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Did Target Mislead on Earnings Miss?

Key Points from cnbc.com:

Target executives cited the recent U.S. ports strike and need to bring goods ahead of it as a factor in its big earnings miss on Thursday, due to elevated freight costs and overly stocked stores.

Trade data reviewed by CNBC shows Target imported a level of goods this year across key months in advance of the strike that was similar to 2023′s peak shipping season, essentially flat to down in the overall number of cargo containers.

The data also shows that the value of goods Target imported was higher than at Walmart by $1.2 billion, reinforcing the real problem for the retailer: it missed on its forecast for consumer demand and price-point sensitivity.

 

So what did hurt Target compared to last year?

It is trying to be a higher end retailer than Walmart with products that consumers may buy or leave on the shelf depending on how economically stressed their consumer is. Target’s foot traffic has continued to increase but their customers are not jumping at the products on the shelf. I can’t get a good figure on Target’s ad spend for 2024 but in 2023 they spent $1.4 billion which going back 14 years, that tends to be what they consistently spend on advertisements. Walmart which has always boasted a “no sales” strategy but boast regular pricing spends around $3.4 billion on ads. Target does run sales. Target does issue rainchecks on sale items it does not have in stock so long as they are not clearance, price cut items, or so called everyday low price items. I can not find the number of rainchecks they have recently been issuing which would indicate inventory problems or potential customer dissatisfaction because of an item on sale not being in stock or the perception that there might be a switch and bait strategy going on where the customer comes in for an item on sale but ends up buying a similar but higher priced item.
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Twitch, facing its own advertiser boycott is being sued by X for boycotting X

Elon Musk’s X suing Amazon-owned Twitch for not advertising on the platform

Musk’s social media site is suing a number of advertisers, alleging they colluded in violation of anti-trust laws to ‘illegally’ boycott the platform to do damage to a potential rival.

On Monday, Twitch was added to X’s ongoing lawsuit against brand members of the now-defunct Global Alliance of Responsible Media (GARM), as first reported by Business Insider. X claims in its lawsuit that members of GARM illegally conspired to boycott the platform formerly known as Twitter in late 2022, shortly after Musk acquired the company.

According to the lawsuit, X says that Twitch has not advertised on the platform in the U.S. since November 2022. As Business Insider reports, X cites a GARM document in its lawsuit that mentions an “executive endorsement” from Twitch regarding GARM’s brand safety standards.

X originally filed the lawsuit back in August. Since then, the World Federation of Advertisers (WFA) disbanded the coalition of advertisers known as GARM. In addition, X removed Unilever from the lawsuit after reaching an undisclosed agreement with the company.

Regardless of the closure of the GARM initiative, WFA says it intends to fight the allegations in court.

The Sherman Antitrust Act explicitly outlaws collusion, meaning any agreement or conspiracy between competing businesses to restrict trade or manipulate prices in a market, effectively prohibiting them from working together to stifle competition; this is considered a key element of the act’s purpose to promote fair market practices.

The last major instance of the Sherman Antitrust Act being used was in the 1980s, when the Department of Justice broke up AT&T, which held a monopoly on telephone services in the United States; this is considered one of the most recent significant applications of the Sherman Act. If Matt Gaetz becomes AG, his past rhetoric and stands indicate that he may very well bring back enforcement of the Sherman Act.

America’s Media is mostly controlled by 6 companies which is the primary reason the elite media went into overdrive to tank the appointment of Matt Gaetz to be AG; gossip and scandals aside.

It should be noted that Twitch has faced its own advertiser boycott because it stopped people from signing up to the platform from Israel and Palestine. The boycott has hurt some streamers a lot more than other streamers, though there has been some debate on whether the harm to streamers has come from the advertiser boycott or from tags that some streamers have used or the content within their streams. Twitch may have started shadow banning or throttling some streamers to try to prevent the advertiser boycott from growing though that is just supposition and may be unfounded.

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Trump’s pick for Education secretary has a lot of work ahead

Trump’s pick for Secretary of Education is Linda McMahon.  It is reported that she is worth $3.2 billion.

The Department of the Education has around 4,400 employees and a budget of $238 billion.  In 2022 the budget was $637.7 billion.

The Department of Education began operating on May 4, 1980, having been created after the Department of Health, Education, and Welfare was split into the Department of Education and the Department of Health and Human Services by the Department of Education Organization Act, which President Jimmy Carter signed into law on October 17, 1979. Robert F. Kennedy Jr. has been nominated to run the Department of Health and Human Services.

While Trump plans to eliminate the Department of Education and promotes the idea of moving more of its services back to the state and local governments the odds are at least part of what the DOE does will be rolled back into the Department of Health and Human Services. So it might be expected that Linda McMahon will work with RFK Jr. to prove to Congress the change is feasible.

