Consumers Don’t Itch for Fitch; Wall Street Un-impressed that Costco Hits its Numbers; Why is UAE’s National Carrier Angry at the U.S.?

What are your qualifications?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Nothing like a fickle teenage population to cause your company to lose 14% in sales. The fact is, consumers just aren’t digging A&F’s offerings lately. Combine that with a strong dollar and you get earnings that you’d rather not announce. But they were announced, in all their unattractive glory, and sadly, for A&F anyway, the apparel company took in a $63.2 million loss with 91 cents per share lost – a far cry from the $23.7 million and 32 cents it lost a year earlier. Sales, by the way, came in at $709.4 million, a major ugly drop from the $827.4 million the company raked in last year. These dismal numbers are also the result of the strong U.S. dollar that continues to wreak its fiscal havoc on both Abercrombie & Fitch and Hollister. So the company has decided to lower prices on its merchandise  – in Europe, that is. But the powers that be admitted the retailer will continue to take a sales hit despite these efforts.  Interestingly enough Hollister, has been showing slight signs of recovery so shares did surge today on that bit of information. If you think you possess the skills that could have prevented this messy quarter, then perhaps you should polish your resume and submit it to A&F. The company has been sans CEO for six months and is on the prowl for a new one.

A year’s supply of toilet paper…

Image courtesy of photoraidz/FreeDigitalPhotos.net

Image courtesy of photoraidz/FreeDigitalPhotos.net

Costco topped analysts’ estimates and if this comes as a surprise to you then, clearly, you have never experienced the magic that is Costco. Sales for the warehouse retailer came in at $25.5 billion, with revenue taken in from membership fees up 4% to $584 million. Sales are up 6%, leaving competitors like Wal-Mart and Target in the dust. The company pulled down $516 million in profit on a total of $26.1 billion in revenue, adding $1.17 per share, a 9% increase over last year and just a teeny tiny penny more than what analysts expected. However, shares of Costco, for some inexplicable reason, fell more than 1.5% today. Well, actually there is an explicable reason, sort of, as traders were underwhelmed with the wholesaler’s performance and hoped Costco would do more than just top expectations. You can’t please ’em all, I guess. And now, if you’ll excuse me, I’m going to drown myself in a one ton container of Kirkland brand jellybeans…

And it’s all your fault…

Image courtesy of Ppiboon/FreeDigitalPhotos.net

Image courtesy of Ppiboon/FreeDigitalPhotos.net

The United Arab Emirates’ fast-growing national carrier, Etihad Airways, took down some impressive numbers with revenues of $7.6 billion and profits coming in at $73 million. Those earnings are a 52% increase over last year, yet, the airline is all up in a snit. It seems the suited folks running the show at Etihad are ticked off (feel free to insert a more colorful word) because “aggressive protectionist sentiment” from the West, i.e. the United States, is going to wreak fiscal havoc on the airline in the future. Apparently, as I have never been on board one of Etihad’s aircraft, its fleet is pretty tricked out, with competitive prices and a major edge on attracting passengers in the Persian/Arabian gulf. US carriers say this advantage comes from major government subsidies and that Etihad is simply messing with an otherwise level airline playing field. However, an independent study found that US carriers also get by with a little from Uncle Sam. So is this a case of the proverbial pot calling the proverbial kettle black? Hmmm.

Bling it On: Tiffany’s Earnings Shine; Michael Kors Earnings Do Not Shine: Did Someone Say Snapchat IPO? Sort of.

You paid how much?!

Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Shares of Tiffany & Co. shot up over 12% to $95.68 – the most in almost six years and, well, why not? After all the high-end bling company scored some epic digits in its latest earnings report, proving once again that people really do like expensive jewelry. I mean, was it ever even a question? Even though the declining euro against the dollar seems to be messing with everybody else’s earnings Tiffany & Co. seemed to emerge from the quarter virtually unscathed. Sadly, I was not the recipient of any high-end Tiffany & Co. pieces lately, but plenty of other lucky consumers were as it was the high-end collections that drove sales for the luxury retailer this past quarter. Those pricey accessories took in $962.4 million in revenue, with profits of $104.9 million and 81 cents per share. Analysts only predicted 69 cents per share. Sort of impressive, except that last year Tiffany & Co. pulled down $1 billion in revenue with $125.6 million in profits and 97 cents per share. Those shares, by the way, are down 20% for the year. But considering that the company just increased its forecast, those stock prices might be making a comeback.

