Warren Buffett: Why We Don’t Do More Due Diligence
"We’ve made plenty of mistakes in acquisitions. Plenty. And we made mistakes in not making acquisitions, but the mistakes are always about making an improper assessment of the economic conditions in the future of the industry of the company."
"They’re not a bad lease. They’re not a specific labor contract. They’re not a questionable patent. They’re not the things that are on the checklist, you know, for every acquisition by every major corporation in America. Those are not the things that count."
"What counts is whether you’re wrong about — whether you’ve really got a fix on the basic economics and how the industry’s likely to develop, or whether Amazon’s likely to kill them, you know, in a few years, or that sort of thing."
Walmart & Target Canceled Billions of Dollars in Orders
"John David Rainey, Walmart’s EVP and CFO, said it had cleared most summer inventory, was reducing exposure in electronics, home and sporting goods, and canceled “billions of dollars in orders” to realign inventories."
Target states it has reduced “inventory exposure in discretionary categories” during Q2 by canceling over $1.5 billion of orders and marking down prices.
Macy’s and Kohl’s recently also stated they are canceling orders.
Where are Walmart, Target, and Amazon Spending Billions?
Many retail sector businesses are increasing Capex spending significantly.
Walmarts capital spending increased 50% the first half of this year. And its spending budget will increase 26%.
Amazon, last week, announced it's acquiring Belgian warehouse robotics firm Cloostermans. Their tech helps organize heavy palettes of goods and packing products for delivery.
"Investments made by big-spending leaders like Walmart, Amazon and Home Depot are likely to result in taking customers from weaker rivals next year..."
"After the 2007-2009 downturn, 60 companies Gartner classified as “efficient growth companies” that invested through the crisis saw earnings double between 2009 and 2015, while other companies’ profits barely changed"