Sears and Whirlpool: The Breakup; Mall Rats: Target vs. Amazon; 3M Earnings: It’s More Than Just Post-its

It’s not you. It’s me…

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Breaking up is hard to do. Especially if the numbers don’t add up. Which is precisely why Sears is dumping Whirlpool along with all of its other brands including Maytag, KitchenAid and JennAir. According to Sears, “Whirlpool has sought to use its dominant position in the marketplace to make demands that would have prohibited us from offering Whirlpool products to our members at a reasonable price.” Which I guess is Sears’s way of telling everyone that Whirlpool really just needed to get over itself because it felt people weren’t going to pay a lot of money for appliances that don’t say Wolf on them. If you know what I mean. And I think you do.  And just like that, a one-hundred-year-old relationship was brought to its knobby knees.  In case you were wondering if this breakup had anything to do with Sears’s own fiscal woes, you’d be mistaken.  After all, you can still walk into your local Sears and pick up a very fancy schmancy Bosch or LG appliance. And while Sears stock took a 3% hit today on the news, Whirlpool’s stock fared worse with investors sending the stock down over 10%.As for Whirlpool, while the company did report disappointing earnings, it can’t really point the finger at Sears, since the beleaguered retailer was only responsible for 3% of Whirlpool’s global sales.

Down with Amazon…

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Could it be that the unstoppable, unflappable Amazon is actually getting stopped and flapped? Apparently, that’s the case as it goes up against Target and other major big-box retailers, not in the online arena, but in the real estate realm. Of course Amazon’s A-game is in its e-commerce, but it’s the big box retailers that have the advantage when it comes to brick-and-mortars. Just ask Whole Foods, who can tell you a thing or two about trying to find a place to call home. You see, it all boils down to leases. Think of a co-op board, except the president of the board in this case tends to be big companies like Target, Best Buy and Bed Bath & Beyond, among others. Those guys get a lot of say in who moves into their malls. And because Target and friends are paying the biggest amount of money in leases, they get to make all sorts of demands, like who is and isn’t allowed to move into a particular mall and under what conditions they can move in. Now that Whole Foods calls Amazon its boss, it’s finding it challenging to get into new locations if there are already other big retailers installed that find themselves competing with Amazon. See how the tables have turned?

Post this!

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If you used a Post-It note today then you helped contribute to 3M’s third-quarter boffo earnings. All those office supplies and little pieces of paper may not look like much but they raked in $8.2 billion in sales with a profit of $1.43 billion that added $2.33 per share. That profit, by the way, was an 8% increase over last year’s profit at this time. But in all fairness, the company’s not just about it post-it notes and tape. The company also makes industrial coatings and ceramics and those items bring in big money. The stock itself is up over 30% in the last year and today’s news sent shares up the most in eight years. Crazy, I know. It also helps that two-thirds of 3M’s sales come from overseas. So even when there’s a strong dollar working against U.S.-based business, a company that earns a majority of its money outside the country is able to hold its own very well and can offset losses. The icing on the cake, for 3M anyway, is that the company beat Wall Street’s expectations. And who isn’t a sucker for a good Wall Street beat?

It’s About to Go Down Between Aetna and the Dept. of Justice; Target in Need of Retail Therapy; Barnes and Noble Has a Job Opening. If You Dare.

Put up your dukes…

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And the gloves are off between the Department of Justice and Aetna. Aetna announced it would be reducing its role in the Obamacare exchange, stopping to sell individual insurance, and the Justice Department was apparently warned about such actions last month. You see, because ACA has been costing insurance companies so much money, Aetna wanted to scoop up rival Humana to help absorb costs. But the Justice Department was against the merger over concerns that it would increase prices for consumers and limit competition – your typical antitrust concerns. In a letter to the Justice Department dated July 5, Aetna CEO Mark Bertolini made it abundantly clear that Aetna  would drop out of the Obamacare exchange if the merger did not go his way. It didn’t. And so here we are. Aetna crticics have cried extortion and threats. Aetna , however, calls it a strategic business decision after eating a $200 million loss in its second quarter. Insurers feel that mergers alleviate the enormous costs brought on by Obamacare. They argue that Obamacare has put a major dent in their economics and the government is not holding up its end of the bargain to help mitigate the situation.

