Belated Happy New Year to every Good Neighbor in ‘CCO Country. I left Minnesota at Christmas time when the temperature was beginning to dip into the negative range. Beginning. I hid out in Puerto Vallarta, Mexico for nearly two weeks (with family) and avoided most of the frigid air. Now I’m back in Minnesota and the temperatures strike me as quite reasonable. I’m sure that will last trend…
Speaking of lasting trends, what about US retailers, starting with our local discount retailers Target and Best Buy. Earlier this week, Target turned in an impressive 3.4% increase in same-store sales for the 2017 November-December Holiday Season compared to the same time in 2016. Here is where you can learn more about Target’s latest numbers:https://www.cnbc.com/2018/01/09/targets-stronger-than-expected-holiday-report-sends-stock-higher.html. Are you impressed? Maybe you should be. Online sales were up a quite impressive 25% from last year. So were in-store sales, but there the percentage increase was well below 3.4%. This increase, especially online, suggests that CEO Brian Cornell’s strategy to enhance the online platform and let the retailer become “agnostic” about how it sells to customers is making progress. But maybe we shouldn’t be too impressed. All discount retailers reporting so far saw big Holiday Season gains. Texas-based J.C. Penney’s sales also increased more than 3.0% over last year. Wisconsin-based Kohl’s saw sales jump more than 6% during the same period. Everyone in this retail industry segment is speeding ahead. The next two months will tell us whether Target’s performance is a “one-off” bump or part of a building trend. And wait til we hear from Hubert Joly at Best Buy…
Speaking a little bit more about trends, here’s one that matter for healthcare in rural Minnesota. Earlier this week. we found out that approximately 1,000 farmers will be getting their coverage through new plans offered by a subsidiary of Arden Hills, Minnesota-based cooperative agribusiness giant, Land O’Lakes. Here’s where you can learn more about this development: http://www.startribune.com/farmer-health-plans-draw-1-700-in-minnesota/468369493/. Is it a big deal? It only affects 1,000 people, a drop in the bucket of the more than 160,000 Minnesotans who have been buying their annual coverage on individual markets that have seen substantial premium increases in the last three years under the Affordable Care Act, also known as Obamacare. Here’s what I think is interesting. It’s coverage provided through Land O’Lakes and apparently discounted 10-20% versus comparable individual policies on the exchanges. Here’s the catch. To get the coverage from Land O’Lakes, farmers need to join the cooperative. That’s vital to Land O’Lakes. Cooperatives are generally more valuable as they get bigger: more members mean more buying and selling through the cooperative conduit; more members to vote on and participate in the governance of the cooperative conduit; fewer members going to competing non-cooperative suppliers like, say, Cargill. For Land O’Lakes CEO Chris Policinski, health insurance just might become a loss-leader like toilet paper or motor oil at a retailer (like Brian Cornell’s Target). Get new members into cooperative system via discounted health insurance and then make money on all the new agricultural commodities new members market through Land O’Lakes. Smart, really smart new trend.
I remember back in the 1990s during the dot-com craze that simply tacking on a “.com” to the name of a business could make it more attractive to investors and raise business value: Meat.com (selling meat); Boo.com (selling clothes); theGlobe.com (selling social networks). All of them went public in the late 1990s and managed to go bust in the early 2000s after burning through tens of millions of dollars. An announcement this week from the 130-year old photography firm, Eastman Kodak, got me thinking of those various “com” firms, except now I’m thinking about “coin” firms. Kodak announced earlier this week that it was introducing a new, proprietary crypto-currency called “Kodakcoin.” Here is where you can learn more about the announcement and the follow-on 5.8% increase in Kodak stock: https://www.cnbc.com/2018/01/09/kodak-joins-cryptocraze-with-digital-photo-licensing-site.html. Bitcoin is probably the best-known crypto-currency, that is, a private medium of exchange not backed by any government like the US dollar. Bitcoin and now Kodakcoin works like private scrip. Everyone receiving the scrip agrees to honor it in approved transactions. Kodak is touting the value of Kodakcoin as a convenient medium of exchange among users in the photography and media business. At a related “KodakOne” website, Kodakcoin users can license their photographic media to others and get paid in…Kodakcoin with each transaction registered on related Blockchain technology. Hmm. Maybe the business will attract artists interested in making a few bucks in licensing without easy observation by others like…the IRS. But the bigger question is this. Why not use Bitcoin? I have a Meat.com feeling about this latest Kodak moment.
Sometimes business people exaggerate, but few will admit it. That’s why I really like Subhash Dhar, the former CEO of lithium-ion battery maker Exalt. Of the tendency of many in his industry to overpromise performance, Dhar said recently: “Battery people have been described as: There are liars, there are damn liars, and there are battery people.” Subhash Dhar, you’re AAA (or AA or A or B) in my book.
Have a great rest of the week.
HERE IS A LINK TO THE PODCAST OF THIS WEEK’s SEGMENT!