How Trump Is Dulling Tiffany & Co.’s Sparkle; Just Another Multi-billion Dollar Monday; Oil Vey! OPEC Squabbles Over Oil Cuts

Occupying 5th Ave…

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Despite occupying some of the the best real estate in the world, Tiffany & Co.’s New York flagship store is having some sales troubles no thanks to president-elect Donald Trump,  whose nearby police barricades, protests and secret service detail have taken a big chunk out of the store’s traffic. And that’s a huge problem, especially because the U.S. is Tiffany & Co.’s biggest market, and its Manhattan store accounts for 8% of the company’s sales. At least there’s China and Japan, whose currency fluctuations allowed consumers in those regions to take advantage of a strong yen that had them picking up all kinds of nifty goods from the iconic jeweler. Mainly because of that, the company posted a surprise 1.2% sales increase – the first sales rise in eight quarters. Same store sales didn’t fare as badly either, even though experts thought they would. Instead of declining an expected 2.8%, they fell just 2%. In the United States, presumably in locations where Trump does not reside, Tiffany & Co. experienced a smaller than expected drop, falling just 2% compared to last year at this time. The luxury jeweler scored a $95 million profit, pulling down 76 cents per share on sales of $949.3 million. Analysts only expected 67 cents to be added to shares with sales totaling $923.7 million.

Shattered…

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Move over $3.36 billion. Move over $3.39 billion. The original sales estimates for cyber-Monday proved no match for the actual numbers. Adobe Digital Insights whipped out the results for this year’s post-Thanksgiving shopping extravaganza, which blew estimates out of the water and came in at a whopping $3.45 billion – over a 12% increase from last year’s cyber-Monday purchases. But what’s super weird is that apparently there were less deals on cyber-Monday than on Black Friday. However, Black Friday’s numbers were looking awfully green as well, setting a record with a 22% increase over last year and coming in at just $110 million less than cyber-Monday. Some analysts were a bit concerned that the abundance of web sales on Thanksgiving would put a dent in cyber-Monday’s digits. But wouldn’t you know it? That didn’t happen. Purchases made using Wall-Mart’s app jumped 150% while Amazon is expecting to report its best cyber-Monday. Ever. But you’re just going to have to take their word for it. As for losers, look no further than Macy’s. Perhaps it was karma for opening its doors at 5:00 pm on Thanksgiving Day, but the company experienced outages on its website that kept a lot of shoppers from making a lot of purchases on the company’s site. The amount of money the retailer likely lost was probably not enough to offset the fact that it opened its doors on Thursday. Boohoo.

Why can’t we oil just get along?

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The Organization of the Petroleum Exporting Countries, also known as OPEC, is having a big fancy meeting in Vienna tomorrow. At issue is the problem that there is way too much oil floating around all over the world. This oil glut is making oil prices low which makes for really good prices at the pump. However, the countries that produce all this oil don’t like that one bit and are trying to agree on how to fix it so that prices go up again and they can start making cold hard cash. Saudi Arabia, Iran and Iraq are the biggest oil producers and the logical step would be for each country to cut their production. But none of them want to do that. There’s a lot of ego involved. It’s like color war, but with actual valuable commodities at stake, besides national pride. Saudi Arabia is proposing cuts of 1.2 million barrels per day. However, Iran’s not down for making any cuts because it feels it needs to make up for lost time from all those years of Western sanctions it faced – and totally deserved – and still does deserve. Iraq is using ISIS as a very convenient, if somewhat legit excuse since it is, after all, fighting a war against a psychopathic terrorist organization, and the money it gets from selling oil helps fund that lofty endeavor. Rumor has it that Iran and Iraq are coming around but no word on whether Saudi Arabia will play ball. So stay tuned to see if and when more OPEC drama plays out, and how this drama will affect your wallet and your green car aspirations.