Some media who remain at war with Trump have attacked Linda McMahon’s nomination as they have attacked most of his nominations, but she is smart, scrappy, and is probably more qualified for the position than Biden’s pick, Miguel Angel Cardona. Though on paper he does look like he would be suited with the skills so as to be more than just a diversity hire, he has not proven to be a very effective leader. Besides his failings being revealed by backlogs in applications and paperwork there have been student performance declines in basic mathematics and reading skills. Though many blame covid school closures or moving from in person learning to online learning, online learning should not have caused such a decline in reading and math test scores; perhaps if handled better. During the Biden/Cardona years, a severe teacher shortage has worsened, which may also have contributed to the decline in scores.  And as one person I talked to added, although parents can’t be fixed, they need to be brought better into the education system and especially when the system has to utilize online / home learning. Students and their parents should not be strangers to the administrators of a school or the teachers regardless of whether the students are being taught in a school or at home. While some parents and their children may be well known in the system, other parents and their children may mostly remain in the shadows. This is not good for learning, the child’s welfare, or  for school security. A school should be a local community project compared to a local village or town and not to a a high security prison run by the Federal Government. For learning and security a school should be a fun and friendly place and not a place under siege that both students and teachers are afraid to attend or in some worse case scenarios contribute to a person’s nervous breakdown.

While Trump wants to shut down the Department of Education there are problems in education that must be solved and which the Department of Education has not solved and may even have made worse. People become teachers to teach and not to have deal with the politics of bureaucracy and paperwork of the system.  Many who enter the teaching profession with a calling and joy very quickly find themselves in a nightmare they quickly want to leave and that is a problem.

As another person I spoke with said, that while it may be difficult to improve a parents involvement in their child’s education, the problem of the teacher shortage can be fixed and in truth it is one of the problems that must be fixed. The reasons a person might not choose teaching as a profession or they choose to leave the profession must be individually and aggressively handled.  The number of people in the profession must be increased.

As a teacher who goes into different schools, who I have spoken with in the past has told me, some of the schools are overwhelmed with the immigrant population. Where in the past the immigrant children have tended to be polite and wonderful, today, many of those students are militant, abusive, and a nightmare for the teachers to have to handle. In the past the immigrant students, who were limited in numbers, integrated into the system very well. That is currently not true and it is a problem that is not being dealt with.

Linda McMahon is a going to have a major job to deal with in running the Department of Education. Some of her decisions which are going to be necessary and can not be avoid forever are going to be controversial.   Hopefully she and Trump are fully aware of what they are walking into. Many might think that running the Department of Education will be like a stroll in the park but the job is going to be difficult.

I feel confident that Linda McMahon is up to the task of what is going to be a high pressure job as well as a very important job.

Linda McMahon is the co-founder of the WWE though currently she only owns a minority share in the company.

McMahon, along with her husband, Vince McMahon, founded the sports entertainment company Titan Sports, Inc. (later World Wrestling Entertainment, Inc.) where she worked as the president and later CEO from 1980 to 2009. During this time, the company grew from a regional business in the northeast to a large multinational corporation. Yes. She has wrestled in ring as well as the world of business.  Is she up to wrestling in the world of education?

McMahon was born Linda Marie Edwards in New Bern, North Carolina, to a Welsh-American family, the daughter of Evelyn and Henry Edwards. She was an only child and grew up as a “tomboy” playing basketball and baseball. Her parents were both employees at Marine Corps Air Station Cherry Point, a military base. She grew up in a conservative Baptist family, but converted to Roman Catholicism in her later years.

Shortly after her high school graduation, Vince asked her to marry him. They had pretty much grown up together where Vince came from a somewhat dysfunctional home and she came from a more stable home. They married on August 26, 1966, when she was 17, and he was 21. She enrolled at East Carolina University in 1966, where she obtained a bachelor’s degree in French, and a certification to teach. From 1968 to 1971, Vince worked as a traveling cup salesman before joining his father’s company, the World Wide Wrestling Federation (WWWF, now WWE). Linda finished college in three years so she could graduate with Vince. Their son Shane was born in 1970, followed by their daughter Stephanie in 1976.

Linda McMahon has dabbled in politics but lost both of her Senate races. At a more local level she has sat on a board of education.  Trump appointed her to run the Small Business Administration when he became President in 2016. This time, after his election in 2024, he has nominated her to be his/our Secretary of Education, a department he hopes to close down with its functions taken over by the states and local school districts and also most likely by the Health and Human Services Department.

So while Trump wants to shut down the department of the education and move its functions back to the local level, there are problems in education that must be solved.  Hopefully, Linda McMahon will work hard to help the states and the local school boards to solve the problems even as she might help work to integrate the Department of Education back into Health and Human Services.

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