TGT Target Corp

By Paul Page 

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Target Corp.'s chief is standing by the retailer's physical stores even as the brick and mortar seems to be crumbling around him. Chief Executive Brian Cornell warned of a steep decline in profit this year, the WSJ's Khadeeja Safdar reports, while calling this "a year of investment" that will commit Target to improving its stores, launching exclusive brands and developing supply chain and digital capabilities. The grim outlook following declining sales in the holiday quarter is a stark sign of the impact internet commerce is having on traditional retailers, and Target's faltering approach shows how tough it's been to turn around the big-box operators. Target isn't closing stores like some retailers, but instead plans to use more of those outlets to fulfill online orders while it cuts its overall inventory. As other retailers have seen, however, using stores for both online and in-store fulfillment can bring a new set of costs, and headaches.

LG Electronics Inc. says the need to move goods faster to American consumers is behind the South Korean company's decision to build its first major factory in the U.S. The conglomerate is putting a washing machine plant in central Tennessee, the WSJ's Andrew Tangel reports, in a move that could help LG's push into the American home-appliance market. It also gives LG a new production outlet following a U.S. Commerce Department decision last year to impose tariffs on LG washers made in China. But LG insists its new site is built on the need to streamline its supply chain in a lucrative market, not battles over tariffs. LG executive William Cho says a U.S. factory will speed up deliveries to American customers, reduce shipping time and costs while helping the company to respond more quickly to market demands.

Flatbed trucking company Daseke Inc. has some new currency for its acquisition-fed growth strategy. The company has started trading on Nasdaq, WSJ Logistics Report's Erica E. Phillips writes, through a merger with an investment company set up for the deal that values the company at about $700 million. Daseke is one of the biggest carriers in the $133 billion flatbed sector, but it's a highly-fragmented wing of trucking the company believes is ripe for consolidation. Daseke says it will use $150 million from the new stock offering for more acquisitions to build on a buying spree that took it from $30 million in revenue in 2009 to $655 million last year. Daseke has targets in mind, but its bigger aim may be the $1 trillion in infrastructure spending being considered in Washington. With its bigger scale, Daseke may be heading into a fast lane for a share of that federal money.

SUPPLY CHAIN STRATEGIES

Big warehouses are going up at a blistering pace, but companies aren't lining up quite as fast to fill them. A new report from real-estate broker Colliers International shows developers finished "big box" warehouses totaling nearly 25.5 million square feet combined in the last three months of 2016, a 77% increase from a year ago. But "net absorption" -- the industry measure for real estate filled by clients -- slipped back from a year ago and from the third quarter. It's only one quarter, of course, and a typically slow time of year. But it signals a rare pause in a warehousing market that has seen developers scrambling to keep up with accelerating growth in demand in recent years. Market-watchers at Colliers and other firms say demand for distribution centers remains vibrant, and they note the online sales explosion that is fueling the warehousing surge isn't slowing down at all.

Add the seafood business to the industries lining up against a possible border tax. Food businesses that rely on raw materials are among those most exposed to the border-adjustment provision tin the House Republicans' tax plan, the WSJ's Richard Rubin and Heather Haddon report. And unlike goods manufacturers, they can't turn their supply chains inside out. They warn that the potential border adjustment tax could force them to raise prices and likely would take a big toll on revenues. The food industry depends heavily on imports: Imported seafood, for instance, makes up more than 80% of domestic consumption. Coffee, tea, spices, chocolate and bananas make up some of the world's longest-standing supply chains -- and can't be produced in commercially viable quantities at home. Border-tax proponents are pressing ahead, but the potential impact at the dinner table suggests the effort will be a complicated battle that will reach deep into the business community.

QUOTABLE

IN OTHER NEWS

German container line Hapag-Lloyd AG's full-year operating profit fell in 2016 but rose in the final quarter on cost-cutting. (WSJ)

A revised fourth-quarter gross domestic product report showed consumer spending grew faster than earlier estimated while business investment was softer. (WSJ)

U.S. home prices jumped in December to their fastest full-year growth since 2013. (WSJ)

U.S. imports of consumer goods jumped 4.8% in January. (MarketWatch)

Automotive supplier Takata Corp. pleaded guilty to criminal wrongdoing and will pay $1 billion for providing misleading reports to auto makers on rupture-prone air bags. (WSJ)

Airbus SE completed the sale of a majority stake in its defense electronics business to private-equity firm KKR & Co. (WSJ)

Apparel giant VF Corp says it is adopting new sourcing policies to eliminate products that contribute to deforestation and human rights violations. (Reuters)

Nissan Motor Co. wants the U.K. government to help rebuild the country's car parts business to replace components after the country leaves the European Union. (The Guardian)

Gap Inc. is reconfiguring some distribution centers that supply retail stores to deliver online orders. (Internet Retailer)

ANA Holdings and its affiliated Overseas Courier Service will set up a Chinese-language online marketplace for Japanese companies to sell goods in China. (Nikkei Asian Review)

Shipping company DHT Holdings rejected a sweetened takeover offer from Norway's Frontline. (Seatrade Maritime)

CMA CGM SA Chief Executive Rodolphe Saadé says the container shipping giant is watching out for takeover targets in the consolidating industry. (Lloyd's List)

Korean shipping line Hyundai Merchant Marine Co. signed a pact with two regional operators to cooperate on container shipments. (Yonhap)

Lesco Logistics, part of a family-owned group of Tennessee trucking businesses, will wind down operations. (Chattanooga Times Free Press)

Retail e-commerce sales in Germany grew 12.5% last year. (eMarketer)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .

Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

March 01, 2017 06:43 ET (11:43 GMT)

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