Global Markets Fight Back Terrorists; Lumber Liquidators Whacked with Another Settlement; Starbucks Feeds America’s Hungry

The terrorists have not won…

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Markets all over the world took a beating because of the cowardly terrorist attacks in Belgium that left dozens dead and many more wounded and forever haunted. Companies dealing in travel and hospitality industries suffered the most today with Royal Caribbean losing almost 4% and Carnival Cruise Lines taking its own 3% hit. Online booking site Priceline Group endured a 3% loss as airlines like Delta Airlines and American Airlines Group lost a couple of percentage points, as well. It’s no surprise, I suppose, that healthcare stocks actually saw increases, as did material stocks. But in a big f.u. to terrorism, the Dow Jones actually picked up a point as global markets rebounded later in the day, even those in Europe. Gold also rose, because well…gold always rise. Investors consider the precious metal as a perennially safe bet. Seems fair.

Tiiiiiiimmmmbbbberrrr…

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The settlements just keep coming in for Lumber Liquidators Holdings. Today’s award goes to the California Air Resources Board (CARB) – I laughed at the acronym too – in the amount of $2.5 million. The number seemed a bit low to me, especially since 40 of Lumber Liquidators 375 stores are in California, not to mention, the company’s flooring has the potential to cause cancer from the high levels of formaldehyde present in them.  Not exactly minor details, I feel. But the other reason I’m scratching my head is because there was no formal finding of any violation, nor was there any admission of wrongdoing by Lumber Liquidators. Just saying. This settlement, by the way, has nothing to do with Lumber Liquidator’s previous settlement with the DOJ that had the flooring company shelling out $10 million to the government agency. Naturally, shares of Lumber Liquidators are up by almost 16% and closed at $13.93. But considering that shares lost more than 70% of their value since that scathing “60 Minutes” report last March, and there are still plenty of class-action suits headed toward Lumber Liquidators, you probably don’t want to hold your breath waiting for the company to fully fiscally recover. In fact, if you ask Kase Capital’s Whitney Tilson,  who is a big fan of shorting Lumber Liquidators, he thinks the flooring company actually has a 50% chance of going bust.

Bon appétit…

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Don’t feel so bad skipping that sandwich you’ve been eyeing at Starbucks. If nobody buys it, you might just help feed someone who is considered “food insecure.” The plan came from baristas and now the coffee chain has made a pledge to donate 100% of its unsold food through FoodShare and Food Donation Connection (FDC). It’s all in an effort to feed the 48 million Americans who don’t have the luxury of knowing if or when their next meal is coming.  It is estimated that 15% of American households are considered “food insecure” while at the same time an estimated 70 billion of food waste is produced by Americans that are far more fortunate. Starbucks had already been donating pastries and other types of foods that had longer shelf lives since 2010. The challenge, however, was how best to preserve the highly perishable products like salads and sandwiches. But now the FDC will send refrigerated vans to all of Starbucks 7,600 plus U.S. locations, pick up all those unsold goodies and fill the bellies of those who could really use them. Starbucks plans to have given out 5 million meals by the end of 2016.

 

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Newspapers Gone Charitable; Not All is Golden in Europe for McDonald’s; Starbucks Not Letting an Itty Bitty Downturn Get in its Way

Read all about it…

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Not-for-profit has been taking on a whole new meaning lately for some unlikely reasons: newspapers. The Philadelphia Inquirer, the Philadelphia Daily News and Philly.com have gone tax-exempt. It’s probably not the first place you think of when you want to make a charitable contribution, but it’ll gladly take one now. Along with an additional $20 million donation, billionaire H.F. “Gerry” Lenfest, who controlled these publications, took the Philadelphia Media Network, tweaked things around a bit and morphed the newspapers into a public benefit corporation (PBC) that will be called The Institute for Journalism in New Media.  A little wordy, maybe, but the entity itself is dedicated to “independent public service journalism and investigative reporting that positively impacts the community, while also creating innovative multimedia content.” Got that?  The paper will still be run as a “for-profit” biz while getting you a tax deduction in the process.  In case you didn’t know, Kickstarter is also a PBC. Just saying. It’s an interesting idea just not an original one for a newspaper as there are a few other newspapers in Florida and Connecticut that have taken this approach. It’s a way to try and make newspapers relevant and successful in a digital era, not to mention, a last-ditch attempt to try and keep a publication from going bust

Hamburglar?

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So what are the Golden Arches accused of doing this time? Three Italian consumer organizations are charging that the fast-food chain is causing franchises in Italy to inflate the cost of menu items. You see, in order to snag a European franchise lease, a lessee must sign a twenty year contract – a contract that is twice as long as what other franchises require. But then, McDonald’s is also accused of licensing the premises for above market rates – by about ten times –  making it nothing short of a big pain in the but to switch competitors. So, in order to defray the costs of these above-market lease rates, European McDonald’s franchises jack up the prices on menu items with consumers bearing the brunt of the cost. At least that’s according to a survey cited by the coalition filing the complaint. Apparently, a whopping 68% – 97% of McDonald’s menu items in various Italian cities are more expensive in franchises than in company stores. Franchises make up 75% of McDonald’s European revenue and worldwide McDonald’s has made $9.27 billion in revenue from these franchises. But before the EU even considers launching a formal investigation into these alleged shifty practices, authorities will first send out a formal questionnaire. Depending on how well those questions are addressed will determine if there is sufficient cause to even open an investigation. Besides, those same EU authorities are already busy investigating McDonald’s in Luxembourg over allegations that it managed to evade paying $1 billion in taxes on its European operations.

