TL;DR
The Watson Weekend: Luxury Collapses, Retail Giants Rise, and the Logistics Pivot — While Walmart enters the "Trillion Dollar Club" with high-margin algorithms and 95% same-day reach, Saks Global has spiraled into a $10B Chapter 11 bankruptcy. Meanwhile, FedEx is narrowing its focus to specialized high-value sectors, leaving low-margin t-shirt shipping behind.
The News You Didn’t Know You Needed
Perplexity Abandons Ads — Perplexity is backing away from the traditional ad model to maintain authoritative trust. In the world of GenAI, the moment a user suspects a sponsored brand has bought its way into the primary answer, the tool’s utility evaporates.
THE WATSON WEEKEND
LUXURY COLLAPSES, RETAIL GIANTS RISE, AND THE LOGISTICS PIVOT
Welcome to the February 20, 2026 edition of the Watson Weekly Weekend show. Grab your coffee because the retail landscape is shifting faster than a TikTok trend, and the spreadsheets are finally catching up to the storytelling.
As the Luxury Wheel Turns: The Saks Global Saga
Retail math remains undefeated. You can have all the champagne on trays and velvet ropes you want, but if the numbers don't talk to the reality of the street, the music eventually stops. For Saks Global, the lights just came on.
What started as a "Confession" in February 2025, where CEO Marc Metrick admitted vendors hadn’t been paid in 18 months, spiraled into a full-blown Chapter 11 filing by January 13, 2026. The drama is straight out of a soap opera:
The Debt: Total liabilities reaching $10B, with $2.65B tied to the Neiman Marcus acquisition.
The Casting: In a wild twist, Geoffroy van Raemdonck, the former CEO of Neiman Marcus, is now the CEO of Saks Global, trying to save the company that originally bought his.
The Fallout: Minority investor Amazon is calling its $475M investment "presumptively worthless". Meanwhile, 57 Saks OFF 5TH stores are being liquidated, and major landlords like Simon Property Group are chasing $19M in unpaid rent.
Walmart’s Trillion-Dollar Blue Vest
While luxury is contracting, Walmart just walked into the "Trillion Dollar Club" on February 3, 2026. They aren't wearing Silicon Valley hoodies; they're wearing blue vests and wielding high-margin algorithms.
Walmart succeeded by turning boring physical stores into exciting tech assets: a digitally-integrated physical network.
Efficiency: Their same-day delivery now reaches 95% of U.S. households.
Diversification: In 2024, advertising revenue hit $3.4 billion, providing much higher margins than milk and eggs.
Consistency: Over the last 13 years, Walmart’s gross margin has never dipped below 24%.
FedEx: Not for Your T-Shirt
If you’re shipping a basic t-shirt, FedEx might not want your business anymore. At their 2026 Investor Day, the message was clear: they are narrowing their focus to specialized, high-value shipments.
By de-prioritizing sub-pound cheap packages (looking at you, Temu and Shein), FedEx is chasing a $130 billion market opportunity in healthcare, aerospace, and data centers. They are betting that reliability for a high-tech health tracker or a critical car part is more profitable than chasing low-margin volume.
Tech Risks: The Next 12 Months
Looking ahead, even the giants face "Show Me the Money" moments:
Amazon: Faces a massive risk if their $200B AI Capex doesn't yield mainstream workloads.
Shopify: Struggling with talent erosion due to an "AI can do your job" mentality; have employees gotten the memo?
Meta: Betting the farm on "Face Computers" (AR/wearables). If mass adoption doesn't happen this year; investor patience could snap.
OpenAI: Risking the "Disintermediation Trap"—becoming a mere feature on Apple or Google OS rather than owning the customer relationship.
Retail is a real estate play, a tech play, and a trust play. When one of those legs breaks, the whole stool topples.
THE NEWS YOU DIDN'T KNOW YOU NEEDED
PERPLEXITY ABANDONS ADVERTISING TO MAINTAIN USER TRUST
Let’s get real about the Perplexity news. They are backing away from the traditional ad model because they’ve realized something fundamental: In GenAI, ads are probably a friction point, not a feature.
In the old Google world, ads were easy to spot and easy to ignore. But when an AI gives you a single, authoritative answer, that answer has to be "The Truth." The moment a user suspects that a sponsored brand has bought its way into the AI's primary recommendation, the tool's utility evaporates. It's one reason OpenAI's ad efforts have started on a CPM basis - the ads cannot be placed too closed to that authoritative answer.
Why this matters for the ecosystem:
Incentive Alignment: If the business model is built on clicks, the AI will prioritize engagement. If it’s built on subscriptions, it prioritizes accuracy.
The "Pro" Moat: Perplexity is betting that power users will pay a premium to avoid being sold to. This is a flight to quality.
Brand Risk: For brands, being a "sponsored answer" might actually backfire. If the AI forces a brand into a conversation where it doesn't belong, it creates negative brand equity.
Is Perplexity in Trouble? Niche Down! Niche Down!
Despite Perplexity’s youth, it needs to be said: Perplexity is in trouble. It's not going to be the biggest subscription business, and it can't rely on ads. The only pivot left is extreme verticalization or a pivot into a sales process to a major player (hello Apple, my old friend).
WHY IT MATTERS
Perplexity is betting that in the answer economy, trust is a non-negotiable asset that advertising fundamentally compromises. By abandoning ads while rivals like OpenAI lean into them, they are pivoting to a high-intent "Pro" model, wagering that users will pay a premium for unbiased accuracy over an ad-supported free tier.
NEWS WE’RE LOVING
WEEKEND READING
Returns Are An AI Target: Fraudulent returns photography is on the rise. It's not new, but using AI tools to create fraudulent photos of damaged goods is on the rise.
eBay Is Finally Leaning In To Being eBay: eBay announced unexpectedly that it is acquiring Depop from Etsy for $1.2 billion in cash.
Etsy In Its Third Turnaround: Etsy announced record revenue and convinced itself that being an early adopter of agentic commerce provides it with upside.
From The Future: Weave Robotics has launched its first-ever stationary robotics platform that can fold laundry in 30 to 90 minutes, which requires a subscription.
WATSON IN THE WILD
Highlights and sizzle from our latest NRF 2026 Watson Weekend Live! event on January 11, 2026, presented by Radial: What is Important in 2026?
UPCOMING EVENTS
Is Agentic Commerce a Nothingburger? Shoptalk 2026: Join us for the Watson Live! — Agentic Debate Series Lunch at Shoptalk Las Vegas 2026 - Register Now.