 

Trump’s Been Dealing it to Himself; Volkwagen Wants Your Love Back; Excuses, Excuses: Barnes & Nobles Whips One Out

Even more Trump’d up…

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President-elect Donald Trump’s foundation admitted it “self-dealt.” Self-dealing is when  leaders of non-profit organizations take money from the charities they lead, for themselves, their businesses and/or their families. It’s a big no-no and in case you were wondering where and why Donald Trump admitted such things, then look no further than his 2015 IRS tax filings, available on GuideStar, a website that tracks non-profits. But rest assured an investigation has been opened, brought to us by Attorney General Eric Schneiderman, who declined to comment due to the fact that the investigation is ongoing.  And in case you were wondering about this as well, Team Trump thinks Schneiderman’s investigation is politically motivated. In other Trump news, stocks were rallying and the Dow went above 19,000 points. Plenty of people on Wall Street are crediting Trump for all of this fiscally joyful news – whether they voted for him or not. After all, he did promise to slash taxes, ease regulations and go big on infrastructure spending. Experts see these initiatives as excellent means to boost the economy in a ways that have been lacking for years. Unfortunately, not every economic idea coming from Camp Trump is leaving investors and economists all warm and fuzzy. Take for instance NAFTA, which Trump refers to as “the worst trade deal in history.” Major havoc could be wreaked on the economy if Trump decides to scrap it. Millions of Americans rely on free trade with Mexico and slapping tariffs on it could spell fiscal doom.

You’re gonna love me, I just know it…

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Volkswagen, the Wells Fargo of the auto industry,  is betting – and hoping – that it can reclaim its former fahrvergnügen glory and make you love them all over again. Following its epic diesel-emissions scandal, Volkswagen chief Herbert Diess announced he wants to “fundamentally change Volkswagen” by focusing on on major tech advancements, developing battery operated vehicles and adding some some self-driving cars into the mix. Diess has got big eyes on the year 2025, by which time he hopes to sell a million electric cars. He wants to “massively step up” Volkswagen’s car tech and also introduce a greater variety of SUV’s to the North american market because, after all, Americans apparently love their SUV’s. But with those lofty goals comes a plan to eliminate 23,000 jobs in the more traditional areas of the auto-manufacturing industry. Instead, Volkswagen will take on 9,000 new employees to work on tech, while wisely offering those 23,000 employees the option of early retirement over a certain amount of time, perhaps in an attempt to soften the blow. In the meantime, Volkswagen already coughed up a hefty $15 billion settlement with both U.S. regulatory agencies and Volkswagen owners.

Uh, if you say so…

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Barnes & Noble reported yet another dismal quarter of declining revenue, except this time the bookseller is blaming the election for its poor fiscal performance. How convenient. Sales fell 3.2% and probably would have fallen even more were it not for sales of “Harry Potter and the Cursed Child.” Barnes & Noble also reported that their online sales improved 12.5%, however, that figure might be a bit more convincing if it provided an actual dollar amount in its report. Nook devices, digital content and accessories were down close to 20%. But can all of that really be blamed on the election? Hmmm. On the bright side, operating losses for the Nook this quarter were only $8.2 million. Hey, don’t laugh. Last year at this time that figure was $30 million. All in all, Barnes & Noble still has cause to celebrate as it only lost just over $20 million and 29 cents a share when last year it lost $39 million and 52 cents per share. B&N is hoping the holiday season will help its reverse course and give it a fresh dose of fiscal mojo. CEO Leonard Riggio is hoping the company’s new $50 Nook device, debuting on Black Friday, will be a big hit. In the meantime, he’s banking on some concept stores, including one that just opened in Eastchester, New York, boasting a full-service restaurant.

 

Wells Fargo Banking on More Headaches; Tonka Christmas Present Sparked – But it Wasn’t Joy; Tyson’s Not Feeding Enough of You Like Family

