A&F Earnings Are Out of Fashion; McDonald’s Biotic Changes; Target-ing Change

Teen-y tiny…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Teen-centric apparel company Abercrombie & Fitch took a fourth quarter beating. One of the (many) reasons seems to be that the fickle adolescent community got tired of advertising the A&F logo on their chests and butts. And like so many other companies, the strong U.S. dollar also seemed to be putting a crimp in the retailer’s numbers, especially considering that a third of the company’s revenue comes from outside the country.  Same store sales also decreased by 10%. Then there’s the part about how teens have been spending less money on clothing than in recent years, yet they are increasingly looking to outfit themselves through the likes of H&M, Forever 21 and Zara. Those chains tend to offer “fast fashion” that kids today totally dig at much better prices. Does that make A&F’s fashions slow? Hmmm. Oddly enough, American Eagle, one of A&F’s competitors actually beat the street with its earnings and even hit a 52-week high. Net sales of Abercrombie & Fitch fell 14% to $1.12 billion with  profits coming in at $44.4 million and 63 cents per share. Analysts expected $1.15 per share on $1.17 billion in revenue.  To add insult to injury, Abercrombie & Fitch is looking to unload its company jet , a relic from the days when big mouth CEO Michael Jeffries ruled the A&F empire.

Cured!

Image courtesy of  Idea go/FreeDigitalPhotos.net

Image courtesy of Idea go/FreeDigitalPhotos.net

If you’re not into chicken seasoned with antibiotics, then you’re in luck. McDonalds has decided to scrap that special feature from its poultry menu, except it’s going to take approximately two years to fully get there. Steve Easterbrook, who took over as CEO just three days ago, did promise some major changes at the the Golden Arches. The fast-food company has become increasingly concerned over “superbugs” that have caused about 23,000 deaths per year. McDonalds will still allow ionophores in its chicken products. Yum. But don’t sweat it too much. Ionophores are antibiotics meant for our feathered friends – not for humans. Phew. The chicken change will affect the 14,000 eateries in the United States, but don’t expect to see any changes in the 22,000 McDonalds restaurants abroad. At least not yet, anyway. While Chick-fil-A already did away with antibiotics-laced chicken a year ago, the fact that McDonald’s is set to make these changes is rather epic, being the largest fast food chain and all. Once McDonald’s gets its distributors and processors to alter the food (for the better, of course), it will make it substantially easier for smaller chains to follow suit. So, here’s to antibiotic-free chicken! Bon appetit!

About those unemployment benefits….

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Big changes are in store for Target and it’s safe to say some of them won’t be welcomed. The giant retailer, who is in the process of literally closing up shop in Canada, is also in the process of trying to cut $2 billion in costs. Part of that cost-cutting includes job-cutting. Several thousand people will need to polish up their reumes and update their LinkedIn accounts as Target looks to cut most of those positions from its corporate headquarters and some position in India, as well. But Target’s got other big ideas that don’t involve applying for unemployment benefits. It’ll be running a huge Hispanic millennial campaign – apparently the first of its kind – and part of it involves teaming up the CW’s “Jane the Virgin” together with Target’s baby department. Then Target’s also looking to open up 15 more stores, however, eight of them will be CityTarget and TargetExpress stores which – you guessed it – will be taking an urban approach seeing as how they will be geared toward an urban crowd in a presumably urban location.

Is it Formally Formaldehyde From Lumber Liquidators; Adidas Who? Carrie Underwood Kicking the Right Game for Dick’s; Best Buy’s Electricfying Earnings

Wood you mind?

Image courtesy of scottchan/FreeDigitalPhotos.net

Image courtesy of scottchan/FreeDigitalPhotos.net

Just a day after a scathing “60 Minutes” report that accused Lumber Liquidators of selling products containing excessively high amounts of formaldehyde, the stock rallied today. Just not as much as the 25% hit it took yesterday. The company stands accused, by “60 Minutes” anyway, of selling Chinese-made flooring containing formaldehyde at much higher levels than what is acceptable and, for that matter, legal. The company, however, said the claims are “overblown” and went on to cast doubt on the “60 Minutes” report, pointing out that no victims were “highlighted,” no feedback was provided from regulators and the piece “relied on anonymous Chinese factory workers making accusatory statements.” Hence, analysts were able to send the stock rallying today. Lumber Liquidators has 318 stores in the U.S. and Canada. Incidentally (or not), the Department of Justice may also be filing criminal charges against the company for violating import laws.  Naturally, Lumber Liquidators said, “We stand by every single plank of wood and laminate we sell around the country.” Aw. Now if we could just know for sure if those planks are gonna kill us or not.

