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Sears Profit Margin Analysis

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Sears’ profit margin has been bouncing from high to low for the past ten years. An interesting point though is their profit margin was barely affected during the recession in 2008. If anything the recession was a better time for Sears. They were focused on “recession-friendly” advertising and with their layaway programs were able to still be selling higher priced products. They took advantage of the recession by challenging their external partners to deliver more for less. Also the recession took the focus off of Sears failing because all businesses were decreasing in sales. In 2009, Richard Gerstein, then senior VP-marketing at Sears Holdings, was quoted at saying, "A lot of things are coming together at the right time to help us succeed.” Their profit margin was at its lowest in 2012 resulting in a net loss of $500 million that year. One reason this could have happened was in 2012 CIT Group decided to not give loans to …show more content…

Many employees have given specific examples of how they are treated. Sears has shown its employees that it doesn’t care for them. Their commission rates are lowered by 50% on Black Friday. While this is only one day, this is the day most sales associates make the money to buy their families’ Christmas presents. Sears has been trying to save itself by cutting back as much as possible. This includes laying off employers and not applying raises. As said by the Harvard Business Review, “Unless employees grasp the purpose of the system, understand the economics of their company and industry, and have a clear picture of how their own work fits into the employee-customer-profit model, they will never succeed in making the whole thing work.” Sears is not following this idea, which is further pushing their company out of business. This also leads to a low moral that can greatly affect the success of Sears. Even one employee said, “Pay your people well, they will pay you back even

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Metro’s profit margin is also about double the percentage of Loblaws which demonstrates that Metro is better at taking revenue and turning it into profit than Loblaws. This company’s net earnings had a large increase of 12.9% from the previous year. The profit margin is important for shareholders because it shows them that the company is efficient and profitable. In addition, food deflation should ease in the next quarters so this will help grocery retailers, like Metro, to increase their profits and

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Some retailers start Black Friday sales earlier because of their intimidation of losing sales to others. Bill Martin, an advisor in major shopping chains, states, “We don’t think it’s the consumer saying ‘Open up earlier, open up more.’ We think it’s really the retailers trying to get at the wallet and pull them into the store - to get to the money before it’s all spent.” To clarify, Martin affirms that the

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All of his ideas are carried with him from his first job within the Ben Franklin Franchise. Within the culture Walton established, the company is not happy with the working benefits and conditions. They are given sparse wages and health care plans, and are asked to keep their expenses to an extent. Also the employees are working hourly overtime without pay, and some work over 70 hours a week. The employees are also expected to pitch in money whenever they can to help care for the building they are working in.

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However with few exceptions, The Home Depot outperforms Lowe’s considerably. Lowe’s did outperform The Home Depot in revenue growth this most recent quarter, but this is just a snapshot when in reality both The Home Depot and Lowe’s have been experiencing very similar growth for years. Next is Earnings/Share, The Home Depot is earns over two times more than Lowe’s for one dollar of share price. Key differences can be found in profit margins, debt vs equity, and return on equity. The Home Depot has a considerably higher profit margin when compared to the margin of Lowe’s, and is much better at turning invested capital into equity.

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Companies all over the globe will experience some sales and profit decrease. Home Depot in the growing housing industry benefited greatly from the houses being built. The accounting concept portrayed in this situation for home depot is called operating leverage. Operation leverage is when managers view a small change in revenue and magnify it to dramatic changes in revenue (Edmonds, Tsay, & Olds, 2011). With a decrease in the market for construction materials, Home Depot is experiencing a 3% decrease revenue and a 21% decrease in profitability.

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With such a powerful system in place, you would think employees would make part of the profit. However, monopolies made employees feel as if they were heading into the service, forced upon them in times of need, with little pay, and little pride in the work forced upon them. The pride people used to have in their work was stripped away by the ever-growing need for workers. Monopolies needing workers, and wanting more money combined led to monopolistic work conditions that were unfavorable for a percentage of workers. The effects of this were higher prices and lower worse products.

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It was stated by Charles Evans Hughes in a court case (Document F) that “[the] authority of the federal government may not be pushed to such as extreme.” This court case was in context of the government’s control over the poultry industry and he believed that the expansion in power, and specifically on businesses, was too much. Yet another example of businesses being put down is given by John L. Lewis in a NBC radio broadcast (Document G) where he talked about how business leaders “have no right” to not listen to union employees and cooperate with them. While corporate-union relationships ought to exist and facilitate workers with fair pay and conditions, it is also important especially during this time of hardship for businesses to be able to thrive so that the economy can be revived. Along with the control that they have, the government isn’t helping businesses either by giving them the backhand for not complying with the demands of unions; they are hindering businesses from growing.

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In fact, “by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain” (CR 88) wanting to maximize his profit while minimizing his costs. So, instead of increasing the wages of their workers, they would instead keep their wages low and keep the money they earned. The owner wants an “industry that produces the greatest value” (CR 88) which would lead one to infer that they just should not give the workers a salary. However, although the company owners “neither intends to promote the public interest, nor knows how much he is promoting it” (CR 88) because of the need to raise the wages of workers. The industry owners end up being “led by an invisible hand to promote an end which was no part of his intention” (CR 88) which pushes the owners to increase the wages of factory workers to allow them to be able to purchase more products, thus further supporting industries.

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Edward Lampert “The ineffective leader in retail segment” In this document the author will analyse the leadership qualities of Edward Lampert on the basis of his performance in Sears. Leadership can be defined as the ability to lead and organization or a group of people and help them to achieve their objectives. Effective leaders build strong communication bond with the employees and they also help the organization to increase its revenue and sales. Emotional intelligence is also an added quality of effective leaders (Batool, 2013).

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Decentralized management and operations as well as the high peer pressure that existed at Nordstrom added to these extremely serious problems that led to litigations starting in 1991 by Local 1001 clerk union and could’ve cost Nordstrom its hard-built reputation in the industry. The sales per hour (SPH) incentive compensation

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The article “Labouring the Walmart Way,” author Deenu Parmar talks about how Walmart is able to achieve selling goods at a lower price then any average superstore. The author goes on to explain that Walmart’s antiunion efforts, employee selection, low prices and high retention rate all contribute to their major success. Walmart’s stance on ant unionism allows them to keep wage cost down and keep all their profits up. Not allowing a union keeps Walmart with the power to keep low wages and force unpaid overtime.

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I find the notion that we should “occupy Black Friday””(Andrew Leonard’s “Black Friday: Consumerism vs. Civilization”). According to Leonard one act that a conscientious consumer could do would be a strike that would result in more layoffs, pay cuts, bankruptcies, and foreclosures. Walmart would take a hit of course, however, so would Walmart employees. NEED CITATION

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For instance, the wage for a cashier is now $11.55 which is only slightly higher than the minimum wages of $11.40 in Ontario. This causes high turnover rate as a lot of staffs are working as part time and frequently quite due to the low pay. A recommendation for Walmart is to develop a formal human resource program and fair performance review process to manage employee compensation. When employees perform at a higher level, their pay rate may be justified according to their performance appraisals. Providing faster promotions is another way to keep people motivated and improve their performance.

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Employers should look for ways to prevent and aid in the research on how to better benefit their cashiers and

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