Leash tightening…

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Wells Fargo’s spanking seems to be far from over. Regulators are looking to make life utterly miserable for the bank by placing on it all kinds of restrictions that weren’t initially required as part of September’s $190 million settlement. For instance, if Wells Fargo wants to hire or make changes to senior level management and executives, the Office of the Comptroller of Currency is requiring a 90 day heads up and ultimately gets the final say. If the OCC doesn’t care for a person’s “competence, experience, character or integrity” then they’re out. As for those illustrious “golden parachutes” afforded managers who leave the company, the OCC gets to ban them if it sees fit. And unlike so many other banks, the OCC will no longer grant Wells Fargo expedited treatment for branch openings, and instead any new application for a branch opening will be subject to careful review. It’s not clear why the OCC changed its mind about the additional restrictions and a lot of experts thinks it’s nothing short of weird. Some speculate that the OCC is worried that they appeared soft on Wells Fargo and therefore imposed the restrictions. But others suspect this has more to do with the fact that the OCC didn’t handle the scandal well. The fact that former employers insist the over two million fake account openings occurred well before the 2011 point that regulators suggest, is just one reason. Then there’s the glaring issue of all those whistleblowers who were terminated after calling the Wells Fargo ethics hotline. Over 5,000 low-level employees were fired, yet mysteriously, higher-level execs went unscathed.

Dreaming of a fiery Christmas…

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Black Friday is still a few days away, yet there will be one less toy crowding the shelves this holiday season: The Tonka Truck 12v Ride On Dump Truck. The battery powered mini-vehicle seats two and the Harden family of Washington thought it wold make a great present for their grandson. Only problem is, driving home from Toys “R” Us, the ride-on toy caught fire in the back of Mr. Harden’s truck. Mr. Harden quickly pulled over to extinguish the flames and proceeded to drive back to Toys “R” Us to return the darn thing. Except the toy truck reignited, only this time it also set the grown up’s truck on fire as well. A Toys “R” Us spokesperson said that the incident appeared to be an isolated one and decided against issuing a full recall. Yet the toy company still went ahead and yanked the item from the shelves and its website as it attempts to investigate with the manufacturer, Dynacraft, what exactly went wrong. Incidentally, the toy received mostly bad reviews on Amazon and the Toys “R” Us website, with most people citing battery problems as the reason. As for the Hardens they got a full refund and a horrifying start to their holiday season.

Hard to swallow…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Investor appetites were not whetted today by Tyson’s earnings. The announcement that it would be changing CEO’s sent shares tumbling a very unappetizing 15%. But that’s not all. Profit came in at $391 million with $1.03 added per share, earning the company a 52% increase over last year at this time. To me that sounds like a respectable number, however, to Wall Street it was nothing short of a disappointment as expectations were for a $462 million profit. Tyson, purveyor of Jimmy Deans Sausages and Ball Park Hot Dogs, also reported a 13% drop in sales. Sales fell from $10.5 billion last year to a meager $9.2 billion, all while estimates called for $9.4 billion. To be fair, food prices had fallen, giving the company sales figures that were hard to digest. Tyson is looking to make between $4.70 and $4.85 per share for the year, but that’ll do little to cheer up investors who were initially expecting to see full-year earnings of $4.98 per share. Tyson’s troubles don’t seem to be going away anytime soon either with animal-right activists hounding the company because they take issue with Tyson’s supply chain practices. Throw in a class-action suit accusing the company of collusion and price-fixing and you’ve got yourself a company that spooks investors more than it feeds them.

Pharmaceutical Phraud; Yellen for a Hike; Wells Fargo-away

There’s a fungus among us…

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There’s another pharmaceutical company today that’s in big trouble today and this time it has nothing to do with EpiPens. Today’s alleged fraudulent crimes are brought to us by former Valeant Pharmaceutical Inc. executive Gary Tanner and defunct Philidor Pharmaceutical Services LLC chief executive Andrew Davenport. Tanner and Davenport allegedly participated in a fraud and kick-back scheme that netted the two tens of millions of dollars. Gosh who knew the pharmaceutical industry could be such a hot bed for illicit activity? The two execs apparently didn’t disclose to insurers that the two companies were connected. Valeant played the part of the big fancy drug company and Philidor played the supporting role of the mail-order pharmacy that conveniently helped boost sales of Valeant’s drug offerings by making sure they filled Valeant prescriptions. Philidor graciously assisted patients in getting insurance coverage for considerably pricier Valeant drugs instead of cheaper alternatives. In the meantime, Philidor would then request to be reimbursed by the insurance companies. Davenport apparently scored over $40 million from the scheme while Davenport only walked away with a paltry $10 million worth of kickbacks. Clearly he needs to hone his fraud “A” game. The scheme ran from December 2012 until September 2015 with the criminal complaint being filed in Manhattan Federal Court. Back in August of 2015, Valeant’s stock hit an all-time closing high of $262.52. But it should come as no surprise that the stock has since lost more than 80% of its value for a number of reasons, each worse than the next. The stock was trading under $18 today.