Losing your stripes…

Image courtesy of woravit.w/FreeDigitalPhotos.net

Image courtesy of woravit.w/FreeDigitalPhotos.net

Some big changes are in store for Dick’s Sporting Goods come Thursday and they’ve got Carrie Underwood’s name written all over them. Literally. The American Idol winner and country music superstar is launching her very own “athleisure” brand, “Calia by Carrie Underwood.” And yes, “athleisure” is a real thing. However, in order to give the athletic apparel line the attention it deserves, Dick’s will be chucking its Adidas and Reebok lines (remember that one? Adidas owns it). While sales of women’s athletic apparel has been outpacing men’s, Adidas’ sales have been taking a big hit in the United States for some time now. People just aren’t digging the brand’s traditional looks that it keeps churning out. So goodbye Adidas. Hello Carrie! Or Calia!

Take that Amazon!

Image courtesy of patrisyu/FreeDigitalPhotos.net

Image courtesy of patrisyu/FreeDigitalPhotos.net

Best Buy had a rockin’ good quarter thanks to people shelling out tons of money for big screen televisions and mobile phones. The electronics retailer reported its overall fourth quarter revenue was up 1.3% to $14.2 billion. Analysts were actually expecting $14.34 billion but for that minor failing we look no further than the strong U.S. dollar and some store closures in Canada (almost makes you think of Target, doesnt it?).  So why exactly was it rockin’? The company picked up a 77%  profit increase at $1.47 per share when analysts only expected a $1.35 gain per share. Even better, shareholders get to rake in a 51 cent per share dividend some time in April.  In case you were wondering where that mysterious “installation” charge on your bill came from, well, just take a look at Best Buy’s 3.2% revenue increase in the U.S. alone, not to mention its $519 million profit and voila – your phone bill financed Best Buy’s impressive digits by spreading out your mobile payments. Clearly, Best Buy didn’t have this lucrative little plan in place last year as it only pulled in $293 million. But hey, at least you get an upgrade soon, right?

Are You There Shareholders? It’s Me, Warren (2015); Forbes’ Magazine Names the A-Listers; Costco: AmEx Out, Visa and Citi In

Best Regards, Warren…

Image courtesy of  Boians Cho Joo Young/FreeDigitalPhotos.net

Image courtesy of Boians Cho Joo Young/FreeDigitalPhotos.net

Warren Buffet’s annual letter to Berkshire Hathaway shareholders arrived over the weekend, regaling us –  I meant them – with so many insights and wisdom about the economy and the ways of the investment Samurai. Among the many pearls, Mr. Buffet wanted to let folks know that “America’s best days lie ahead.” Things might have been a bit shaky the last few years, but darn be the naysayers  and things can and will only get better. Mr. Buffet also wished to remind people that “Market forecasters will fill your ear but will never fill your wallet.” Aw, Warren. There’s something very moving about the way the Oracle of Omaha advises people that all these financial experts surrounding us are good for nothing. He also offered some poetic words regarding his failed investment in British supermarket chain, Tesco: “In the world of business, bad news often surfaces serially: You see a cockroach in your kitchen; as the days go by, you meet his relatives.” The venture ultimately cost him a whopping $400 million and the Oracle attributes the loss, to among other things, not being decisive and fast enough about pulling out of the investment. Meanwhile, during an interview on CNBC, Warren Buffet said Sen. Elizabeth Warren (D-Massachusetts) should be “less angry and demonizing” and should be more open to compromise. Ouch. I guess those two won’t be hanging out together anytime soon.

Speaking of Warren…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

Omaha’s most famous resident made it to the number 3 spot on Forbes’ list of billionaires. Microsoft’s Bill Gates claims the top spot – again –  with a net worth of $79.2 billion while Mexico’s Carlos Helu Slim comes in for second. There are 1,826 billionaires on the list who have a combined total net worth of $7.05 trillion. However, the average net worth of the billionaires is actually down by $60 million this year to $3.86 billion. I know, how sad.  Seventy-one of those billionaires are breaking onto the list of the very first time. Among those first-timers is basketball great Michael Jordan who makes his big billionaire list debut this year with a little help from having increased his ownership stake in the Charlotte Hornets. But his restaurants, deals with Nike, Gatorade, Hanes, etc…allow him to claim the 1,741st spot with a net worth of about $1 billion. Forty-six of the billionaires are under the age of 40 with Snapchat’s Evan Spiegel having the distinction of being the youngest billionaire on the list.