Going down down down…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Unfortunately for Michael Kors, his fashion company took a nasty beating over the declining euro. But it wouldn’t be right to blame all the company’s bad earnings on the strong dollar as other factors also caused the company’s stock to plunge. While it may be hard to believe, it was just a few months ago that the stock hit an all time high of $97.60. Today, however, the stock is teetering at just under $46, its lowest point since December 2012 when it first made its IPO. Besides the strong dollar, same store sales were down a very uncool 6%. That may not seem like such a big deal but for Michael Kors it’s huge, especially when you take into consideration that the retailer also reduced its earrings outlook. Coach and Kate Spade are definitely giving Michael Kors an unwelcome run for its money, as well. When the dismal earnings for Michael Kors were announced, though, those two companies also saw their shares take a beating, as investors wondered whether bad earnings for fashion companies would be trending. Another culprit behind Kors’ earnings was Apple. No joke. While accessories tend to be hot sellers and profit drivers for companies like Michael Kors, the Apple watch is putting a major chink in those sales. After all, if you’re already spending that kind of cash on your wrist, why not have an Apple watch perched there?

Bubble burster…

Image courtesy of arztsamui/FreeDigitalPhotos.net

Image courtesy of arztsamui/FreeDigitalPhotos.net

Is there an IPO on the horizon for messaging app Snapchat? Maybe. Except CEO Evan Spiegel declined to elaborate on some key details during an interview with Re/code’s Kara Swisher and Walt Mossberg. For instance, the 24 year old founder wouldn’t even drop an itty bitty hint as to when Snapchat might make its big ticker debut. Speigel also dished out his thoughts on several other topics including his feelings that our current tech bubble is going to burst. Which is informative and all but really, when’s this Snapchat IPO coming at us? With 100 million users sending out around 700 million pics a day, the company has picked up funding and is valued at around $10 billion to $15 billion – depending on whom you ask, of course. But about that Snapchat IPO…

Home Short Supply Home; Fast-Food Chains are Losing Their Artificial Appetite; Cabling Up

Home-y don’t play that…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

There’s no place like home, that is, if you can actually get your hands on one. Homes in the U.S. seem to be in short supply, causing the ones that are already for sale to increase in value. Great news if you’re selling but bad news for buyers who are watching those prices rise because of that limited supply. The demand, however, is still there and people are continuing to buy up those homes as evidenced by the 5% increase in homes sales for the month of April. Experts thought that number would go up only 4.6%. Who can blame these eager buyers willing to shell out a few extra (thousand) bucks for a place to rest their heads. A decent job market and low interest rates are making this limited home supply that much more attractive. According to the ever informative Commerce Department, 517,000 homes were sold last month which was 6.8% more than last year at this time. Again, analysts only anticipated that 508,000 homes would find new owners. March saw only 484,000 new homes being sold. If you happen to be in the market for some new digs, take note that the median price for a house has gone up 8.3% over the last year to $297,300.

All the cool kids are doing it…

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

Artificial out. Natural in. And so it begins for both Pizza Hut and Taco Bell, two chains that have decided to throw in the artificial towel and kick the offending ingredients to the curb. It’s actually quite a big undertaking as this will affect 95% of their menus. But don’t worry about feeling it in your wallets. As least that’s what the people in charge are saying. The chains, which both happen to be owned by the same parent company, Yum Brands, are losing the fun colors and preservatives that you’ve come to expect in your fast-food cuisine. Your nacho cheese may not look as yellow by the end of July as Taco Bell gets set to say adios to the ingredient dubbed “yellow number 6.” And prepare yourself, diners, as you get set to munch on actual black pepper in it, as opposed to black pepper flavoring. Imagine that. Real black pepper. Who would’ve thunk it? Perennial offenders high-fructose corn syrup and palm oil will also be making an exit from the menu as well, and something tells me they won’t be missed.