Buyer’s remorse…

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Target has missed its target in what the company called a “difficult retail environment.” Well, for Target anyway. The sixth largest retailer cut its full-year fiscal profit after quarterly sales fell more than expected. One of the culprits was a smaller demand for its tech offerings, specifically Apple products. Of course, it’s to be expected that the company is constantly losing ground to Amazon. After all, who isn’t? The company has also been making a push to redo its grocery division by bringing in more organics, gourmet and healthful offerings. That endeavor hasn’t quite hits its stride. And that’s a problem since Target’s grocery division accounts for a fifth of the company’s revenue. Target did turn up a profit of $680 million. Too bad it was a 10% decrease over the same time last year. Sales were down 7.2% to $16.2 billion which was almost on par with estimates. CEO Brian Cornell griped that customer visits went down and now expects a profit range of $4.80 – $5.20, when before it was between $5.20 – $5.40.  It seems his turnaround plan is taking a bit longer to actually um,…turn. In other Target developments, to address its transgender-bathroom policy, the retailer is plunking down $20 million to install single stall bathrooms to its remaining stores that don’t already have them.

Buh-bye…

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Shelve this one under history as Barnes and Noble booted its CEO Ronald D. Boire. The bookseller felt the exec, who had the job for not quite a year, was “not a good fit.” However, to be fair, he did previously fit in at Brookstone, Best Buy, Sony and Sears Canada. Executive chairman  Leonard Riggio will take over until a more permanent replacement can be found and Riggio can finally begin his much-anticipated retirement.  The board said of Boire’s untimely departure that the decision was in “best interest of all parties for him to leave the company.” Ouch. In B&N’s most recent quarter – under Boire – the company took in $876.6 million. Impressive, right? Wrong. B&N took in $910 million the year before. It also lost $30.6 million, far more than the $19.6 million it lost during the same time last year. As efforts to trim costs and turn the company around have yet to yield any meaningful results, shares of the company have also managed to tank to its lowest price in eight months. While B&N has 640 stores dotting the planet, it is still losing ground to that animal we call Amazon. And once again, who isn’t?

 

Turn the Street Around…; Best Buy’s Best Quarter?; Oui Oui Le Tax Pour Airbnb

Recovery?

Image courtesy of rattigon/FreeDigitalPhotos.net

Image courtesy of rattigon/FreeDigitalPhotos.net

It’s only right to call today “turnaround Tuesday” since the stock market seems to be sort of recovering from the fiscal slaughter of the last few days, including all those sell-offs and Monday’s 588 point Dow drop. Part of the turnaround is because of China’s decision to cut interest rates. For the fifth time. Since November.  And then there are all those juicy stock bargains. Traders up for a good bargain are on the prowl and take bargain shopping to a whole new level. You might think you know how to spot a great discount but you’ve got nothing on these traders. These deals have nothing on post-Christmas sales. But at least the Dow soared today, with tech stocks leading the charge. Except that the day ended down by 200 points.

Rolex who?

Image courtesy of Pixomar/FreeDigitalPhotos.net

Image courtesy of Pixomar/FreeDigitalPhotos.net

Best Buy had a particularly impressive quarter but is it really all because of Apple and it’s highly coveted watch? Hmmm. Apparently, the Apple Watch has been quite a hit with the retailer and by the end of September you can stop into any one of Best Buy’s 1,000 plus locations and pick up the gadget. That much coveted watch also helped propel Best Buy’s online sales to a 17% increase, giving Amazon and Walmart a cyber run for their money. Of course, not all those sales were from Apple products, but still.  Apple doesn’t get all the credit since Best Buy also scored some impressive appliance sales.  And I’m pretty sure Apple doesn’t make refrigerators and dishwashers. Yet. The Apple thing really seems to be paying off for Best Buy so it seems logical that it will be increasing Apple’s presence in its stores and start to offer AppleCare and service in some extremely lucky locations. Best Buy earned a $164 million profit adding 46 cents per share. Analysts only expected 34 cents. Apparently those analysts don’t own an Apple Watch (nor do I, for that matter). A year earlier Best Buy raked in $146 million and 42 cents per share.

