Poor Supplier Performance Hurts UK Retailer's Share Price
If you're interested in a real-life example about how supplier performance can directly impact a company's stock price, check out this story from the UK which describes how "shares in photography retailer Jessops plummeted almost 15% after it warned that 2007 results would be the same as last year due to supplier problems that hurt the recent Christmas season." According to the article, the retailer could not meet demand for SLR cameras due to supply shortages from two manufacturers. What were the problems you ask? Further down the supply chain, Canon blamed a "general glitch in the factory run up to Christmas" and Nikon had more specific challenges in the production of lenses, causing their failure to meet Jessops' fill and quality requirements.
Certainly supply performance problems such as this are far more common than retailers let on. But in this particular case, given the smaller size of Jessup relative to a Tesco or Wal-Mart, two individual performance issues materially impacted the overall performance of the company. And as a result both customers and shareholders were the ones left holding the bag. But for Canon and Nikon, it's a good thing that Jessop was not a big box store. And that's because Wal-Mart and others often charge back suppliers for their lost profit on items which they're not able to sell because of supplier performance, qualty, or on-time delivery issues.
- Jason Busch
Certainly supply performance problems such as this are far more common than retailers let on. But in this particular case, given the smaller size of Jessup relative to a Tesco or Wal-Mart, two individual performance issues materially impacted the overall performance of the company. And as a result both customers and shareholders were the ones left holding the bag. But for Canon and Nikon, it's a good thing that Jessop was not a big box store. And that's because Wal-Mart and others often charge back suppliers for their lost profit on items which they're not able to sell because of supplier performance, qualty, or on-time delivery issues.
- Jason Busch
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I feel Jessops problems have more to do with failure to compete against lower priced internet retailers than it does to the late arrival of two models of camera. Amazon appear to have plenty in stock and are significantly cheaper. Having said that your point is well made, a hiccup in Canon Japan results in a share price drop and no bonus for the Sales Director of Jessops UK - when a butterfly beats it's wings....
# Posted By Stuart Burns
| 1/17/07 10:42 AM
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