Well hello, pardner…

Image courtesy of stock images/FreeDigitalPhotos.net

Image courtesy of stock images/FreeDigitalPhotos.net

Club goers rejoice! Costco has officially entered into agreements with Citigroup and Visa to become the wholesaler’s partner in credit. In the meantime, the retailer is bidding a not-so-fond farewell to American Express, who for the last 16 years had an exclusive deal with the chain. Citigroup will be putting out a Costco/Citi credit card with perks and generous rewards aplenty, in keeping with the Costco spirit, of course. Unfortunately, Costco shoppers must wait until April of 2016 to whip out the new plastic. However, debit cards know no bounds – or labels – and those will continue to be warmly accepted regardless of the issuer, at Costco’s 674 warehouses worldwide. And while AmEx is expecting to take some type of beating on Wall Street for the next two years, shares of Visa hit an all-time high today over this very exciting fiscal news.

Morgan Stanley Finally Owns Up to All the Trouble It Caused; It’s a Darn Claim Unemployment Filings Are Up; Sears is Losing It

It was just a matter of time…

Image courtesy of  dream designs/FreeDigitalPhotos.net

Image courtesy of dream designs/FreeDigitalPhotos.net

Morgan Stanley is taking a bit of a beating today on Wall Street now that it has finally finally settled with the Department of Justice over its shady little role leading up to the 2008 financial crisis. Morgan Stanley reached a deal with the DOJ  that’ll have the bank paying $2.6 billion to get Uncle Sam off its back.  Attorney General Eric Holder and the DOJ will graciously end their probe into whether Morgan Stanley duped investors by telling them how very great their home loans were when in fact, they were anything but. This settlement is sure to put a major dent in MorganStanley’s 2014 profits. By major, I mean it’ll eat up nearly 50% of what MorganStanley got to take home in 2014. It officially lands Morgan Stanley on that illustrious list of banks who also had to shell out billion dollar settlements to the DOJ for their smarmy actions leading up to and during the 2008 financial crisis, including  – but not limited to –  Bank of America who reigns the top spot with a $16.7 billion payout. It’s followed by JPMorgan Chase which holds the number two spot for its $13 billion settlement. Citigroup rounds out the group with a $7 billion settlement.

Don’t stake this claim… 

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Image courtesy of renjith krishnan/FreeDigitalPhotos.net

The number of people filing jobless claims went up. Not down. But up. The number climbed to 313,000 people instead of a projected 290,000. While the news is a bit of drag, economists  – who presumably know a thing or two  – are telling us that we can’t work ourselves up into a collective panic over one month’s lousy numbers. At least for now, anyway. First, the number of people filing those claims is still relatively close to the 300,000 mark. If it were way past that number, then yeah, having a fiscal freak out might be considered almost acceptable. Two, the labor market’s rockin’, sort of, and hiring is strong, which brings us to reason number three. Because hiring is strong, wages are actually going up. Walmart, TJ Maxx, Gap…the list goes on as to how many retailers are raising its employees’ wages. All these factors allow us to almost ignore this fiscal hiccup. However, leave it to Fed Chairwoman Janet Yellen to remind us that, “wage growth remains sluggish” and that there’s always room for improvement.  You don’t say.

Loser…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Sears isn’t having a very good year. Actually it hasn’t had a good year in…well, many many years. It just reported its fourth straight year of losses with this quarter losing $159 million and $1.50 per share. Incidentally, that figure is not nearly as dismal as last year’s $358 million fourth quarter loss. So you see, there is a bright side. Sort of. Run by the The Hoffman Estates, which also runs Kmart, the company has tried just about everything to help the ailing retailer reverse its downward financial spiral. From store closures to slashing inventory, the retailer has tried countless ways to cut costs. The company closed over 230 stores in 2014 and today has over 1,700 stores, which sounds impressive. But you know what’s more impressive? The over 3,500 stores the company had five years ago. The latest plan is to spin off between 200-300 stores into a REIT, which stands for Real Estate investment trust, by the way. The idea is apparently going to allow the failing company to pick up some $2 billion and help turn the fiscal tide. But if you want to know how exactly that works you’re on your own.

