Snap to it! Snap Inc. Banks on IPO; Canada Goose Wants to Keep NYSE Warm and Cozy; How Much Is That Handbag Company In the Window? Kate Spade Puts Itself On the Market

Next big thing?

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Looks like Snap Inc., the company that gave us Snapchat, is gearing up to be Wall Street’s next big IPO darling. Come March 1, the company is hoping to get an IPO valuation of between $19.5 – $22.2 billion, and is offering about 200 million shares on the New York Stock Exchange under the ticker symbol…wait for it…SNAP. You saw that one coming, didn’t you. It plans on pricing those shares between $14 to $16, which should bring in over $3 billion. The company already boasts 158 million active users and most of Snapchat’s money comes from advertisers. Revenues for the company came in this year at $404.4 million –  a far cry from 2015’s $58.6 million. However, one hurdle Snapchat might have to overcome is the perennial question of how it plans to make a profit. Sure it took in over $400 million in revenue last year, but it still also posted a $514 million loss.  In any case, before Snap Inc. makes its big Wall Street debut, top brass, including CEO Evan Spiegel, are set to hit the road, for a “road show,” – which is not as cool as it sounds – to visit investors in hopes of whetting their fiscal appetites on the potential of Snap Inc. stock. One hitch – and apparently there are more than a few – is that new shareholders won’t have any voting powers and instead will have to trust the board to know what they are doing in order to make tons of cash for the company.

What’s good for the goose…

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You don’t have to be Canadian to notice the swarms of people sporting the Canada Goose brand of winter gear. Chances are, if you’ve ever thought about buying one of those coats, you might have reconsidered after looking at the price tag.  But apparently more than enough people are buying the brand’s merchandise to warrant a $100 million IPO filing, and Canada Goose will list on the New York Stock Exchange under the ticker symbol…wait for it…GOOS. Didn’t see that one coming, did ya? Okay, you probably did. While that $100 million isn’t exactly screaming: “SNAPCHAT!” the fact is Canada Goose’s revenue grew close to 40% between 2014 and 216, with just its online sales hitting $33 million in 2016. By 2016, revenue for the company came in at over $290 million. You may not have bought one of their jackets, but chances are, with figures like, that you know someone who did. In fact, in the last three years in the United States, sales grew by 76%, and 33% in the last year, to total over $103 million. In Canada those numbers only grew by 15%. Go figure.  While Canada Goose still scored a $27 million profit on that $291 million revenue, it does still have a wee bit of debt to the tune of $278 million. So yeah, a few extra bucks from an IPO would do wonders.  Of course, you can’t file for an IPO just on the basis of a few jackets. With that in mind, Canada Goose has big plans to expand its product offerings from footwear to bedding and everything in between.

Up for grabs…

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It was just a matter of time, I suppose, before Kate Spade threw in the fiscal towel and decided to put itself up for sale. Except, at Kate Spade, they’re calling it “exploring strategic alternatives.” However the company wants to spin it, it still heartened Wall Street which sent shares of the company up more than 13% for a change. To be fair, Kate Spade’s recent quarterly earnings weren’t even horrible.  In fact, the company took in a 39% increase in profit of $86 million on $471 million in revenues, missing estimates by just one million measly dollars. The handbag company even added 41 cents per share when just 34 cents were expected.  Shares are up over 20% for the year and sales of its merchandise in its own stores increased by over 9% . Its rivals, including Michael Kors  and Coach would have loved to see similar results themselves. But alas, for Kate Spade, China just wasn’t feeling the love while a strong dollar kept plenty of tourist shoppers at bay. And in our neck of the woods, consumers just aren’t buying handbags as much as in the past, which is quite the problem when your core product is just that.

