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- đŹ Retailers in a mess
đŹ Retailers in a mess
and Boeing has more bad news
Good morning investors! S&P 500 closed at a new record yesterday as excitement remains.
Today we cover:
A look at retailers
Unemployment claims jump
Boeing has more bad news
đ Economy and News
U.S. Retail Store Closures Surge Amid Industry Shifts
In 2024, U.S. retail store closures soared to 7,325, the highest since 2020, when nearly 10,000 stores shuttered due to the pandemic. This trend continues in 2025, with 1,925 closures already announced by January 10. Major retailers leading this wave include Party City, Big Lots, Walgreens Boots Alliance, 7-Eleven, and Macyâs. Specialty retailers like Big Lots and Joann have struggled significantly, filing for bankruptcy, while chains like Connâs and Rue21 closed entirely after parent companies collapsed.
Department stores are also downsizing. Macyâs plans to close 150 stores by 2027, transitioning toward smaller, off-mall locations. Kohlâs will close 27 stores by April 2025 and an e-commerce center in California. Legacy retailers face mounting competition from rising e-commerce platforms such as Shein and Temu, which together earned $100 billion in 2024 sales, much of it from outside the U.S.
Holiday spending remained resilient, increasing 4% year-over-year to $994.1 billion, but consumer dollars have concentrated among fewer players. The gap between store openings and closures has been influenced by population shifts, changes in shopping habits, and malls replacing stores with alternative uses like fitness centers or apartments.
Despite challenges, thereâs optimism. U.S. store openings hit a record 5,970 in 2024, with projections for 5,800 in 2025. Retailers like Aldi, JD Sports, and Barnes & Noble are driving expansion, signaling areas of growth amid the turbulence.
No homes? Last year was tough for homebuyers, with only 28% of prospective buyers succeeding. Rising home prices, up 33% since 2020, and mortgage rates doubling to over 6% were the top challenges. A tight housing market, failed offers, and difficulty finding suitable homes also hindered buyers. Buyers aimed to spend a median of $150,000, far below the national median price of $420,400, leaving first-time buyers struggling to compete with wealthier bidders.
Global hits:
BOJ likely to raise rates to highest in 17 years, signal more hikes.
Trump says he will demand lower interest rates immediately.
BofA expects Australian disinflation trend to persist.
Unemployment claims jump: Unemployment benefit applications rose slightly last week, increasing by 6,000 to a seasonally adjusted 223,000, signaling steady labor market conditions. Economists had forecast 220,000 claims. Layoffs remain low, but job opportunities for displaced workers are tightening as employers remain cautious about hiring.
Claims rose in California, partly due to wildfires, but declines in most states, including Michigan, Texas, and Ohio, offset the increase. While extreme weather in parts of the U.S. may temporarily impact claims, the labor market is expected to stay resilient, supporting ongoing economic growth.
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đ Stocks
S&P 500 6,118.71 (+0.53%)
DJIA 44,565.07 (+0.92%)
NASDAQ 20,053.68 (+0.22%)
BRENT CRUDE 77.91 (-1.39%)
* Prices as of Jan 24th, 12:20 AM UTC
Boeing Faces $4 Billion Q4 Loss Amid Safety, Labor, and Production Challenges
Boeing announced it likely incurred a $4 billion loss in Q4 2024, marking another turbulent year for the manufacturer. The company expects a loss of $5.46 per share and $15.2 billion in revenue, falling short of analyst estimates. Cash burn for the quarter likely reached $3.5 billion, though Boeing raised over $20 billion to bolster liquidity.
Key challenges included a January midair safety incident that reignited federal scrutiny and delayed plane deliveries, along with a two-month machinists strike that halted production until November. Boeingâs commercial airplane division reported $4.8 billion in revenue but a negative operating margin of 44%.
Further setbacks include a $1.1 billion charge related to its 777X and 767 programs and $1.7 billion in pretax charges for defense projects, including the KC-46A tanker, delayed 747 Air Force One aircraft, and space programs. Boeing, which hasnât posted an annual profit since 2018, continues to grapple with the fallout from past safety crises and current operational disruptions.
Exciting: General Motors unveiled the $80,000 Cadillac Lyriq-V, a performance model in its V-Series lineup. The luxury EV aims to position Cadillac as the leading non-Tesla luxury EV brand in the U.S. this year. Also, UnitedHealthcare taps company veteran Tim Noel as new CEO.
Reminder: EA's stock plummeted 19%, marking its sharpest decline since 1999 and the third-largest drop in the company's history. On the other hand, Puma fell -23%, recording one of its worst days in history.
Shein executive chairman Donald Tang suggested that the companyâs ultra-low prices wonât be impacted by tariffs as long as new tariffs are âapplied equally.â
Worrisome: Strong demand and limited capacity growth are set to push airfares higher. Elsewhere, Adidas to cut up to 500 jobs after posting better-than-expected holiday profits. Lastly, Nikola closed down 27.8% after a report that the embattled electric truck maker is exploring options to sell parts or all of the business.
đ” Personal Finance
Signs that indicate itâs time to sell a stock â Part III
Letâs resume this weekâs topic and talk about signs that mean you should reconsider a stock:
Company raising capital
Companies use a variety of ways to generate capital, including issuing additional shares. This method might sound attractive but itâs a sign of trouble.
Companies typically do this to avoid issues but not all succeed in doing so. However, merely raising capital isnât a problem, you should see why a company is in need to do so.
A reverse split
A split is not always a sign of trouble but the same cannot be said for a reverse split.
Also called a stock consolidation, a reverse stock split is used to avoid delisting. It is considered a major sign of distress and a red flag.
Major management changes
We have seen major management changes in big companies like Microsoft, Boeing, and even Disney. Though problematic, they do not always ring trouble. However, regular changes indicate issues.
Consistent and effective leadership is key to a companyâs success. A company that fails to find or keep the right people also finds it hard to succeed.
A major shift in management often reflects more profound issues such as strategic misalignment, failure to meet performance goals or internal governance problems.
Itâs best to be careful when dealing with stocks belonging to such companies.
A look at suppliers
This might sound strange but the success of a company largely depends on its supply chain and suppliers. We have seen Apple suffer recently due to supplier-related issues.
Declining supplier reliability and performance can have a significant effect on a companyâs cost structure, production capabilities, and, ultimately, its ability to make money.
This is especially important in fields that depend on unique materials or parts.
Bad supplier performance can cause immediate operational problems, and result in long-term issues.
đ° Be a Better Investor
âExpect the best. Prepare for the worst. Capitalize on what comes.â
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