“In the last 24 hours, we’ve … seen three different ways to beat Amazon at its own game: the Williams-Sonoma way, the PVH way and the deep-value way as represented by the dollar store — think Dollar Tree — and the closeout companies like Burlington Stores,” the “Mad Money” host said. “All these companies produced fantastic results and much higher stock prices.”
After years of hit-and-miss results, Williams-Sonoma’s latest quarter, during which the company did a major overhaul of its administrative structure, could have staying power, Cramer said.
“WSM is a company that did a total, total makeover, embracing customer relations management — think Salesforce.com — time to market, time to delivery, better interface, quicker style turns and, most important, digital advertising, which led to an expanded funnel and much higher-than-expected numbers,” Cramer said.
Williams-Sonoma CEO Laura Alber attributed the high-end cookware chain’s upticks in new customer accounts, traffic trends and orders to the push toward new digital ad formats.
Alber also said the company’s new personalized emails contributed to higher engagement and margins and set a goal to triple that engagement in the near future.
“Until recently, these sorts of things felt like the exclusive province of Amazon, which understood customer acquisition through a broad funnel years ago,” Cramer said. “Why has Williams-Sonoma embraced the new formula? I think it’s because they’ve always been a catalog company and catalog companies understand things like new lists, wider funnel, [and] targeting. But in retrospect, they’ve been flying blind. Alber understands what has to happen to make her company see again, and the uplift has been as swift and positive.”
PVH adopted a different strategy. The Calvin Klein and Tommy Hilfiger parent was an early participant in Amazon’s and Alibaba’s e-commerce trajectories, a trend that CEO Manny Chirico used to diversify away from U.S.-based brick-and-mortar chains.
“The web’s been a good way to get more sales, but Manny’s boldest move was to expand overseas right into one of the worst contractions of all time, the European recession-slash-depression,” Cramer said.
Chirico told Cramer on Wednesday that PVH is “clearly taking market share in Europe” as the continent’s economies improve. Shares of the retailer closed at a new high on the news.
“PVH’s European growth is remarkable both in department stores and stand-alones. The dollar’s become a true tailwind,” Cramer said. “Manny’s taking share in the U.S. and that’s keeping things humming, but the gross margins overseas are prodigious. Now he’s applying the same skills to China, where a day like the Single’s Day in November is gigantic for this once largely domestic enterprise.”
“We should get used to them being able to deliver these kinds of numbers,” he said. “The dollar stores had been inconsistent of late, but Dollar Tree’s forecast verbiage was so good that I think they can deliver going forward. Burlington’s consistently beaten the Street with its closeout model, yet it’s rarely gotten the respect it deserves.”
So as retailers climb out of the rut Amazon’s monstrous rise had dug for them, Cramer tracks the defining factors driving them higher despite the e-commerce giant’s domination.
“Retailers looking to protect themselves from Amazon, the dark star of retail, now have not one, not two, but three potential force fields: customer relations management, overseas penetration, and deep value. They all make great investments,” Cramer said.
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