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Apples to Apples: Warren Buffett Increases Stake in Tech Giant; Groupon’s Earnings Show Everyone Loves a Deal; Trump Wine Makes Trouble

Well, if Warren Buffett’s doing it…

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It’s all about Apple and airplanes these days for Warren Buffett. His company, Berkshire Hathaway, again increased its position in the iPhone maker to 57.4 million shares back in December. This means the company now boasts a hefty $7.74 billion stake in the Cupertino-based company. The Oracle of Omaha also decided to scoop up more shares in the airline industry’s four biggest carriers in the United States: American Airlines Group, Delta Airlines, Southwest Airlines and United Continental Holdings. This little purchase set Berkshire Hathaway back by about $9.3 billion. What’s a bit weird about Warren Buffett’s new-found affection for Apple, is that he has never been much of a fan of tech stocks only because – or so he would like us to think – that they are apparently outside his realm of understanding. I’m pretty sure there’s very little in this world that’s outside his scope of knowledge. Just saying. The airline investment was also a little surprising given Warren Buffett’s hands-off stance on the industry for the last twenty years. Now, however, he apparently sees some potential in airlines that he hadn’t seen in years. In any case, the timing of Berkshire Hathaway’s Apple purchase couldn’t have been better because shares of Apple closed at an all-time high yesterday, as I noted here in this blog.  In fact, shares of all the companies in which Berkshire Hathaway invested have gone up. Because if Warren Buffett puts his fiscal stamp of approval on a company, investors take that as a sign – albeit a not very scientific one –  and they all tend to follow suit.  As for his ten year old Walmart stake, the news was not as good. Berkshire Hathaway dumped almost all of its shares  – close to a billion dollars worth – and analysts are now wondering just how bad of an omen is that.

Get your Groupon, yo!

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Groupon, it seems, is not only beloved to bargain hunters, but to Wall Street as well, as the company just released its fourth quarter earnings, easily beating estimates all-around. For a company that’s all about posting discounts, it took in revenues of $935 million, when analysts only expected $913 million. While the company earned close to $370 million in profit, analysts were left a bit bummed, since last year’s number was higher, at almost $372 million. However, Groupon did add 7 cents per share, more than triple the expected 2 cents. Plenty of its success from the quarter is apparently due to its acquisition of website LivingSocial, which Groupon scooped up back in October.  Groupon’s customers increased by two million, one million of whom came from LivingSocial, and its total amount of customers purchased 11% more goods and services during the same period last year. Interestingly enough, the amount of purchases this past quarter was a smidgen lower, coming in at $1.70 billion, when last year at this time it was more like $1.71 billion. But hey, what do you expect from bargain-hunters, after all?

Cheers…

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In today’s installment of “Who’s Next to Face a Boycott for Carrying Trump Merchandise?”and the #GrabYourWallet campaign, we turn our attention to Wegmans Food Markets.  The offending merchandise in question is wine, or rather products from the Trump Winery, of which Eric Trump, President Trump’s son, is the President. While a group aptly named “Stop Trump Wine,” is calling upon Virginians to boycott businesses that carry the beverages because “Eric Trump shares the views of his father,” the local chapter of the National Organization for Women got 300 of its members to come up with ways to get Wegmans to put the kibosh on the products. But my question is, if the wine is really good, will the boycott be effective? Just wondering. Like all other retailers, Wegmans, with its 92 stores, explains that it only looks at how a product is performing. If the products in question are performing well, with people still buying them, and the boycotts aren’t necessarily having an effect, chances are, the wine stays put.

Fed Chairwoman Shuts Down Congressman; Mattel Goes For Big With Alibaba; Apple Hits New High On iPhone Dreams

Sit back down…

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Almost everyone’s favorite Federal Reserve Chair, Janet Yellen, was in the hot seat today. First she graciously explained in a letter to Republican Congressman Patrick McHenry that, in fact, the Fed possess the authority and has the responsibility to work and consult with foreign entities with regard to financial industry oversight and the development of international banking rules. McHenry, who is Vice Chairman of the House Financial Services Committee, didn’t appreciate that the Fed had already engaged in international talks before President Trump had a chance to put his peeps into play to conduct their own reulatory review. But no dice for McHenry as Chairwoman Yellen explained that such efforts were to the benefit and in the best interests of the United States and its financial stability. In other news, Ms. Yellen was mum on whether the Fed would raise rates at its next meeting in March but said waiting too long wouldn’t be a good idea. Besides inflation and the labor market, Yellen and co. are looking to see what policy changes President Trump is going to make before making any major announcements from the Fed’s end. Which seems like a prudent plan, especially from someone who was appointed by President Obama, but is doing her best to keep from playing sides since she has still has a few years left on her term during the current administration. And also because Trump criticized her during the campaign when he said that she was deliberately keeping rates low in order to benefit President Obama. Yikes.