Un-Charter-ed territory…

Image courtesy of manostphoto/FreeDigitalPhotos.net

Image courtesy of manostphoto/FreeDigitalPhotos.net

You may not care about this next piece of merger news as it may not affect you at all, especially if Netflix is your main provider of quality entertainment (in which case, I totally get it). But in the not-so-glamourous world of mergers and acquisitions, the fact that Charter Communications is scooping up Time Warner Cable is quite epic. It’s big news because 1.) two huge companies are coming together 2.) it will make Charter Communications the second biggest television and internet provider in all the land (of the United States, that is) and 3. there’s a ton of money being exchanged – over $55 billion or roughly the equivalent of the GDP for like a dozen developing countries combined (I may have exaggerated that one a little – but only a little). Interestingly enough, Time Warner Cable is much bigger, but that’s not stopping Charter from offering to shell out $195.71 per share to take on the company and bring its total customer base to 24 million. Of course, it’ll be no Comcast Communications, who comes in first with 27.2 million customers, but for now, it’s still a big – make that huge – step up for Charter.

Lumber Liquidated CEO; Best Buy’s Earnings Electrifying; Home Sweet Lack of Homes

Gee I wonder why…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

If you find yourself up for a challenging career change, look no further than embattled Lumber Liquidators, who now has a job opening…for a new CEO. After months of scrutiny and criticism following a scathing “60 Minutes” report about its dangerously high-levels of formaldehyde-laced flooring, Lumber Liquidators CEO Robert Lynch threw in his corporate towel. He officially resigned from the company and stepped down from the board of directors. Shares of the company took a 16% hit before the market even opened following the news of Lynch’s resignation, adding to the slide that Lumber Liquidators has been taking for months now. In fact, its stock is down more than 60% for the year. However, in Lumber Liquidator’s defense, 97% of its products found in its flooring already installed in customers’ homes was found to be within protective guidelines. As for that other 3%…well, I suppose that explains why the company is under federal investigation.

Best ever?

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Best Buy managed to score some impressive earnings with a big fiscal shout out to big-screen tv’s and “iconic” smart-phones. In case it wasn’t obvious, CEO Hubert Joly deems the iPhone 6 and Galaxy S6 “iconic.” Other money-makers for the company were home appliances, which makes perfect sense since the housing market is easing up  (sort of, see below) making it easier for people to actually afford their homes, which they then need to fill with super convenient items like ovens and refrigerators. Just try living without them. Shares of the stock gleefully went up 7% before the market opened as the company announced it pulled in a profit of $129 million with 36 cents per share added, even though Wall Street only expected the electronics giant to post a 29 cent per share gain. A year ago the company pulled in a $461 million with $1.31 per share added, except that was all because of a tax change, so the year-over-year comparison is almost a moot point. The company saw revenues of $8.56 billion which was actually a slight drop from last year. But again, no one is too concerned because a.) analysts predicted revenues of only $8.46 billion b.) Best Buy is saying au revoir to 66 stores in Canada (yes, just like Target) so a loss of revenue was expected.  Oh, Canada. c.) the strong dollar has been messing with very company’s earnings and why should Best Buy be any different.

Is it? Or isn’t it?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Once again, leave it to the housing market to toy with our fiscal emotions.  April proved to be nothing short of a bummer as sales of existing homes dropped, according to the National Association of Realtors. The culprit, it seems, is the fact that there are not as many listing, and the prices for homes are higher. Supply and demand, I tell you. Arghh!!! Just a little over 5 million homes were sold in April representing a 3% drop. And nobody likes a drop. Part of the problem is that people aren’t listing their homes. Maybe they just like the ones in which they are currently living. Maybe they don’t see listings that they like. In any case, the median price for a home these days is hovering around $219,000, almost 9% more than a year ago.  Of course building more homes is a logical way to fix this housing inventory issue.  And builders are doing just that, as evidenced by the rise in new building applications recently reported. But the problem is that building a new home can take about a year and who wants to wait that long to see some housing recovery?

Banks Behaving Badly Get Slapped with Billion Dollar Fines; Target’s Earnings Bullseye; Hormel Ears on All That Spam

Busted…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The fun is over for a group of foreign exchange traders who brazenly dubbed themselves “The Cartel” and went about manipulating the price euros and dollars to score some extra cash. Now, because of them, five major banks have to shell out over $5 billion in settlement fees. Citicorp, J.P. Morgan Chase, Barclays and Royal Bank of Scotland all admitted their fiscal misdeeds that began in December of 2007. UBS pleaded guilty to one count of wire fraud and has to pay over half a billion dollars in fines. But the Swiss bank dodged some other penalties and gained conditional immunity for being the first to report on the criminal activities taking place. These forex traders would share confidential information about their clients’ orders and then plan out trades that would conveniently boost their own profits. Entrance into the group was by invitation only and one participant said at one point, “If you ain’t cheating, you ain’t trying.” Charming, huh? The resourceful plan proved quite profitable until January 2013 when investigators finally honed in on what was going on. Even though no criminal charges were brought, as per the settlement agreement, investigations into other foreign exchange issues are not going away any time soon.  And of course, plenty of traders were given their walking papers. As for the movie rights…well, I suppose you can expect to see this play out in theaters within a few years. No sense in Hollywood not profiting off this, right?

