Great Expectations–Greater Failures

Last week while I was not around, Staples along with other companies reported their quarterly earnings.

Unfortunately, the picture is not pretty for really anybody. Staples, Walmart, Target, Abercrombie & Fitch, Sears and J.C. Penney amongst others reported sales that did not meet expectations.

So the real question to ask is: Are the companies estimating too high or are shareholders wanting too much?

The way I see it, it’s both.

It is important that companies make money, but the possibly of sales going up continuously is very much a misconception especially in this economy.

Sadly, shareholders are expecting much more every quarter as they want to see a better return in their investments. However, many of these shareholders probably don’t even shop at the companies that they hold shares.

This brings me to the point that many if not most of these shareholders are actually sucking money out of these companies when the money is much more deserving to the people who really deserve it: the employees.

Comparatively, many shareholders make much more than the employees that the company has. And for what reason? Just because they can or just because they are that privileged.

Companies like Sears, J.C. Penney, and Staples would not be tanking if investments were made to employees and not to shareholders. Unfortunately, many of these companies are clueless as to where their money is going and where it really should be.

Also companies are using gimmicks. Consider what Staples has done during the back-to-school season this year. They have their scam of the savings pass and this year they have decided to have greatly reduced items with a minimum purchase. No more free rides anymore with them. Given that the competition does price matching, there is no incentive to ever shop at Staples.

However, Staples blames once again their foreign stores for their problems, not the fact that realistically that their domestic stores are tanking. Ironically the stock price has lost better than 1/3 of its value since I sold all my stock 5 years ago and it has never recovered.

Ironically the story is the same at other retailers as well, just that Staples won’t admit to their real core problem. Instead they would rather fire full time employees for no good reason rather than man up to the real problems with the company.

Eventually, after all their full time employees have been fired, they will no longer be able to save money that way and inevitably have to start shutting down stores here in the United States and abroad. Other companies are already doing this to try to save themselves but are still failing.

My suggestions are to lower sales expectations for companies and lower stock ownership. Many companies have already had buybacks of their stock just for this reason. It will be just a matter of time when some of these companies will disappear completely because more was cared about the shareholders rather than the employees that they could have had.