Ni-Hao Barbie…

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Mattel’s wound licking might just be on hold for now, despite losing some major Disney-Princess licensing mojo to Hasbro awhile back. The toy company has begun to forge a new path with Chinese e-commerce giant Alibaba. Nothing like gaining a foothold in the $7 billion Chines toy marketplace to ease those Disney-licensing blues. By the way, the United States’ toy industry is estimated at over $20 billion. Just saying. The company that makes Barbie dolls and Hot Wheels cars is in a partnership with Alibaba to create and promote interactive and educational toys, in addition to producing entertainment content based on Mattel products. Because hey, who doesn’t love shows based on toys – and vice-versa? Mattel will be selling its new wares via Tmall.com, which is Alibaba’s business-to-consumer retail site. Incidentally, Mattel had already been selling on Tmall.com for about six years now and rumor has it that its selection of Fisher-Price toys have actually been the top-sellers for five years in a row on Alibaba’s November 11 Singles Day. Mattel’s new products for Alibaba will hit Alibaba’s virtual shelves by mid-2017.  Mattel could really use the boost, especially since sales of Barbies have not been doing as well as they have in the past, and despite throwing some more realistic features onto the doll. Also, the company reported an earnings miss February 1, taking in 52 cents per share on an 8% revenue decline to $1.83 billion, when analysts expected 71 cents per share. But with Alibaba boasting over 440 million active buyers, chances are Mattel has the ability to turn that last earnings report into a mere distant bad memory.

Apple of my i-Phone…

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For the first time in two years, Apple hit a new high of $134.90 and a market cap of $701 billion. And in case you don’t own any shares, that probably means a whole lot of nothing to you. The last time it hit a new high was back on April 28, 2015, when the stock hit $134.54. But that 36 cents means a whole lot to investors who are hoping, and probably betting, that Apple will release a new iPhone, dubbed the iPhone 8, or the iPhone X – if you dare –  that will magically lift blah sales for the tech giant. While the company reported impressive earnings in its last earnings report, its outlook was less so, and the fact that Apple’s revenue decreased by 8% for 2016 didn’t help the mood on Wall Street as of late, even if it is the most valuable company in the world.  Rumor has it, the new phone is going to be even more expensive than previous ones, which is always a good way to get Wall Street tongues wagging.

Sears Dives Into “Dump Trump” Fray; Allergan Goes From Face to Body-Contouring; Teva Beats Despite Turmoil

To dump Trump or not to dump Trump?

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Sears is the latest company caught up in the great retail debate over its decision to discontinue carrying Trump branded merchandise. It would seem that the merchandise of both President Donald Trump and his daughter, Ivanka, have been dropped from Sears and Kmart stores – which Sears owns. However, while Sears and Kmart have put the kibosh on 31 Trump Home items, there’s still plenty more Trump merchandise available online for sale via third-party vendors. Believe it or not, Sears goes by the numbers, at least the ones attached with a dollar sign, and has been putting great efforts into kicking up its online presence. So if items are profitable, they get to stay. If they are not? Well, you get it. This is in the wake of Nordstrom’s decision last week to ditch Ivanka’s line completely. Rumor has it that sales of her merchandise tanked more than 70% for most of October, compared with the same time period last year, when the would-be president still hadn’t yet managed to offend an almost an entire gender of the electorate. Since the Trump brand has been unpopular these days, plenty of customers have little desire to purchase many of its products.  But make no mistake, if the items in question had been selling, either at Sears or Nordstrom, don’t think for a second that the stores wouldn’t have kept the merchandise on its shelves, no matter what the President said – or tweeted.

