BUSINESS & ECONOMICS

Seasonal hiring stays upbeat, indicating steady holiday business

Worcester Telegram Story: By Shraddha Gupta

WORCESTER – A happy, holiday vibe is spreading around the city of Worcester. Christmas trees, wreaths and glittering lights are ornamenting the streets, announcing the comeback of the most awaited festive season of the year. While residents are busy decorating their houses, finalizing their lists of christmas gifts and winter chores, businesses across industries are hiring seasonal workers to smoothly function throughout this peak business time of the year.

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BUSINESS & ECONOMICS

Indicators of domestic manufacturing sector report downward trend for U.S. economy in September 2015

ECONOMIC INDICATOR (#6)  STORY: By Shraddha Gupta

A significant economic indicator for the U.S. economy is ‘Manufacturers’ Shipments, Inventories, and Orders’, which provides a broad-based, monthly statistical data on economic conditions in the domestic manufacturing sector. A recent survey, as of September 2015, showed statistics indicating that the entire segment was going through a downward curve.

According to the U.S. Census Bureau, new orders for manufactured goods in September, went down two consecutive months, decreased $4.7 billion or 1.0 percent to $466.3 billion, and followed a 2.1 percent August decrease.

Shipments, were down five of the last six months, decreasing $1.8 billion or 0.4 percent to $477.3 billion. This followed a 0.9 percent August decrease.

Unfilled orders, were down two consecutive months, which decreased $6.2 billion or 0.5 percent to $1,187.9 billion. This followed a 0.3 percent August decrease.

Inventories, also dropped down three consecutive months, decreasing $2.4 billion or 0.4 percent to $645.1 billion. This followed a 0.4 percent August decrease.

While the unfilled orders-to-shipments ratio was 6.88, down from 6.89 in August, the inventories-to-shipments ratio was 1.35, unchanged from August.

As per official statements, the data published in the survey is based on a panel of approximately 4,800 reporting units that represent approximately 3,000 companies and provide an indication of month-to-month change for the Manufacturing Sector.

The companies for which shipments data are currently reported represent approximately 61 percent of the total value of shipments for manufacturing establishments in the 2012 Economic Census, and these companies include almost two-thirds of the manufacturing companies with $500 million or more in shipments in the 2012 Economic Census.

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BUSINESS & ECONOMICS

Earning Stories – Day Two: AMAZON / McDonalds / Google

A new turnaround plan, saves McDonald’s from ugly decline in revenue

McDonalds, that recently reported a refreshing net profit increase of 23% in the third quarter of 2015, has managed to finally recover from an ugly decline in revenue in 2014. The global fast food chain retailer, that was once the favorite of its consumers across countries, has been struggling in the past few years, due to a ‘menu’ that failed to appeal to Millennials who broadly opt for healthier food with ingredients they trust.

Working forward with a new turnaround plan, Steve Easterbrook, McDonald’s President and Chief Executive Officer, said, “As we begin fourth quarter, comparable sales are expected to be positive in all segments. While still in the early stages, we believe our turnaround plan is starting to generate the change needed to reposition McDonald’s as a modern, progressive burger company.”

Comparable sales for the International Lead Markets segment increased 4.6% for the third quarter led by strong performance in Australia, the U.K. and Canada and positive results in Germany. In the U.S., third quarter comparable sales increased 0.9%, the segment’s first quarterly comparable sales increase in two years. The introduction of the new Premium Buttermilk Crispy Chicken Deluxe sandwich and breakfast, including a return to the classic recipe ingredients for McDonald’s iconic Egg McMuffin, contributed to the segment’s performance.

A sales recovery in China following the prior year supplier issue also added to the company’s higher spirits this quarter, with very strong comparable sales performance in China and positive performance in most other high growth market segments. Operating income increased 39% (68% in constant currencies). Looking at the larger picture, a positive consumer response to multiple menu, service and value initiatives throughout most of the segment contributed to the segment’s performance.

Amazon Prime becomes the driver of growth and profits for Amazon.com

E-commerce retail giant, Amazon.com, from a greater short term loss situation, has emerged as a winner with sharp increase in profits of 118% in the third quarter 2015. The company has always claimed to be growing in losses, as it looked forward to future growth with long term investments plans. This once bizarre theory by the company, has today become a success story, as its net income increased to $79 million, from a net loss of $437 million last year.