Everything Really Is Awesome for Lego; Southwest Gets Grounded; Target’s Earnings Hit and Miss;

Everything is awesome…

Image courtesy of ArtJSan/FreeDigitalPhotos.net

Image courtesy of ArtJSan/FreeDigitalPhotos.net

The Lego Movie movie might have been very rudely snubbed at this year’s Oscars but that didn’t stop Lego CEO Joergen Vig Knudstorp from belting out the hit tune “Everything Is Awesome” to reporters recently.  That’s because for him everything really is awesome. The privately held Danish company released its yearly earnings report and the consensus is that Lego is in demand. My basement, however, could have told you that. Demand in China, Russia, France, etc is only getting stronger and this year’s release of “The Lego Movie,” which earned a staggering $468 million, helped propel that awesome demand precipitously upward. Lego’s profits were 15% higher this year hitting about $1 billion. I can truly say I contributed considerably to that figure. Revenue for the company came in at $4.3 billion and move over Mattel because Lego has become the number one toy company in the world. There’s also a Lego Movie sequel in the works set to be directed by Rob Schrab with a 2018 release date. But if the Oscars snubs Lego again, it’ll have to answer to the forces of Ninjago, not to mention Batman,  whose Lego movies are set to be released in 2016 and 2017.

Yeah…that could be a problem…

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Everything is not awesome over at Southwest as the airline had to ground 20% of it’s fleet. In case you were wondering that is about 128 of its planes. Apparently Southwest missed inspections and immediately notified safety regulators, according to an airline spokesperson. How very diligent of them. Eighty flights bore the brunt of this gaffe but fear not intrepid traveler, as the FAA and Southwest have figured out a way to get those flights up into our friendly skies until all the aircraft can get properly inspected. How very reassuring.  In case you were still wondering, the part of the aircraft that requires immediate inspection on all these airplanes is the backup hydraulic system. It helps control the aircraft…in the event of a  main system failure. Awesome. The bulk of inspections ought to be completed by now and if you happen to be on one of the few remaining aircraft that have yet to be inspected? Well, then have a nice flight.

Oh Canada!

Image courtesy of Bill Longshaw/FreeDigitalPhotos.net

Image courtesy of Bill Longshaw/FreeDigitalPhotos.net

Target reported its earnings this week and the good news is that it lost $2.6 billion. That amounted to a loss of $4.10 per share. It’s good news because it’s a one-time loss from closing up shop, literally, on its disastrous foray into our neighbor to the north. But if you take into account that Canada is now officially off the Target grid, then you can calculate that the mega-retailer actually pulled in $1.50 a share. Which is really great news because analysts only thought that the retailer would gain about $1.46 per share. So you see, there is a bright side here. Somewhere. Sort of. Listen it’s not Canada’s fault. Canadians are really lovely people. Some of my best friends are Canadian. But they just didn’t appreciate all those empty shelves at their 133 stores, not to mention some annoying pricing discrepancies – among other issues, mind you. But back on our turf, Target’s sales increased to $21.8 billion – almost $2 billion more than last year, Canadian failure and all.

Waffle House: For All Your Shipping Needs; Home Deport Improves Earnings; Fed Chairwoman Ponders Millenials

Can you expedite that waffle?  

Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

What do you get when you cross a restaurant chain known for its waffles with a delivery app? Roadie, of course. Haven’t heard of it yet? That’s probably because it’s only been up and running for a few weeks. However, it’s already got $10 million worth of funding with some of that cash coming from Google’s Eric Schmidt. The app is also being touted as the “Über of shipping.” The idea, created by founder Marc Gorlin is so simple yet so genius. It matches up people who need to ship something with other people who are already driving to that location, often for much less than what the usual shipping companies charge. And just where do the waffles come in? Enter Waffle House and its 1,750 locations which will serve as the meeting points for shippers and insured drivers. The cost to ship an item  – and yes it has to be legal! – with a “Roadie” could range from $12 – $200. First time “Roadie” downloaders are eligible for a free waffle. Get a free beverage to take along with you every time you make a delivery.  While it’s only available in 25 states , primarily in the southeast, there’s no need to fret. With 7,500 downloads and counting all signs point to some major expansion plans sooner rather than later.

Where can I find nails?

Image courtesy of zole4/FreeDigitalPhotos.net

Image courtesy of zole4/FreeDigitalPhotos.net

Home Depot had a particularly fabulous fourth quarter pulling in a 36% profit. Net income came in at $1.38 billion at about a buck per share Analysts only predicted Home Depot would gain 89 cents per share. A year earlier the company gained 73 cents per share. So what gives?  It seems the retailer earned some major cash from its website and its big push to improve customer service has paid off quite nicely for the world’s largest home improvement retailer. If you are lucky enough to be one of Home Depot’s esteemed shareholders , then congrats to you as you just earned 12 cents per dividend, which is now up to 59 cents per share. The company even has big plans to buy back $18 billion in shares. In the market for some gainful employment?  You might want to check out Home Depot’s job board. The company is looking to fill 80,000 jobs for the spring, the store’s busiest season. Unfortunately, the retailer’s forecasts for the year are tinged with a bit of disappointment as it is convinced that the exchange rate and that especially robust dollar of ours is going to put a 6% ding in the stock this year.