Yoga, it ain’t…

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Allergan, the maker of everyone’s favorite wrinkle-fighter, Botox, is going to scoop up Zeltiq Aesthetics Inc. for about $2.5 billion, or about $56.40 per share. That’s more than a 14% premium from Friday’s closing price. Naturally shares of Zeltiq went up, because, hey, who would’t want to join the Botox family, right? But here’s the fun part, in case you have never heard of Zeltiq. The company makes a body-contouring product, called the CoolSculpting system, that will fit in nicely at Allergan. Your face and your butt get contoured and primed all from one company. If there’s a regulatory issue with that, then I don’t care. Zeltiq has already been approved by the U.S. Food and Drug Administration and yes indeed, that kind of makes it more legit. CoolSculpting apparently reduces the appearance of fat by freezing it, however, I’m not sure that it actually gets rid of the junk in the trunk. Instead, it just shapes it into your body, like play-doh. Or something like that. Laugh all you want but there’s nothing funny about the 37% worth of revenue brought in by CoolSculpting systems products, which helped Zeltiq take in a net revenue of $374 million for 2016. Allergan CEO Brent Sanders must be onto something, since the body-contouring market is a whopping $4 billion industry and, according to him, is the fastest growing field in medical aesthetics.

Not the usual generic stuff…

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Not all pharmaceutical companies are having as much fun as Allergan. Last week, shares of Teva pharmaceuticals seemed to be in an ugly state of free fall, and matters didn’t help when its CEO Erez Vigodman suddenly left the company. The official word is that Erez Vigodman’s decision to leave Teva was part of a mutual agreement. At least that’s the story they’re sticking to. But even before that, the company was having fiscal issues in the way of delayed drug launches and major acquisitions that wreaked all sorts of ugly fiscal havoc on the company’s stock price. Then, lo and behold, the company reported an earnings beat this morning and all seems right in the world once again for the company.  Teva took in revenues of $6.5 billion, adding $1.38 per share when estimates were for $6.24 billion and $1.35 per share.  Also from the good news front, the company didn’t even see the need to adjust its forecast for the year, and still expects to score between $23.8 billion to $24.5 billion in revenues and adding between $4.90 to $5.30 to shares.  Interim CEO and President Yitzchak Peterburg took the call and said it was “a critical time for Teva, and we are here to fix what is not working.” Which basically means they are desperately trying to figure out how they can get the company to start pulling down some major cash, ditch  a lot of debt and improve its prospects.  Rumors are swirling that the company will split into two: one to focus on its generic offerings and the other for its branded products. According to some experts, a move like this could solve a ton of problems. Just maybe not all of them. Another possibility is to sell off its branded generic drugs biz in an effort to unload some its major debt. Time will tell.  Because I certainly can’t.

Trump Does Nothing for Twitter; Take That Trump! Tequila Goes Public; Whole Foods Whole Lotta Trouble

(Sigh…)

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The good news from Twitter’s latest earnings report is that its monthly active users increased by 2 million to 319 million accounts.  Although forecasts were for 319.6 million. Just saying.   Revenue also grew 10% to 717.2 million. However, that’s about all the good news there was, because the company missed estimates for revenues of $740.1 million, as ad revenues were lower, falling about .5% from last year’s $710 million to $638 million. In fact, Twitter experienced its slowest quarterly revenue growth since its IPO in 2013. To make matters infinitely worse, shares fell almost 12% on the news, and Twitter can’t afford to lose any more value from its shares. But CEO Jack Dorsey asked for patience, as the company he heads is making some investments into machine learning and figuring out exactly how to engage its advetisers. Seems like a prudent plan. But the bigger story is that President Trump’s tweeting did absolutely nothing for the company. Zero. Nil. Nada. Sure, the world got to see the kind of havoc that can be wreaked with just 140 characters. Unfortunately, that’s about all it did as his tweeting as Twitter reported that it actually experienced slower growth in the quarter that included the election.  According to Twitter’s Chief Operating Officer, Anthony Noto, you can’t expect a “single person to drive sustained growth.” Meaning, Trump had no effect, President or not. The one bright spot – if you can call it that – is that Twitter earned 16 cents a share when estimates for 12 cents.

 Mas tequila, por favor!

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Mexico had its first IPO since President Trump won the election back in November. The lucky IPO was tequila maker Jose Cuervo. The world’s biggest tequila company raised $900 million, with shares priced toward the top of the range at 34 pesos. That translates to roughly $1.67 per share. It’s pesos. What did you expect? The IPO had actually been put on hold twice, thanks to Trump, because his anti-NAFTA ambitions and wall-building enthusiasm kept weakening the peso. Interestingly enough, unlike other products, demand for tequila is not based on price. However, its price could get higher if Trump gets his way by slapping some major tariffs on the lime-friendly beverage. A move like that could put a major dent into Jose Cuervo, which gets 64% of its’s $1.165 billion in sales from the United States and Canada. At least Jose Cuervo always had the luxury of enjoying strong dollar-base earnings. That’s got to count for something, right? Problem is that the new expected U.S. protectionist measures could end up hurting that $1.165 billion. But maybe not. Because, after all, this is tequila we’re talking about. So maybe Americans will be willing shell out a few extra dollars.

