To celebrate the holidays, we here at the Fool are devoting extra virtual ink to all things consumer-focused in a special section called "The 12 Days of Christmas." Over the coming week, we'll have our "12 Days of Content" surrounding consumer-focused names that look set to profit or perish from the holiday cheer.
Some stocks are like roasted chestnuts bought on a snowy streetcorner at Christmastime: You want to get 'em while they're hot.
Over the next decade, toymaker Hasbro will be one of those companies, transforming its portfolio of games and action-figure heroes into movies, TV shows, and other entertainment opportunities. The Motley Fool Stock Advisor recommendation is potentially a huge, multimedia powerhouse.
Others companies, not so much. We'll be lucky if they're still hanging around by next Christmas.
A lump of coal
Even with the tight economy, discount retailer Sears Holdings (Nasdaq: SHLD ) couldn't maintain a grip on cash-strapped customers, who fled in droves to Wal-Mart Stores (NYSE: WMT ) and Target. Chairman Eddie Lampert favored the financial sleight of hand commonly used at hedge funds to generate cash instead of investing in his stores. Total return swaps, share buybacks at astronomical prices, and Lampert's apparent disdain for remodeling the retailer's aging buildings led many to conclude that he was more interested in the land they sat on than salvaging the company's portfolio of still-iconic brands.
The once-venerable retailer has paid the price of neglect, achieving not one single quarter of positive same-store sales since the combined company emerged from bankruptcy. Unfortunately, investors have bought into the argument that Sears' land will ultimately unlock shareholder value, but a weakening commercial real estate market doesn't bode well for that scenario. As customers continue to avoid its stores, a less robust cash hoard will leave Sears with less room to maneuver.
Enough to make you cry
The news parody site The Onion once ran an imaginative interview with RadioShack (NYSE: RSH ) CEO Julian Day: "There must be some sort of business model that enables this company to make money, but I'll be damned if I know what it is. You wouldn't think that people still buy enough strobe lights and extension cords to support an entire nationwide chain, but I guess they must, or I wouldn't have this desk to sit behind all day."
Satire, yes, but it also hits pretty close to home. Unless you're looking for some obscure doodad, many people just go to Best Buy (NYSE: BBY ) or another big-box electronics store to buy their laptops, large-screen TVs, and other gizmos, rather than the Shack.
Although sales have been on a multiyear downtrend, the company has still managed to earn $192 million in the last four quarters.
However, not even rebranding the company as "The Shack" can offset its own dwindling consumer base. Last quarter, RadioShack was reduced to blaming lower sales of batteries and GPS devices, among other reasons, for its failure to report revenue growth. Coupled with a reliance on stand-alone GPS devices that have themselves been gutted by wireless telecoms incorporating the technology into their phones, the Shack's business model seems even less relevant to today's electronics customer.
A busted business
Blockbuster (NYSE: BBI ) must also realize that the shelf life of its bricks-and-mortar movie-rental model is reaching the end. While Netflix continues to thrive with its mail-delivery model, and Redbox is a kiosk movie star, Blockbuster grasps at whatever seems currently hot. Total Access -- a supposedly seamless store, mail, and online rental-and-return solution -- was never able to save the chain, and we don't hear much about it anymore. Blockbuster's alleged new saving grace is its own line of branded kiosks, which are now being rolled out. But this seems more an act of desperation than a carefully scripted plot for success.
Blockbuster has become a horrorshow of its own, with a growing debt profile and plummeting sales, making its next starring role likely similar to Circuit City's final performance.
Burn this book
Investors will be able to also turn the page on Borders Group (NYSE: BGP ) , which has lost millions of readers to Amazon.com (Nasdaq: AMZN ) and will likely lose millions more as e-books becomes even more popular. It's hard to ignore that one of the most popular iPhone apps is the Barnes & Noble eReader application. While e-readers such as the Kindle and Nook are unlikely to replace a physical book anytime soon, Borders has shown itself incapable of competing effectively in either form.
Wal-Mart, Target, and Amazon are all vying for a larger share of the reading public's dollar by cutting prices on best-sellers to $10. With the company's margins already under pressure, it will have a harder time matching those discounts, which could make this Borders' final chapter.
A wreath of mourning
There's no Christmas cheer in pointing out the companies that face chilly prospects in 2010, but these retailers all look like ghosts of Yuletides past. A weakened economy means that some of them -- maybe all of them -- won't be around to welcome in the New Year in 2011.
Do you agree that Sears won't be hoisting a warm cup of wassail next year? Is Blockbuster a burnt-out bulb? Are Radio Shack and Borders ready to be tossed onto the Yule log? Then go caroling in the comments section below, and let us know which company you think is enjoying its last Christmas.