Hit it…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Seems like only yesterday when Target was rocked by a data breach that cost the retailer tens of million of dollars. Then there was the fiasco, also known as “Target’s Canadian Expansion,” that saw the retailer pulling the plug on the 133 stores located there. But those not so minor hiccups seem to be water on the fiscal bridge as Target released its latest earnings that hit their mark and saw its third straight quarter of sales growth, especially in home goods and apparel. So how good were these earnings? How does a a 52% increase in profits sound? That’s right, Target scored $635 million in net income, up from $418 million just one year ago, gaining $1.10 per share. Analysts were only predicting $1.02 per share. Clearly, those analysts were not amongst the many consumers lined up at five in the morning hoping to score some limited edition Lilly Pulitzer merchandise. Revenue was also up 2.8% which had everybody on Wall Street marveling at the fact that Target’s great earnings put Wal-Mart’s not great earnings to shame. Especially because sales at Target were up 38%, which is about double what Wal-Mart pulled in.

Talking turkey…

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

Hormel, the original Spam maker, long before it was known for crowding our inboxes, just released its earnings and there’s good news. And bad news. The good news is that profit for the company increased 29% to $180.2 million with sales of $2.3 billion. The company pulled in 67 cents per share while analysts expected 62 cents per share. You may not be eating Spam, but somebody out there is. Besides, Hormel, being the largest meat processor in the United States, makes tons of other products including Roast Beef Hash and, I kid you not, Wholly Guacamole. In case you didn’t realize, Hormel’s got big business going in the refrigerated foods industry. The company also has a Jennie-O turkey store business, which brings us to the bad news: bird flu. There is a new bird-flu outbreak and if you want to sound sophisticated you can refer to it as avian influenza. Not only is this expected to take a big bite out of Hormel’s numbers, but it is also predicted that this outbreak is going to wreak havoc on the rest of the turkey industry as well. Forgive me if I just put an extremely early damper on your Thanksgiving.

Wal-Mart Misses Profits, But Who Can Blame Them?; Spotify-ing Starbucks; Urban Outfitter’s Un-Trendy Quarter

Wager on this…

Image courtesy of digitalrt/FreeDigitalPhotos.net

Image courtesy of digitalrt/FreeDigitalPhotos.net

Wal-mart took a hit on its first quarter earnings but would it be really fair to blame the world’s largest retailer? After all, that miss had a lot to do with the fact that Wal-Mart threw $1 billion towards raising employee wages and training programs.  Some might even call that profit miss noble. While Wal-Mart expects this initiative to actually lift sales in the long term, I bet management is hoping for a really short long term. Another reason not to completely blame Wal-Mart for its earnings miss is that recent Commerce Department report detailing how spending is down because would-be consumers are actually choosing to save money and pay down their debt. Of course, we also mustn’t forget to blame the strong dollar, which rumor has it, was responsible for eating a few cents per share off of Wal-Mart’s earnings, as well. The giant retailer pulled down revenue of $114 billion when analysts expected $116 billion. Even though that figure is down just .1% from last year, considering it’s Wal-Mart, that number is not as small as it seems. Analysts were hoping to see $1.05 per share earned, however, Wal-Mart only managed to score $1.03 per share on $3.34 billion. I suppose that figure sounds impressive – anything with the word “billion” usually does – except for the fact that it was a 7% drop from the $3.6 billion and the $1.11 per share it took in last year.