 

A Whole lotta nothing…

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Whole Foods is looking anything but with its announcement that it will be closing nine stores. It’s the first time in almost a decade that the company had to resort to such measures as this quarter saw sales drop 2.4% when analysts only predicted a drop of 1.7%. Yikes. Whole Foods initially had a plan to open over 1,200 stores, but alas it was not meant to be as increasing competition and higher food prices led to the company’s sixth straight quarter of decreasing same store sales. The chain gained 39 cents per share which is was about what analysts expected, but as for its forecast, things aren’t exactly looking up. Whole Foods still operates 440 stores and believe it or not, six new stores are still expected to open, with another 80 stores in the planning stages.

Trump Tweet-Targets Nordstrom; Under Armour CEO Says It All Wrong; Wells Fargo Continues to Anger

Oh no you didn’t…

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Just one week after pulling Ivanka Trump’s fashion line from its stores, Nordstrom has managed to incur some serious Presidential social-media wrath, via Twitter of course. The Tweeter-In-Chief wrote that his daughter was “treated so unfairly” by the department store and “She is a great person — always pushing me to do the right thing! Terrible!” Nordstrom argued that the merchandise’s performance wasn’t up to snuff, and that it regularly evaluates the thousands of brands that it carries to decide which ones get the boot and which ones don’t. And Ivanka’s line got it, though the chain had been carrying the line since 2009. Back in November, Nordstrom co-president Pete Nordstrom sent out a company memo explaining that the turmoil surrounding the election is putting the retailer in a “tight spot.” It risks offending Trump-haters for keeping the line, but also risks alienating shoppers who support him. Nordstrom tried to explain that it makes a “sincere effort not to make business decisions based on politics but on performance and results,” but found itself “in a very difficult position.”  That difficult position probably had to do with calls for boycotts of the merchandise, and even the store.  And it’s not like Nordstrom was the only one who took this sort of action. Neiman Marcus Group also stopped selling her jewelry online and in one of its stores in the northeast. Shares of Nordstrom had dropped a smudge 1% following Trump’s tweet. But they quickly bounced back. So maybe the effect of Trump’s fury only goes so far.

That’s gonna come back to haunt you…

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Speaking of which…Under Armour CEO Kevin Plank played nice with Trump so of course, it’s now going to cost him. Literally. During an interview on CNBC’s “Fast Money Halftime Report,” host Scott Wapner asked the athletic apparel chief executive about his involvement in Trump’s initiative to create manufacturing jobs in the United States. Some of the pearls that escaped Plank’s mouth included, “To have such a pro-business president is something that is a real asset for the country…People can really grab that opportunity.” [cue crickets chirping]. Naturally, Under Armour had to issue a statement to clarify Kevin Plank’s remarks – lest anyone think that he really meant what he said, which would lead to a boycott. Except that sort of already happened as “Boycott Under Armour” hashtag made its way into the Twitter-sphere in no time. In the meantime, UA insisted that it engages in “policy, not politics” and Plank’s statements had to do with job creation.  I shall spare you the details of official company statement – you’re welcome! – but rest assured it included all the usual themes about the beauty of unity, diversity, welcoming immigrants etc. The fact is, UA can’t afford any boycotts, whether Plank meant what he said or not. Its shares have been falling lately and in its most recent earnings report, the company missed expectations and forecasted slower growth for 2017.

