SHLDQ Sears Holdings Corporation (CE)

By Paul Page 

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Sears Holdings Corp.'s new agreement with Amazon.com Inc. marks an important step for the troubled retailer and for the online giant that's provided Sears its biggest competitive threat. Sears will start selling its Kenmore line of refrigerators and stoves on Amazon's website, the WSJ's Imani Moise and Suzanne Kapner report, marking the first distribution of Sears kitchen appliances outside of its own stores. That's a dramatic step for the struggling retailer, but it also pushes Amazon more deeply into the large-appliance business, one of the few corners of retail where it has yet to penetrate deeply. Both companies will upend their supply chains to make the plan work. Amazon will buy the Kenmore inventory, but it will reside in Sears's warehouses, and a Sears distribution unit will ship the goods to customers' homes and have them installed. Sears is hoping the tie-up brings more foot traffic while Amazon is effectively taking in more real estate, and a distribution operation to go with it.

It's no wonder Sears is looking to Amazon as a savior of sorts, at least for its appliance business. A comparison of the two retailers over time provides a graphic illustration of how the companies have effectively swapped places over recent years. The WSJ's Yaryna Serkez and Theo Francis write that major financial and scale measures for the companies completely crossed from 2009 to 2017, with Amazon overtaking and surpassing Sears even in physical space as the online retailer has bulked up in distribution centers. Amazon has surged from 17 warehouses to more than 260 in 30 states, most of them opened in 2015 and 2016. Sears has scaled back from some 2,000 stores to 1,200 in that time, and its 31 domestic distribution centers are down from 39 in 2009. Most significant may be that Amazon generates $400,000 in revenue per employee against Sears' $160,000, a gap that illustrates the challenge facing traditional retailers.

Volvo Car Corp. will start its transformation into an all-electric brand in China. The Swedish car maker is putting into a place a wide-ranging technical collaboration with its Chinese parent Zhejiang Geely Holding Group Co., the WSJ's William Boston and Dominic Chopping report, in a multi-year effort that may provide a jolt to drive the auto industry toward an electrified future. Volvo Cars will also take a stake in Lynk & Co., a car brand the Chinese investment group created in its effort to become a global automotive force. The venture aims to lower development costs by sharing technology across the three car companies controlled by Geely Holding. But the impact could spread as the project grows, with the scale of the businesses -- Volvo sold nearly 150,000 new cars last year -- potentially pushing other car makers and components suppliers to go after the market for electric cars and hybrids.

SUPPLY CHAIN STRATEGIES

Chipotle Mexican Grill Inc. is coming under scrutiny again for its food sanitation after overhauling its supply chain over the last two years. The food chain reopened a Virginia location that it had shuttered this week after reports that customers had gotten sick there, and the WSJ's Julie Jargon reports that more than 100 people may have been sickened. Chipotle says the cause of the outbreak was a norovirus that didn't come through the food supply, and the local health department says there's no early indication the illness came through the supply chain. For the chain, a pioneer in the fast-casual restaurant category, the shutdown recalls incidents a couple of years ago that sent Chipotle's planners scrambling to redesign how they prepared, packaged and shipped their food. Those tougher controls may be one reason Chipotle is so confident the more recent outbreak was limited to one site.

QUOTABLE

IN OTHER NEWS

A new report says supply-chain disruptions from extreme weather are growing but companies are doing little to assess risks. (WSJ)

Crude oil prices retreated after reaching a seven-week high on reports of another decline in U.S. stockpiles. (WSJ)

The euro jumped against the dollar to its highest level in nearly two years. (WSJ)

Economic talks between the U.S. and China ended without an agreement or future agenda, leaving Trump administration efforts to recast trade ties with Beijing in limbo. (WSJ)

Volvo is forecasting record car sales this year after strong Asia Pacific-led gains in the first half of 2017. (WSJ

Honda Motor Co. has made little progress in talks aimed at a collaboration with Waymo LLC, the self-driving car unit of Alphabet Inc. (WSJ)

Unilever PLC reported a sharp rise in first-half profit and forecast better-than-expected margins for the full year. (WSJ)

Alibaba Group Holding Ltd. is moving more aggressively to open physical outlets amid signs its online growth may be peaking. (Reuters)

Samsung Electronics Co. Ltd. will buy display panels from LG Group, the first big partnership between the two South Korean rivals. (Nikkei Asian Review)

Lenovo Group Ltd. Chief Executive Yang Yuanqing says he will resign if he doesn't boost the PC maker's online revenue to $12 billion in three years. (Bloomberg)

Drivers at a FedEx Freight truck terminal in Croydon, Pa., voted to drop the Teamsters union as their bargaining representative. (Business Journals)

Union Pacific's second-quarter profit rose 19% to $1.16 billion as coal revenue jumped 25% on stronger volumes and pricing. (Omaha World-Herald)

Second-quarter profit at Canadian Pacific Railway soared 46% to a record $381.6 million. (CBC)

Freight broker C.H. Robinson Worldwide Inc.'s second-quarter profit fell 22.4% to $111.1 million as rising shipping costs offset revenue and volume growth. (The Loadstar)

Freight forwarder Panalpina boosted its second-quarter consolidated net profit 37% to $31.4 million. (Journal of Commerce)

Congressional Republicans say any action on infrastructure legislation will come after lawmakers address healthcare and a tax overhaul. (The Hill)

Delays in ship handling at Bangladesh's Port of Chittagong have reached 12 days. (Splash 24/7)

DryShips Inc. set its fifth reverse stock split this year as the bulk carrier faces new shareholder lawsuits over earlier market actions. (American Shipper)

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. Follow the WSJ Logistics Report on Twitter at @WSJLogistics.

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

(END) Dow Jones Newswires

July 21, 2017 06:43 ET (10:43 GMT)

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