as well as our commitment to our goal of restoring positive adjusted EBITDA in 2018.”