Amongst the various highlights that have contributed to the collective growth of the company, some significant influencers have been, Amazon’s introduction of four new tablets, including Fire; three new Fire TV devices, all with Alexa integration; launch of Fire TV and Fire TV Stick Japanese customers; and the overall success of Amazon Prime.

Company’d highlights further included the launch of Prime Video for Japanese customers, along with Prime Music in U.K., giving prime members over one million songs and hundreds of playlists to stream and download for free.

Amazon also introduced Prime Day, a full day of sales that offered Black Friday-type of deals, for the first time last quarter. According to reports, Amazon CFO Brian Olsavsky said, Prime Day contributed 2% to Amazon’s revenue growth globally, which resulted in adding more new Prime members than any other day in company history. He said Prime Day will continue to be a part of Amazon in the future and become a bigger part of the company.

Looking forward, the company also claimed that they would continue to reduce prices for customers to keep the increase of sales in the current quarter, including their lower-priced shipping offers, low-priced sales in fast growing categories, and to add more exclusive good for their Prime members to gain customers’ loyalty.

Google credits substantial growth to increased mobile search revenue

Google, the internet giant which has always been on a keen investors radar, reported a prospering 13% revenue increase in third quarter 2015. Earlier in the month of August, the company released it plans to create a new public holding company, Alphabet, and a new operating structure. As effective since October 2, 2015, the implementation of the holding company reorganization was finally made official, with Alphabet now becoming the successor issuer to Google.

According to the official press release, the company credited its substantial growth to an increase in mobile search revenue, complemented by contributions from YouTube and Programmatic Advertising. Further gains were also observed from a 16% revenue increase in Google websites and 13% in advertising revenues.

Research shows, the ‘other revenues’ in Alphabet’s financial statements might also be coming from from Google Play Store and Google’s own hardware. Android is now by far the most widely used mobile operating system in the world, and Google earns money by selling apps and media to those smartphones and tablets. It recently reported that it had sold 20 million Chromecasts, and has its own line of netbooks, phones, and tablets.

The press release declared that, ‘Had foreign exchange rates remained constant from the third quarter of 2014 through the third quarter of 2015, our revenues in the third quarter of 2015 would have been $1,291 million higher with a constant currency growth rate of 21% year over year.’

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BUSINESS & ECONOMICS

Earning Stories – Day One: AMAZON / McDonalds / Google

McDonald’s bounces back with third quarter comparable sales increase

McDonald’s, is once again bouncing back into prosperity, announcing a net profit increase of 23% in the third quarter of 2015, as net income rose from $1,068.4 million last year, to $1,309.2 million.

“I am encouraged by our operating performance for the quarter, with positive comparable sales across all segments, including the U.S., as well as sales recovery in China following the prior year supplier issue”, said, Steve Easterbrook, McDonald’s President and Chief Executive Officer. 

While there is still a consolidated decrease in revenue of 5% to $6,615.1 million; the diluted earnings per share of $1.40, saw an increase of 28% (44% in constant currencies), due in part to a benefit from comparison to the prior year’s increase in tax reserves related to certain foreign tax matters.

Easterbrook also concluded, “Third quarter marked an important step in the Company’s global turnaround – the reorganization of our business from a geographically focused structure to business segments that combine markets with similar characteristics and opportunities for growth”.

Amazon announces a surprising 118% increase in third quarter profits

Amazon.com, Inc. has surprised the market with a sharp increase in its profits, of a breathtaking 118%, for its third quarter ended September 30, 2015.  The company, which is known to grow its business even with a series of losses, reported a net income of $79 million, as compared to a net loss of $437 million in third quarter 2014.

Net sales increased 23% to $25.4 billion in the third quarter, compared with $20.6 billion, along with an operating cash flow increase of 72% to $9.8 billion in comparison with $5.7 billion last year. Earnings per share accounted for a$0.17 per diluted share, from a comparable $0.95 per diluted share.

Contributing to the overall growth of the company, AWS (Amazon Web Services) seemed to be the most significant reason, with a reported operating income of $521 million. According to reports, this is almost the same as the $528 million operating income Amazon generated in its North American retail business this quarter, showing how important AWS has become to its business.

Sounding highly ecstatic in a recent press release by the company, Jeff Bezos, founder and CEO of Amazon.com said, “Fire sets a new bar for what customers should expect from a low-cost tablet. This is one more step in our mission to bring customers premium products at non-premium prices. Fire is the #1 best-selling product on Amazon.com since launch, and based on the strength of the customer response, we are building millions more than we’d already planned.”