Let them eat cake…

Image courtesy of pixtawan/FreeDigitalPhotos.net
Image courtesy of pixtawan/FreeDigitalPhotos.net

If you’re traveling to Paris after October 1 (lucky you) and your accommodations come courtesy of Airbnb, be prepared to say au revoir to even more money than you might have planned. Your Parisian host will now be collecting a tourism tax from you in the amount of 83 euros per day, per person. In case you were wondering, because I know you were, 83 euros is equal to about 95 cents. Paris authorities made the request to Airbnb in an effort to encourage the home-sharing site to behave more like a hotel would. And, well, considering that Paris is the most visited city in the world, and Airbnb has over 50,000 listings there, it seems like the smart thing to do to comply with this request. Besides, that tourism tax helps generate local tax revenue and pays for all the extra infrastructure that results from tourism. Also, it gives Parisian hotels one less thing to complain about when it comes to the advantages of Airbnb and helps the site make nice with French authorities. Incidentally, New York attorney general Eric Schneiderman has taken issue with the $25 billion company. Schneiderman said that 75% of New York City listings are, in fact, illegal, since the hosts are/were not present and the rental periods were for less than 30 days. According to New York State Law, these tenants owe Uncle Sam some $30 million.

Take That Tsipras! Greece Agrees to Terms. Well, Maybe; Big Retailer Black Friday Smackdown; The New Campaign to Get Young Americans Work

What would Plato do…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Stocks all over the world went back up and all seems right in the universe once again now that the Greeks don’t have to bail on the euro anymore – well, for now anyways. $95 billion in even more aid is headed to the government in Athens. But boy are the Greeks in for it. In exchange for this, dare I say it,  bailout, major reforms are in the works for the country’s pension system. And then there all those taxes they’re going to have to pay. Well, you gotta pay that money back somehow right? Maybe some sort of debt relief will come in the form of reduction, extended payments or even – don’t let the Germans see this one – partial forgiveness. But all of this is still talk, despite some verbal agreements from Greek Prime Minister Alexis Tsipras, since Greece’s Parliament sill needs to give its official thumbs up. In any case, at least the country’s banking system isn’t expected to come crashing down anytime soon. So yay.

Beating the holiday rush…

Image courtesy cooldesign/FreeDigitalPhotos.net

Image courtesy cooldesign/FreeDigitalPhotos.net

Wal-Mart wants in on the Black Friday fun and is making sure Amazon’s Prime Day doesn’t get all the retail glory. The world’s largest retailer will also be slashing prices on thousands of items this week. Except Wal-Mart calls these discounts “rollbacks.” Just sayin’. Unlike Amazon, you don’t have to buy a special membership in order to get its great deals. “We just don’t believe you should pay a fee to get a better price,” Walmart’s Ravi Jariwala graciously explained. As if that wasn’t enough, free shipping comes with a just a $35.00 minimum, as opposed to the $50.00 minimum it usually requires. Wal-Mart has been losing a lot of ground to Amazon’s e-tail dominance in recent years and knows it has to up its “A” game. Which is all good news for consumers who get to reap the rewards here. Wal-Mart does have plans in the future to offer a similar membership program like Amazon’s Prime, but it will be half the price. As for the other big retailers gearing up for some Black Friday fun, Target and Best Buy will be joining in so get ready to whip out your plastic.