Slowdown? What slowdown?

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There might be an economic downturn in China, but that’s not stopping Starbuck’s from expanding its empire there. Sure there are already 2,000 Starbucks stores caffeinating the world’s second largest economy. However, Starbucks feels that the country could use at least 1,400 more stores and plans to have them all serving up lattes by 2019. Starbucks CEO Howard Schultz feels that China has the potential to become the company’s biggest market. And that’s not so crazy considering that China is already Starbucks’ second largest market and is the fastest growing one too. At a recent Starbucks event in China called the “Starbucks China Partner-Family Forum” (Alibaba’s Jack Ma was at the event so you know it was a big deal), Schultz wanted to reassure the Chinese that he totally gets their culture and has tremendous admiration for it. Hence, he made sure to acknowledge and give major props to the parents of its baristas. In fact, Starbucks wants so badly play nice with China and shower the country with oodles of corporate respect that he is offering to cover 50% of monthly housing expenses for Starbucks employees in China. For baristas there who so valiantly served up drinks for ten years, Starbucks is offering them a “career coffee break” – a year long paid sabbatical. Hěn hǎo!

 

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

Wager on this…

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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…

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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?

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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.

Starbucks: Can’t We All Just Get a Latte; Pinterest Valuation Not So Pint-sized; Irish Airline’s Got a Flight For You

Race to the frappucino…

Image courtesy of amenic181/FreeDigitalPhotos.net

Image courtesy of amenic181/FreeDigitalPhotos.net

Starbucks’ latest campaign called “Race Together” has little, if nothing, to do with coffee. However, CEO Howard Schultz sees it as “…an opportunity to re-examine how we can create a more empathetic and inclusive society — one conversation at a time,” and presumably one $5 drink at a time, too. The idea is to have Starbucks baristas write, not just your name on your cup, but the phrase “Race Together,” in an effort to engage its customers, frequenting its 12,000 locations, in a dialogue on the very sensitive topic of race. The idea took form back in December, when Mr. Schultz held an internal meeting following the shooting deaths of unarmed black men in Ferguson, Staten Island and Oakland, California.  Several forums and thousands of employee statements later, #RaceTogether was born, and on March 20, USA Today will join hands with Starbucks as it offers a supplement to that day’s edition offering various ways to begin dialogue and promote discussions on race. It’s just another day in the life of Starbucks and Howard Schultz, who likes it when his company practices “conscious capitalism” (yes, that is a thing and yes, there are other companies who practice it) which is basically using a company’s invaluable resources for the power of social/societal good as opposed to…dare I say it…profit.

Pin it…

Image courtesy of Mister GC./FreeDigitalPhotos.net

Image courtesy of Mister GC./FreeDigitalPhotos.net

What would the world do without Pinterest? It’s a good thing we’ll never have to know as the social media/online bulletin company just picked up – ridiculously quickly, I might add – some $367 million. That cash is going to help fund some lofty international expansion plans, which makes perfect sense since 2014 saw Pinterest picking up 135% more international users. In fact, some 40% of Pinterest’s accounts come from beyond our cozy borders.  Some of this new funding comes from some veteran Pinterest investors, but newcomers are also joining the online bulletin board fray. It helps that Pinterest started selling ads, though, in the magical land of Pinterest, ads are elegantly referred to as promoted pins. Nothing like a little ad revenue, or rather, promoted pins to fiscally stir things up a bit. Thanks to these latest generous investor contributions, Pinterest’s valuation is now going to be in the $11 billion stratosphere. Although, if you want in, here’s your chance as the company is apparently still looking to raise about $211 million.

Bon Voyage!

Image courtesy of bplanet/FreeDigitalPhotos.net

Image courtesy of bplanet/FreeDigitalPhotos.net

Ireland’s famed budget airline, Ryanair, announced plans that it will begin to offer flights from 12-14 European cities between 12-14 U.S. cities.The company also announced that those flights could be as little as $15. No joke. Of course, that price doesn’t necessarily include an actual seat to sit in during the trans-atlantic flight, but hey, minor details. Indeed, there are many fees which will be quickly added to that attractive little fare, like meals, baggage fees, breathing…So by the time you finish selecting all those “extras,” you’ll likely be shelling out something closer to $275 per ticket. Which isn’t so bad when you consider that full budget airlines charge at least double that amount. And you’ll only have to wait 4-5 years. You see, Ryanair still needs to acquire a fleet of aircraft equipped to those make trans-atlantic flights. But like I said before, minor details.