Google declares 13% revenue growth in Third Quarter 2015

Alphabet Inc., the successor issuer to, and parent holding company of, Google Inc., recently announced its third quarter 2015 financial results, reporting a revenue growth of 13% year over year, accounted at $18.7 billion. With a 45.3% increase, the company’s GAAP net income grew from $2,739 million comparable to $3,979 million, in 2014.

Ruth Porat, CFO of Alphabet and Google, said in the official press release by the company, “Our Q3 results show the strength of Google’s business, particularly in mobile search. With six products now having more than 1 billion users globally, we’re excited about the opportunities ahead of Google, and across Alphabet.”

According to reports, the substantial growth was also complemented by contributions from YouTube and Programmatic Advertising.

While the operating income was accounted at $4.7 billion, the diluted earnings per share were $5.73, along with a strong operating cash flow of $6.0 billion.

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BUSINESS & ECONOMICS

In the business of fabric, it is all about trends

LOCAL BUSINESS STORY (Final Article): By Shraddha Gupta

On a bright sunny weekend, Mark Winer, the Vice President of Fabric Corner Inc., a mom and pop fabric store based in Arlington, is found strolling on the local streets of Newton, keenly gazing through the show windows of every clothing boutique store in the area.

With a small diary and a pen in his hand, he is cautiously making notes of the most prominent colors, prints and textures of latest collections, that are attracting customers into these shops in search of new looks and trends. He then calmly observes what they are buying and appreciating the most, making a rough draft of his next merchandise.

“The key to run a successful fabric business, is to understand the pulse of the people and the market, both at the same time. The products that these boutique stores are selling, and the trends that their customers are eventually buying, are directly promotional to what a fabric store like ours sources and sells ahead with profit,” said Mark.

Adding further, he also claimed, “Our biggest challenge is to maintain freshness in our merchandise. To to keep our customers engaged, we always  have to be on our toes to introduce updated styles of fabrics every couple of months, based on constant market research”.

Being one of the oldest fabric stores in Massachusetts, the company today, gloats over 47 years of a successful history. Since its inception in 1968 by Mark’s father, the business has gone through several reinventions overtime, finally settling in for a highly niche target market, that of a conventional ‘hobbyist’, which has directly influenced the kind of trends that the store stocks.

“As fashion is a dynamic business with new trends coming and going each day, it is vital for us to understand the kind of crowd our store attracts and what is our target market, to source the right material for them”, he said. In Mark’s case, his market is mostly made of local residents, who are very involved in sewing and like to knit, people who like to crochet, to quilt or to make their own clothing and basically sew. “For them it is a hobby, an activity that mothers do with their daughters and sons, to build family relationships. It’s all about classics for them, to make things that can stay with them for long,” he added.

To avoid the possibility of dead stock from season to season, Mark tends to source trends that are a bit in the middle, not too contemporary, not too dated, and something that everyone can use. As he puts it, his taste is more towards the traditional side, and according to him, “Classics luckily always stay in fashion. For instance, we will always have a choice of liberty prints in the cottons sections, as that is one style that always remains in trend . Then there are the evergreen plaids, checks, and flower prints. Also thankfully, this is one category in which we don’t make too many mistakes”.

To stay ahead of the rest in market, Mark also makes it a point to read a lot of fashion magazines and surf online for fashion forecasts. Some of his favorite stores to visit for research are, Nordstrom, Ann Taylor, Lily, Liberty of London, Brooks Brothers for men, apart from the boutique stores in Newton.

“These clothing stores are a bit ahead of time than the fabric stores, which gives me the chance to bring in something that I know people are looking forward to buying. Also, I believe that if you stick with companies which are successful with their trends, you tend to go on the right track”, he concluded with confidence.

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BUSINESS & ECONOMICS

Selling fashion fabrics to the conventional ‘HOBBYST’

LOCAL BUSINESS STORY (Previous Draft): By Shraddha Gupta

Located literally on the corner street of Mass Avenue in Arlington, is Fabric Corner Inc., a mom and pop fabric store that gloats over its 47 years of successful history.  Since its inception in 1968, the business has gone through several reinvention overtime, finally settling in for a highly niche target market, that of a ‘hobbyist’.

“My market is mostly made of local residents, who are very involved in sewing and like to knit, people who like to crochet, to quilt or to make clothing and basically sew”, said Mark, the owner and also the mind and heart of the store. Even though the store caters to a variety of clientage such as students, designers and home decorators, it is the residential community of Massachusetts that brings in its maximum revenue.

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