Deal of the day…

Image courtesy of bplanet/FreeDigitalPhotos.net

Image courtesy of bplanet/FreeDigitalPhotos.net

CD’s are out and barista’s are in at Starbucks as the coffee chain teams up with streaming music provider Spotify. In what just might become remembered as one of the more creative business collaborations to come along in a long time, Starbucks employees – some 150,000 of them –  will be getting an unusual job perk: premium subscriptions to Spotify. The baristas will get to hone their deejaying skills by making playlists for the stores from the Starbucks music that has been wafting through the coffeehouses, together with the smell of espresso beans, for the last twenty years. So where’s does the money part come in? Starbuck’s promotes Spotify’s premium service, which can be yours for $9.99 per month. (the company already has 60 million users), while the playlists from Starbucks’ 7,000 locales will be conveniently accessible to those premium subscribers from Starbucks’ own mobile app. Then, as an added bonus, Spotify users can earn “stars” from the Starbucks reward program, of which there are 10 million members. I mean, can it get any better, well, for Starbucks and Spotify anyway?

Passe?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

There’s nothing trendy about lousy earnings. Urban Outfitters and Anthropologie can attest to that as the apparel companies took a hit in their latest earnings report. In fact, it was Anthropologie’s worst quarter in more than two years as sales of the brand were only up by a paltry 1%. Sales for the company, as a whole, were only up 3.8% at over $311 million. Even though same store sales were up 4%, analysts predicted growth of 5.3%. So that was nothing short of disappointment at its peak. Revenue was also up, but only by 8% to $740 million. But it was the company’s net income that had everybody aghast. Urban Outfitters took a 12.5% beating on its profits coming in at $32.8 million and earning just 25 cents per share. Analysts were pulling for 30 cents per share on revenue of $758 million. Fiscal rumor has it that the clothing company can’t seem to get a fashionable leg up on the faster fashion companies of H&M, Zara and Forever 21. Whatever the reason, here’s wishing them a better second fiscal quarter.

Is Netflix Saying Ni-Hao to China; Ann Taylor is Dressing Up for a Merger; Dear Apple…Love, Carl

How do you say “Orange is the New Black” in Chinese?

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

Looks like Netflix might soon be needing “House of Cards” translated as its been rumored that the video-streaming company has been in talks with a few Chinese companies about bringing their premium entertainment to that part of the world. It’s estimated that the online video market in China is close to $6 billion so, it’s probably a good idea if Netflix gets started on that venture sooner rather than later. It should be duly noted that Netflix hasn’t been chatting with just any Chinese companies either. Heard of Wasu Media Holding Co.? If that name doesn’t ring a bell, then what about the name Jack Ma? The mastermind billionaire behind Alibaba, China’s biggest e-commerce site, also backs Wasu. But rumor has it Netflix was also talking with another giant Chinese media company, BesTV New Media Co. A few months ago, Netflix’s Ted Sarandos initially said that there were no plans for the company to enter into any “joint” ventures,  whether Chinese or not. But the thing is, if any company, even Netflix, wants to do business in China, then teaming up with a big important Chinese company is a must. Especially if that company wants to have a pleasant and sustainable relationship with the Chinese government. While no contracts or agreements have been signed with regard to Kevin Spacey’s character, Frank Underwood, going east, Netflix’s stock still went up on just the talk.

Stylin’…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Ann Inc. was looking particularly stylish as it was just scooped up by Ascena Retail group for a very fashion-forward  $2.15 billion. Ascena, which also owns Lane Bryant and tween chain Justice, among others, picked up its latest apparel chain for a very cool $47 per share, which happened to be more than a 21% premium over its closing price on Friday. Wall Street liked the new joint venture and sent Ann Taylor’s stock up over 20%. Ascena’s stock also went up a bit, but then came back down to little, if no, fanfare. Several companies have gone the merging route lately. They do this when their sales have been less than impressive for an extended period of time. Ann Taylor and Ascena were no exceptions to this trend but its now expected that this new adventure between the two retail giants will rake in a combined revenue of $7.4 billion.

Very Truly Yours….

Image courtesy of Iamnee/FreeDigitalPhotos.net

Image courtesy of Iamnee/FreeDigitalPhotos.net

Activist investor Carl Icahn poured his fiscally minded heart out in an open letter to Apple CEO Tim Cook. In the letter he did nothing short of gush about how Apple’s stock is “dramatically undervalued” and that he sees its price target at $240 per share. That figure is a whopping 55% more than its closing price in Friday. The stock is currently hovering at around $130 per share, mind you. And while Mr. Icahn is profoundly moved by Apple’s decision to repurchase stocks, alas, he wants the tech company to repurchase even more. Some of his love and devotion stems from the fact that Apple, besides being the largest company in the world by market cap, is delving into the fiscally vibrant worlds of television (2016) and automobiles (2020).