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Searching for a Miracle on 34th Street – CEO Daily, Monday 20th November

November 20, 2017, 12:45 PM UTC

Good morning.

Millions of Americans on Thursday will start their day by watching the Macy’s Thanksgiving Day parade, a 93 year-old tradition with a hold on American culture that’s as strong as ever. The company that sponsors that parade, however, is losing its grip. The company’s stock price has fallen over 70% since the summer of 2015, it has closed more than 100 stores, and despite the trimming, same-store sales have sunk steadily over the past three years.

Can the nation’s most iconic department store be revived? That’s the job facing Jeff Gennette, who became Macy’s CEO last March. Fortune’s Phil Wahba profiles him and his plans in the December issue of the magazine, and we are releasing his story online here this morning.

The challenge isn’t a simple one. Gennette has to try and reestablish Macy’s as a high end trendsetter, but also cater to shoppers who insist on discounts. “Threading that needle,” says Wahba, “may prove to be as difficult as shimmying down a chimney flue with a sack full of toys.”

Macy’s has done a decent job building its e-commerce business in recent years. Its $4.3 billion in annual online sales make it sixth nationwide. But it still faces the constant threat overhanging all retailers: Some 47% of its apparel shoppers also buy clothing from The next six weeks will be critical in determining whether Gennette can begin to execute a turnaround, or will follow in the footsteps of Sears. (Does anyone really still shop at Sears?)

Meanwhile, speaking of retail turnarounds, Walmart shares soared to an all-time high last week, thanks to its report showing same store sales for U.S. stores climbed for the 13th quarter in a row, and e-commerce sales were up 50%. I’ll be interviewing Walmart CEO Doug McMillon at the New York Economic Club on Tuesday (former Macy’s CEO Terry Lundgren, chairman of the club, will be presiding). If you have questions for McMillon, send them my way.

More news below.


Alan Murray

Top News

Angela’s Political Ashes

Angela Merkel’s efforts to put together a new coalition broke down, leaving a minority government under Angela Merkel or new elections as the two likeliest scenarios. While it was the pro-business FDP that pulled the plug, it reflects Merkel’s weakening hold on power in the wake of the migrant crisis (immigration policy was at the heart of the breakdown). Individual political careers rise and fall, as ever. The bigger worry is that the legacy of 2015 is a Germany that is inherently more unpredictable and harder to govern. That’s a luxury that the EU, faced with Brexit and resurgent populism, can ill afford. Fortune

Cavium Caves to Marvell

Chipmaker Marvell Technology has agreed to buy smaller peer Cavium for around $6 billion, looking to expand in the networking equipment sector. The deal will allow Marvell to diversify away from its traditional storage devices business, at the instigation of activist investor Starboard Value. Marvell CEO Matt Murphy, who took over last year, is restructuring the company, slashing jobs and looking to add offerings in areas such as data centers and wireless communications. Fortune

Goldman Parts Company With Goldilocks

Goldman Sachs predicted the end of a ‘Goldilocks’ economy that is neither too hot nor too cold. It said the Federal Reserve will have to hike interest rates four times next year, against a background of a tight labor market and a ‘more normal’ inflation picture. That’s one hike more than the rest of Wall Street expects, on balance. Goldman’s analysts raised their forecasts for growth in 2018 to 2.5% and cut their forecasts for the jobless rate to 3.7% by the end of 2018. Fortune

While Y Combinator Parts Company With Peter Thiel

Venture capitalist Peter Thiel, as famous for his controversial activism as for his tech investments, is no longer a part-time partner at Silicon Valley startup incubator Y Combinator. The parting of ways comes after a year in which Thiel's politics, including vocal support of Donald Trump's presidential ambitions, put Thiel at odds with many of his peers in the tech world. Y Combinator president Sam Altman announced recently he will support a slate of candidates in California elections in 2018. That could put him in more direct conflict with Thiel, who has denied plans to run for governor there, but still seems likely to be politically engaged. Fortune


Around the Water Cooler

The Myriad Failings of The Weinstein Company’s Board of Billionaires

If you missed it yesterday, you should check out Shawn Tully’s Fortune feature looking into how the clique of billionaires that was the Weinstein Company’s board kept their abusive friend in power for years. Elsewhere in the same vein, The Wall Street Journal reported Sunday that Maria Contreras-Sweet, who led the Small Business Administration under President Barack Obama, has emerged as an unlikely candidate to buy the company. Fortune

Closing the H-1B Door

The Trump administration is increasing scrutiny in the employment-visa application process, making it harder for businesses to hire foreign workers, The Wall Street Journal reports. It says that immigration officials sent back more than 25% of applications between January and August with ”requests for further evidence,” compared to less than 20% last year. WSJ, subscription required

Alibaba Veers Deeper Offline

Alibaba is to invest $2.88 billion in a major stake in the top Chinese hypermarket operator Sun Art, another0 milestone in the e-commerce giant’s advance into offline retail. Fortune

All That Glisters Isn’t Bitcoin

Bitcoin soared through the $8,000 barrier over the weekend, extending a rally that is still, first and foremost, a function of liquidity. For those with more traditionalist monetary fetishes, a new startup in London called Glint Pay Services says it’s “reintroducing gold as money” by launching a new electronic money account backed by rights to physical gold. Fortune

Summaries by Geoffrey Smith;