1-2-3 hike!

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Janet Yellen (thankfully) stole the Wall Street spotlight from Donald Trump today announcing that a rate hike “could well become appropriate relatively soon.” Loosely translated, it means it could and most likely will happen soon so feel free to hold your breath. The decision not to raise the rate at the last meeting was because the labor market still wasn’t quite where the Fed wanted to see it.  But now things are looking up…fiscally speaking, that is, and with steady job growth, wage gains and signs that point to firming inflation, that rate hike is looking like a done deal. But I guess we’ll have to wait until December 13-14, the date of the Fed’s next meeting, to see when that move might officially happen. As for Janet Yellen herself, she stayed mum on the presidential election but said she plans to stay on in her post until January of 2018, when her term officially ends. Many assumed that Yellen would resign once Trump was elected considering he’s not exactly a fan of her monetary policies.  But the Dove of Wall Street let ’em know that she’s staying put, Trump or not.

Cry me a river…

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Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Wells Fargo is getting some heavy doses of fiscal karma as it reported today that there were 44% fewer new account openings in October of 2016, compared to October 2015. That’s in addition to a 27% drop just from last month. As for credit card applications, those dropped by half to just 200,00 in October. There was a 3% increase in customer initiated closings over previous months as well. Because after all, why wouldn’t you choose to close an  account that you didn’t choose to open in the first place? However, Wells Fargo was at least savvy enough to make such predictions as October marked a full month since the lid was blown off the bank’s unauthorized accounts scandal as the settlement was disclosed on September 8 to the whopping tune of $185 million. But at least the bank finally and wisely decided to chuck sales goals for consumer bankers which were the primary culprit that ultimately led to the scandal. As for former CEO John Stumpf, he’s a free agent now, not that anyone’s going to be checking out his LinkedIn profile anytime soon.

Trump’s Treasury Trove; Things are (finally) Looking Up for Target; Neiman Marcus Bets on Rentals

 

Trump’s to treasure…

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Leave it to Carl Icahn to tweet that Donald Trump honed in on his choices for Treasury Secretary and Commerce Secretary. And, believe it or not, those choices may not be as bad as you think. Enter Steven Mnuchin, a veteran Wall Streeter and former Goldman Sachs partner who most recently served as Donald Trump’s campaign finance manager. Okay, that last bit may not be his best selling point. But if it makes you feel any better, controversial Trump White House Chief Strategist Stephen Bannon didn’t care for him and questioned Trump on whether he was “selling out to Wall Street.” Next we have Wilbur Ross, a billionaire investor and major NAFTA critic who also served as part of Trump’s economic advisory team. Ross has a knack for restructuring failing companies and has done so successfully in the energy and textile industries. That’s a big resume plus for the Commerce Secretary post. However, if Ross is serious about the post, he’ll have to step down from the numerous boards on which he serves, besides selling off tons of investments or chucking them into a blind trust. As for Carl Icahn, he tweeted that “Both would be great choices” and that they are “two of the smartest people I know.” And, if Carl Icahn thinks that then it must be so. Right?

Target = hipster?

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Things are looking up for Target. At least according to its CEO, Brian Cornell who said today that he is “increasingly confident” about Target’s new plans and endeavors for its 1,800 plus stores. Part of those endeavors include its foray into small-format stores. Those are basically shops that are targeted – no pun intended – to meet the consumer wants and needs of a specific location. With several under its belt already, Target’s latest small-format shop is slated for a 45,000 square foot space in super hip NYC locale, Tribeca. But Cornell’s enthusiasm went way beyond just the new stores. Shares of the retailer went up almost 9% today in pre-market trading because its third quarter sales decline was smaller than expected. Translation: Target didn’t lose as much money as experts thought it would. Those sales were down almost 7% to $16.4 billion, but that was primarily due to Target selling its pharmacy biz to CVS. As for the company’s e-commerce department, those sales were up 26% over the same time last year, which was especially welcome news considering that e-commerce for Target’s second quarter was down.

