Warren Buffett is known for his affinity for strong, basic businesses available at a bargain price. At first glance, that might explain why the Oracle of Omaha nearly doubled his stake in Wal-Mart Stores Inc. (NYSE:WMT) in the third quarter, according to regulatory filings. The bargain price element is there. Wal-Mart shares have barely budged in the market rally since last March. But Wal-Mart's offerings are looking less basic these days.
Under a remodeling effort called "Project Impact," the discount retailer of everything from groceries to tires is climbing upscale a notch or two and redoubling its assault on specialty areas left open by the wave of retail bankruptcies. The revamped brick and mortar behemoths now boast cleaner aisles;
expanded electronics sections lined with 60% more flat-screen TVs;
celebrity cookware from Southern chef Paula Deen; and more fashionable duds by designer Max Azria.
Following in Best Buy Co.'s (NYSE:BBY) footsteps, Wal-Mart has also begun to provide home installation and consultation services for electronics, giving it a leg-up on competitors like Kohl's Corp. (NYSE:KSS) and Target Corp. (NYSE:TGT).
At the same time, Wal-Mart has also benefited from consumers trading down in the throes of the recession. Despite a rough second quarter, over the past year Wal-Mart has been able to double its cash position to $13 billion, and between February and September it opened 52 so-called Supercenters, Time magazine reports.
Now, as consumer confidence inches back, Wal-Mart isn't being left in the discount bin. Instead, it is
targeting Target's throne as the go-to cheap chic retailer. In the third quarter, traffic at Wal-Mart stores rose 1.3% from a year earlier while Target's traffic fell 2.6%, according to The Boston Globe.
This is only year one of Project Impact's five-year implementation plan.What analysts seem to complain about most is that Wal-Mart can't seem to implement Project Impact to all of its locations fast enough, which makes its unaltered stores look shabby in comparison. - Sara Behunek
CEO Fritz Henderson, trying to soothe Adam Opel GmbH employees infuriated by General Motors Co.'s decision to retain Opel, says he's willing to give the unit a certain amount of autonomy. "The business will have both the authority and the
independence to be successful," he said after two days of meetings at Opel's headquarters in Rüsselsheim, Germany. But how much independence?
The union has demanded that Opel's incorporation status be changed from a "GmbH" to an "AG," according to Bloomberg -- a change that would vest Opel employees with more control over the direction and strategy of the company.
An AG has a two-tiered board. A management board, with seats held by company executives, makes the major decisions, while a supervisory board, made up of shareholders, union representatives and employees, has veto power and can remove members of the management board. A GmbH, on the other hand, is usually run by a small group of managing directors, with much less say for employees.
Changing the legal status would actually be quite simple, Florian Drinhausen, partner at Linklaters in Frankfurt, explained. Opel would need to get approval from GM's board as well as confirmation that net assets cover the capital of the company in its new form -- or in other words, it would need to prove it's not a negative equity situation.
But the chances that GM would actually approve a transition are "zero," according to Ferdinand Dudenhöffer, director for the Center of Automotive Research at the University of Duisberg-Essen.
"Why would GM focus on topics that are not essential for the company?" he asked. Indeed, he doubts the unions really even expect that GM would put them on a board that would supervise the expected layoffs of 20% or more of the workforce. The request was more so the workers council could demonstrate that it was "fighting for workers' rights," he maintained.
No doubt the council will continue to fight. But not from a position on a supervisory board - Sara Behunek