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               DANIEL CULLINANE CPA                                                              Phone:          732-516-1648

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.Expect department stores to make some radical overhauls in their efforts to reverse plunging sales. While overall retail sales have held up this year, department store chains have been reporting steep sales decline versus 2015. Technology will b e key to the effort. Look for stores to spiff up mobiel apps to win a bigger share of the surging e-commerce market while arming in store clerks with tablets and smart phones so that they can better help shoppers find items.  They will also speed up shipping for online orders and expand in store pickup items. Big stores are trying to reinvent themselves, shifting away from apparel in favor of appliance and offering more in store experiences, such as salon services. Retailers should figure on a so-so back to school shopping season this fall, with total spending about on a par with last year's leve. That means plenty of bargains as merchants try to lure folks in the door and awasy from competitors websites. some prices will be cut below cost in gin up foot traffic and potential impulse buys

ROBOTS ARE COMING

Is it time to bow to our robot overlords? Last week analysts at Morgan Stanley, using datg from an Oxford University study, predicted that nearly half of US jobs will be replaced by robots over the next two decades. Cars that drive themselves? waiters you do not need to pay. self folding clothes? Are we headed toward a post job future? Signs are certainly there. Abundant Robotics, a company spun from the same Stanford research Institute that brought us the mouse and networked computing has begun testing a robot   that picks apples. Red delicious, are using vision systems to sort apples.


According to a 2013 Stanford University study, some manufacturing robots now cost the equivalent  of about $4 an hour, and they keep getting cheaper and better. This month scientists at MITY have sasmpled a silicon chip based LIDAR, light detection and ranging like radar but much higher resolution though it covers a shorter distance.

Home Depot Inc is making progress in its effort to fulfill online orders from its stores. The Home Improvement retailer said customers are taking advantage of its new options for retrievdiing their ecommerce orders, including buying goods online  that can be delivered from stores faster than they can be sent from more far flung distribution centers. The ability to deliver from stores, using the sites as virtual fulfillment center piece of the so called omnichannel strategy some retailers are adopting to minimize the growth in logistics costs that has come with growth in ecommerce.  About 42% of Home Depot's online orders and almost 90% of its online returns for the second quarter were handled by its stores.


Fulfilling online order from physical stores has been touted by the retail industry as a possible advantage over online competitors like Amazon allowing brick and mortar shops to serve as both showrooms and well located mini-distribution centers.  Few have been able to handle the operations smoothly and profitably, inventory in stores thatn in warehouses, and determining the best source of fulfillment can involve a complicated calculation of timing, labor, and shipping costs.

TARGET YIELDS ON RESTROOM DEBATE

For individuals working abroad and taking foreign housing exclusion: Make sure your expenses are reasonable. Lavish or extravagant costs do not qualify as eligible housing expenses in determining the tax free amount. Ditto for the cost of domestic labor pay TC subscription, furniture or accessories, improvements that increase the value of your property and certain other expenditures. On exam, agents will be usre to check whethr you are  complying will all of the rules.

​FINANCING BRIGHTENS PROSPECTS FOR MALL

​AUGUST NEWSLETTER 3

Target Corp said it would spend $20 million to add a private bathroom to each of its stores by next year, following customer protests over its policy allowing transgender individuals to use whichever restroom corresponds with their gender identity. Most of Target's 1,797 locations already have single occupancy or unisex bathrooms but it will add the option to 277 stores by November and to about 20 remaining stores by March 2017. Cathy Smith Target's financial chief, said the move is a response to feedback from customers voicing displeasure over the company's bathroom policy. She added, the customer discontent had not had a material impace on sales. Chief Executive Brian Cornell had promised to roll out family restrooms earlier this year and defended the company's stance on diversity.  Protests started at Target stores after the retailer said in April that it welcomed transgender empolyees and guests to use the restrooom or fitting room that corresponded with their gender identity. 

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​HOME DEPOT STORES HANDLE MORE WEB ORDERS

The American Dream may not be dead after all. canadian developer Triple Five is hoping to restart construction next month on the long delayed retail and amusement project in East Rutherford NJ. The Triple Five's $2.65 billion financing plan, which includes $1.15 billion in public bonds, has drawn criticism from some who consider the arrangement corporate welfare. The 2.9 million square foot American Dream first broke ground in 2003 as Xanadu. Local and state officials have long envisioned it as economic anchor for the Meadowlands. The area, the former site of landfills serving the region, has undergone extensive environmental cleanup and now has more than 3,500 acres of protected wetlands.


Work on the American Dream construction site ground to a halt in February. If Triple Five's financing proposal is approved, it hopes to open the center in summer 2018. Lord & Taylor and Saks Fifth Ave have signed on an anchor tenants. In additoon to 500 retain stores and restaurants, the mall would have an amusement park, water park, ski slope, performance theater , ice rink movie theater complex, aquarium and miniature golf course

​MACY'S MALISE

It is hard to see what will save the American department store. Macy's Inc, the largest such operator in the US has fallen victim to online shopping, dwindling store traffic and increasing competition from discount  retailers. It kicked off the year with its lowest auarterly sales since the recession and warned that the rest of the year would not be much better Shares have lost half their battle over the past 12 months. The current economic backdrop should be helping. Jobs are plentiful, gas prices are low and consumers are spending. That suggests  the problems facing Macy's are structural , not cyclical. "We are frankly scratching our heads" Chief Financial Officer Karen Hoguet said on an earnings call in May. That does not inspire confidence, while new ideas clearly are needed, Macy's is replacing long time chief Terry ZLndgren with a 33 year company veteran 


The new boss will face a tall task. Shopping malls across America are pushing out department stores in favor of specialty retailers that have a better chance of driving foot traffic. Making matters worse, valuable brands Michael Kors Holdings LTD and Coach Inc said this week that they were pulling back from selling to department stores in an effort to reduce discounting  Other department store chains, including Nordstrom Inc and Kohl's also are feeling the pain. 

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