And here’s one more reason to hate Wells Fargo…

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In case you weren’t incensed enough by Wells Fargo’s fraudulent account scandal, CEO Tim Sloan said that the bank is committed to helping the Dakota Pipeline project. While it would be nice to focus all rage on Wells Fargo, who loaned $120 million toward this project, the fact is the bank is just one of 17 that gave loans to help fund the $3.8 billion project. Obama had initially halted the project, but President Trump swiftly reversed that action and is looking forward to its completion. Come June, the pipeline is expected to ship half a million barrels of crude every day from North Dakota to Illinois. Unfortunately the 1,200 mile pipeline cuts through an Indian reservation with deep cultural significance, and it’s likely the pipeline will incur damage on the site. The pipeline also poses major environmental hazards where it crosses the Missouri River. The Standing Rock Sioux reservation is downstream from the crossing and the pipeline could end up polluting the Tribe’s drinking water. The Seattle Council is doing its part to combat Wells Fargo’s involvement by pulling about $3 billion in city funds.  Seattle has a contract with the bank that expires in 2018, and it most definitely will not be renewed. In the meantime, the council is on the hunt for a more “socially responsible bank.” Good luck with that one.

Solar Jobs Have the Power; Michael Kors Sings the Retail Blues; GM Sets a Record, But Profit Disappoints

Sunshine days…

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The sun is where it’s at these days as the amount of jobs in the solar industry jumped 25% in the last year, now employing over 260,000 workers. According to The Solar Foundation, the reason for the job growth in this field has to do with a massive decrease in cost to install solar panels, combined with rising demand. A perfect fiscal storm – but in a good way.  The solar industry is projected to grow significantly  as solar capacity  continues to grow. It’s actually looking like solar power will end up becoming the most widely used power source.  The U.S. Department of Energy, in its own study, found that there are more Americans working in the solar power industry, compared to the 187,000 employees toiling away at natural gas and coal power plants. In fact, one out of every fifty new jobs in 2016 was in the solar industry, and the number of solar jobs increased in 44 out of 50 states.  Women represent 28% of the solar workforce and that number is expected to climb.  In case you were thinking of switching careers, the  industry is expecting to add about 51,000 jobs in 2017.  And with a median wage of $26 per hour, that might not be such a bad idea.

It’s in the bag…

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No matter how much Michael Kors wants to blame department stores for its dismal performance, it can’t. Because it just wasn’t their fault. Entirely. The fact is, there were just a lot less shoppers at both department stores and at Michael Kors stores.  Shares of the company fell almost 15% as it announced that it earned $1.64 per share. That should seem impressive, since analysts forecasted that the company would gain $1.63 per share. However, the 6.4%  drop in sales was just too much to bear, especially because a 5.4% drop was anticipated. So you can imagine the collective disappointed sigh on Wall Street. Revenue for the quarter dropped 3.2% to come in at $1.35 billion, when estimates were for $1.36.  For the full year, the company now expects to take in sales of $4.48 billion, when it previously had its sights set on $4.55 billion. As for the $4.71 billion in sales Michael Kors took in last year, well, that’s now a sweet distant memory, isn’t it? As part of a big plan, Michael Kors’ brass explained that it’s going to scale back on its offerings in wholesale stores. With too much inventory and major discounts eating substantial chunks into its margins, the company has even decided not to participate in friends and family sales.  The theory is that by ditching these deep discounts, the brand will somehow get reinvigorated and finally gain back some of its value and prestige. Too bad it’s taking so long to find out if this plan will actually work.

It’s a record…

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General Motors just came out with its fourth quarter earnings bumming out Wall Street with news that its profit dropped $1.8 billion and earning $1.28 per share. Nothing says disappointing quite like a 71% year-over-year drop, which is exactly what this profit was. But apparently, that drop isn’t as tragic as it seems, since that figure was the result of a $4 billion tax gain from a one-time accounting change. Too bad that bit didn’t stop the stock from taking a 4.7% hit. Revenue for the quarter came in at $44 billion, an 11% increase over last year, even though estimates were for just over $40 billion and $1.17 per share. A year ago, revenues almost hit $40 billion, taking in $1.39 per share.  The big joyful news, though, is that GM scored a record $166.4 billion in revenues for 2016, a 9% increase from last year that brought in a profit of $9.4 billion and added about $6 per share. Estimates were for $163.5 billion. As for GM’s 52,000 hourly workers, they can look forward to a $12,000 bonus this year, up from last year’s $11,000. This little initiative will set GM back by $624 million, but hey, those folks deserve it, no? And while GM sold 10 million vehicles globally, Wall Street’s still uneasy about the company’s 845,000 ownerless cars that were sitting around at the end of 2016.