All rent out of shape…

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Online clothes and jewelry rental companies are betting that if you’re not a customer now, you will be after you visit them at an actual showroom. And so begins a new journey for companies like Blue Nile and Rent the Runway, who have decided that it would be cheaper to install showrooms and hire staff than to find new ways of advertising that would attract new customers. Blue Nile already successfully tested out this timeless showroom concept with just 300 square feet at one lucky Nordstrom department store, while Rent the Runway is set to unveil a 3,000 square foot space at Neiman Marcus’ San Francisco store on Friday. However, many are skeptical that this is a prudent move for Neiman Marcus assuming that instead of buying Neiman Marcus inventory, customers will simply rent it from Rent the Runway. And is it wise for Neiman Marcus to be playing around with such a novel concept after losing $407 million in its last quarter? But the logic is that Rent the Runway has 6 million customers in an age demographic that Neiman Marcus would like to have. The luxury store is banking that the customers who come and pay to rent the high-end brands will end up being big ticket buyers of those very same high-end brands soon after. Plus, for an additional $30 – $75, Neiman Marcus will throw in styling services for Rent the Runway customers. Rent the Runway’s concept might seem cute but the money is definitely serious. A monthly subscription of $139 gets you up to three pieces at a time which you can keep for the month or send back in less than a day. The company so far raised $126 million in start-up venture capital and already exceeded its 2016 sales projections of $100 million.  So maybe Neiman Marcus is onto something because Rent the Runway sure is.

 

Smackdown: Google, Facebook vs. Fake News; Controversy Over New Balance Seems Unbalanced; Ford Revs Up Tariff Debate with Trump

Just faking it…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

As the Trump controversies keep on pouring in, Google and Facebook have now decided to crusade against fake news, as widely shared, yet wholly fabricated stories about the candidates may (or may not) have adversely influenced the presidential election. Part of the problem began when Google realized that the top results for search phrases such as “final election results” and “who won the popular vote” were directing users to a fake news site. By Monday, Google started pulling AdSense from several sites that “misrepresent, misstate or conceal information” and were profiting off such bogus political news stories. As for Facebook, it plans to put the kibosh on ad money from fake sites, but it’s not entirely clear how it will achieve this objective and identify these sites. However, it seems to be a prudent move considering that, according to a Pew study, 44% of Americans get their news from the social network giant. No matter how you slice it, the internet and social media figured prominently last Tuesday and now everyone’s looking to find out what went wrong – or right.

Unbalanced…

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Privately-held company New Balance has inadvertently, and presumably unwillingly, become the unofficial “official shoes of white people.” Unlike its much more enormous rival, Nike, the 110 year old Boston-based New Balance has always been committed to manufacturing its products in the U.S. across 14 factories where it employs over 1,400 people of various races, ethnicities, genders, religions etc. Hence, the company never cared much for the Trans-Pacific Partnership Trade Agreement that gives companies – like Nike – a very humongous edge because they can manufacture a greater quantity of goods abroad, for a lot lot less money than doing it here. The TPP basically jeopardizes companies who choose to domestically produce goods by making for a very un-level playing field. Because Trump is a huge fan of domestic manufacturing and job creation, his election was welcome news for New Balance. And when New Balance said as much, social media either skewered the company and called for boycotts and mass destruction of the sneakers or had white supremacists proclaiming it as their footwear of choice.  Incidentally, New Balance supported the trade policies of Hillary Clinton and Bernie Sanders too.  A fact that both Trump haters and white supremacists seemed to have overlooked.

Have you manufactured a Ford lately?