Everyone likes a good mystery…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Fed Chairwoman Janet Yellen is taking fiscal center stage today before the Senate Banking Committee.  The Fed Chairwoman gets to enjoy two days of back to back congressional testimony where she will be grilled on a loooong list of complaints, courtesy of the Republican controlled House and Senate. Among the questions with which she will be peppered is when exactly does the Fed plan on hiking those interest rates, an answer that has been eluding the American people and its elected officials for quite some time.  Not exactly the stuff that Oscar nominated movies are made of. But on Capitol Hill that testimony could give Game of Thrones a run for its money. Ms. Yellen also wondered aloud about that mysterious lot born in the eighties and nineties, a.k.a. Millenials. The Fed Chairwoman finds them to be a bit of a mystery and is unsure how the economy is going to affect them. If that’s what she’s wondering about them then I’m guessing she doesn’t get to Chipotle very often.

The White House Comes After Wall Street Advisors; January’s Frigid Housing Numbers; Target’s New Shipping Policy Gives Cause to Shop

Hard sell…

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Image courtesy of ddpavumba/FreeDigitalPhotos.net

The White House is coming after Wall Street, in particular, financial advisors who might be a little too loose with money saved diligently by America’s middle class. President Obama wants the Labor Department to revamp its rules ensuring that retirement advisors put clients’ fiscal needs before their own bank accounts by putting the kibosh on hidden fees and conflicts of interest. Currently, investment advisors have this practice of suggesting expensive products to their clients that could at best be categorized as “suitable”  – but not “ideal.” In fact, these “suitable” investment products could cost a retiree five years worth of savings. Investment advisors would actually now be required to follow, dare I say it – a “fiduciary standard.” Many Republicans and financial firms, not to mention Republicans who work in financial firms, are just not that into this whole new idea of revamping the rules for two reasons that aren’t likely to elicit any sympathy: 1. They’re worried a new system will considerably shrink all the money they make in compensation fees and 2. They think the current system works just fine. However, the current system, according to White House, anyway, says it has cost unsuspecting working middle-class families an estimated $17 billion a year.  So who is this system working for, exactly? Hmmm.

Bring it home…

Image courtesy of hywards/FreeDigitalPhoos.net

Image courtesy of hywards/FreeDigitalPhoos.net

The number of existing homes that sold in January was 4.82 million. In case you were ready to celebrate…don’t. Those numbers suck. They suck because it’s a 4.9% drop from December and is at the lowest rate it has been in nine months. Nine months ago, (which by the way,  was May  – in case you didn’t feel like doing the math) saw 4.9 million homes sold. The National Association of Realtors provided us with these disappointing figures but all is not lost because, as it turns out, this 4.82 million figure is still 3.2% higher than it was a year ago. Naturally it wouldn’t be right if much of the blame didn’t go to Mother Nature who, it seems, loves nothing more than setting the bitter wintry stage for gloomy fiscal numbers. But with low interest rates and strong jobs numbers, here’s hoping spring will kick winter’s fiscal butt.

Aw’ ship…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

Target has graciously decided to offer free shipping for online orders on just a $25 minimum purchase – with no exclusions, allegedly. Be still my beating consumer heart. If you recall – as I certainly do – Target was offering “free shipping” with a minimum $50 order. The retailer was inspired by the success it had when it offered free holiday season shipping through December 20, this past holiday season. It was an effort to compete with the slew of online retailers, but it payed off in more ways than one.  The company set new sales records for Thanksgiving and cyber-Monday and saw 60% of its website traffic come from mobile users. Once upon a time Amazon also offered free shipping with a $25 minimum purchase but alas, its investors got their way and Amazon was forced to up its minimum to $35. In the meantime, Walmart, while raising its minimum wage, has yet to change their free shipping policy, which offers the perk on only certain “eligible orders,” which seems a little too open to interpretation, as far as I’m concerned. Target also has big gigantic plans to open online fulfillment centers and if that doesn’t bode a Target/Amazon smack down then I don’t know what does. Target’s inventive digital app has also been doing particularly well in the popularity contest picking up a couple new million users and shooting past that pesky $1 billion promo sales mark.