Percolating…

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Image courtesy of ddpavumba/FreeDigitalPhotos.net

Howard Schultz found a way to rebound from his last poorly received social campaign. But this time around, people will agree he got it right. Dubbed the 100,000 Opportunities Initiative, the goal is to take 16-24 year olds from low-income areas, who are neither studying nor working, and give them gainful employment opportunities. In fact, there are about 3.5 million jobs up for grabs that don’t require a college degree and Starbucks, along with other more than a dozen other top U.S. companies, including Microsoft and Alaska Airlines, are eager to fill them. Like now. There are approximately 5.6 million young Americans who this initiative is targeting and who are eligible for these opportunities which range from full-time positions to internships and everything in between. Wall Street certainly digs Howard Schultz’s idea as well. Shares of Starbucks hit an all time high today.

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

Gee I wonder why…

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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?

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

Wood you mind?

Image courtesy of scottchan/FreeDigitalPhotos.net

Image courtesy of scottchan/FreeDigitalPhotos.net

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

Losing your stripes…

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Image courtesy of woravit.w/FreeDigitalPhotos.net

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

Take that Amazon!

Image courtesy of patrisyu/FreeDigitalPhotos.net

Image courtesy of patrisyu/FreeDigitalPhotos.net

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

Best Buy Earnings Beat; Wal-Mart Gets Smart (Sort of); Home Sweet Pre-Existing Home;

Surprise surprise…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Score one for Best Buy which just posted its third quarter earnings much to the surprise and delight of everyone – well, except for Amazon. But we’ll get to that soon. The electronics retailer pulled in some nice earnings all thanks to higher-definition televisions – a perennial fave. Store sales were up over 2% which means people aren’t necessarily flocking to Amazon after browsing in Best Buy stores. Earnings for the retailer came in at $.32 per share and $107 million. Estimates were pegged at $.25 per share. A year ago Best Buy only raked in $54 million and $.16 per share. Revenue came in at $9.38 billion. Not much of a change from last year, but still, no loss. Naturally, all the good fuss caused shares of the stock to go up as well. How convenient. But to be fair, it was all part of Best Buy CEO Hubert Joly’s master plan to turn around the company. The surprisingly good numbers came at the expense of lots of cost-cutting, including jobs. For his second act, Joly has big plans to partner up with other companies like  “it” company, GoPro.

The jig is up…

Image courtesy of Arvind Balaraman/FreeDigitalPhotos.net

Image courtesy of Arvind Balaraman/FreeDigitalPhotos.net

In the market for a $90 Playstation4? Good luck on that one. Wal-Mart has (finally?) caught up to some crafty internet scammers who industriously, albeit feloniously, created fake ads to present to Wal-Mart employees in order to capitalize on its price-match guarantee. But after updating, clarifying and re-vamping its policy, scammers are going to have a much harder time securing those “deals” especially for all those Xboxes and PS4s. Wal-Mart (very) recently posted this on its website: “We’ve updated our policy to clarify that we will match prices from Wal-Mart.com and 30 major online retailers, but we won’t honor prices from marketplace vendors, third-party sellers, auction sites, or sites requiring memberships.” And at the end of the day, the Store Manager gets the final word. Happy Holidays!

House party…

Image courtesy of ddpavumba/FreeDigitalPhotos.net

Image courtesy of ddpavumba/FreeDigitalPhotos.net

More good news about the economy. I know you can hardly stand the excitement as the National Association of Realtors announced that existing home sales rose 1.5% in October. While that may seem like a relatively small number its actually huge on so many levels. For one, the 1.5% rise is the fastest pace in over a year. It also means that 5.26 million homes were sold. A big shout out goes to low interest rates. It also  wouldn’t be right if we didn’t mention the merits of a strengthening job market. Because, hey, if you want to buy a house, a job is good thing to have to help pay the mortgage, no? Foreclosures and short sales aka “distressed sales” even dropped to 9% of the total versus the 14% of the total a year ago. Good news for the economy. Not so much for you, that is, if you were in the market for a discounted home that went for 15% below market value. It’s a give and take, my friend. The median price for existing homes is $208,300 which is actually a 5.5% increase over last year’s median price at this time. And wouldn’t you know it, those supremely intelligent analysts predicted a decline instead. Ha. Thinking of something more upscale? Homes that sold for above the magical million dollar mark jumped 16% from a year ago.