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

After congratulating Donald Trump on his election last week, Ford Motors CEO Mark Fields shared some thoughts about Trump’s proposed 35% tariffs on imports – he thinks they’re a bad idea. After reporting a 12% decline in car sales for October earlier this month, Fields said in a speech given at the L.A. Auto show, that those tariffs will have a very big bad impact on the U.S economy and trusts (or hopes) that Trump will do what’s in the best interests of the United States. However, Trump, early on in his campaign spoke about how he didn’t appreciate the fact that Fields moved Ford’s small car production to Mexico, where wages are a whopping 80% less than what they are in the U.S. If you recall, Trump thinks NAFTA is “the single worst trade deal ever approved in this country” and he’s licking his chops to put the kibosh on it. Although, to counter that last tidbit, Fields did say that Ford added 25,000 jobs since 2011. In the meantime, experts have said that Trump’s tariffs, which are on this side of punitive, in fact, violate the rules of the World Trade Organization. So it’s anybody’s guess how far those tariffs will actually go.

Samsung Looks to Erase its Mistakes; A Not-So-New Chapter for American Apparel; Hedge Fund to Kate Spade: Sell off!

Exploding cell phones need not apply…

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There were no over-heating phones in sight as Samsung plunked down $8 billion to acquire Connecticut-based Harman International Industries. In case you have no idea who – or what – Harman is, it’s a company best-known for making premium audio systems for cars. But that’s not all. The company also makes plenty of other hardware for vehicles to connect, which makes it a very good fit for Samsung, as there will be very little overlap. Its products can be found in over 30 million vehicles, including BMW, Toyota and Volkswagen. This acquisition is an excellent opportunity for Samsung to break into the automotive industry where it barely exists. For now, anyway. It will also give the South Korean company a strong foothold in a rapidly growing industry that is expected to experience major growth in the next ten years. And who doesn’t like massive growth, right? By the way, this is the biggest overseas acquisition by a South Korean company. Ever. Samsung is paying roughly $112 per share, a 28% premium to Friday’s closing price.

The final chapter?

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

American Apparel is filing for chapter 11 bankruptcy protection. Again. For the second time in a year. After just exiting that protection in February. To be cute, some people call it Chapter 22 because it’s the second time it happened. Get it? Hilarious. In any case, I’m pretty sure American Apparel did set some type of record for earning its second bankruptcy in twelve months. The apparel company will be picked up by Canadian company Gildan Activewear for the bargain price of $66 million. If you recall – and it’s okay if you don’t – American Apparel, arguably best known for its racy ads, first filed for bankruptcy protection back in October 2015, roughly a year after it ousted founder and CEO Dov Charney for a litany of sexual harrassment problems. Charney, who said that the company had been taken from him in a coup, did try to regain control of his company only to have a court put the kibosh on his attempts. Later on, CEO Paula Schneider left after failing to turn the company around. The company, which went from 230 stores down to 110, saw a 33% decline in year over year sales, has $215 million in debt, tons of legal bills courtesy of Dov Charney and took in only $497 million in net sales for 2015. American Apparel will continue to run its normal U.S. operations though, the stores will eventually be put on the auction block. In the meantime, its stores across the pond have already started to experience the trauma and drama of liquidation.

Bag it…

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Image courtesy of lekkyjustdoit/FreeDigitalPhotos.net

Kate Spade is not feeling the love from hedge fund Caerus Investors, who whipped out a letter today asking, or rather urging, the lifestyle brand to sell itself. What Caerus neglected to mention in that letter was what it plans to do should such a sale occur. As for Caerus’ stake in Kate Spade, well, if you find out what it is, feel free to share that information as no one seems to know for sure. In any case, Caerus, according to its letter, has become “increasingly frustrated” with Kate Spade brass who have yet to make the company churn out a profit that would be on par with other companies like it.  Caerus doesn’t care for Kate Spade’s profit margins either, which are apparently lower than its peers, besides the fact that its stock also trades at a discount to other companies in the same category. There is something to be said for Caerus’s “frustration” seeing as how there was a whopping 63% decline since Kate Spade’s intraday high back in August of 2014.  Add that to the fact that Kate Spade’s third quarter revenue missed estimates and the stock is down 7% for the year and maybe you might be wondering if Caerus might be onto something. But then, lo and behold, Jana Partners announced that it owns a hefty .85% stake in Kate Spade, which conveniently sent shares up to $17.80 and gave it a very generous $2.28 billion valuation.  So maybe the answer to Caerus’ issues with Kate Spade lays in Jana Partners stake.