Tesla Takes On Ford; J. Crew Says Bye to Own Icon; Burberry Wants to Go Big

Race to the finish…

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Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Tesla’s market cap just left Ford Motor Co. in the eco-friendly dust today. It’s all because of a much anticipated, yet massive Model 3 rollout scheduled for later this year. Assuming everything goes smoothly with that massive rollout – and why wouldn’t it? – Tesla has pinned some very pricey hopes and dreams in the form of growth targets. Those growth targets sent the company’s stock up 5.7% and why shouldn’t they? After all, the luxury electric car company smacked down analysts estimates when it reported a shipment of 25,000 vehicles for its first quarter. In case you were wondering – because I know you were – that was almost a 70% increase from last year at this time. To be fair, however, the increase is not as impressive at second glance considering that Tesla experienced some production pains beginning in October. So the company was basically making up for the pains. In the meantime, as the second largest auto company in the United States, Ford delivered 6.7 million cars and trucks last year while Tesla delivered less than 80,000. Then, last year Ford hauled in a revenue of close to $152 billion while Tesla took in just $7 billion. Yet Tesla’s very magical market capitalization now comes in at $47.6 billion, compared to the much much older Ford Motor Co.’s $44.9 billion. Let that one sink in for a bit. And in case you were in the market for some Tesla shares, its stock is currently trading at around $293 a share.

Crew-cuts…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

J. Crew’s long-time creative director, Jenna Lyons, is out after just five years on that gig and over 20 years at the label. Which is just so cray cray since she is responsible for making so much of what made J. Crew…well, J. Crew. She is credited with turning the brand around a few years ago and making it super-popular and ultra-hip. In fact, she was so good at what she was doing that she became the face/icon of the prepster brand. But then there were a bunch of unfashionable issues, a 6.7% sales drop, following a more than 8% drop the year before.  The company, if you recall – and it’s okay if you don’t – was purchased for $3 billion back in 2011. Now the retailer is staring at the wrong end of $1.5 billion in debt. All that had company brass scratching its preppy head and wondering where did things go south and how could they be remedied. Apparently, part of that remedy involved saying goodbye to Lyons. Despite that, J. Crew is a retailer like any other, and we all know how darn ugly the fiscal landscape has been like as of late for all the players, big and small. But back to Lyons, rumor has it that her exit was a mutual decision.  Although, I’ve often wondered if the word mutual takes on a very different definition when describing people who find themselves leaving their high-level executive jobs.

Just so ya know…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Pish-posh designer Burberry just signed a $225 million licensing deal with Coty. – as in the musk-maker. However, rest assured as there will be no trench coats involved. Instead, Coty will get exclusive global rights to Burberry’s make-up and fragrance brands – which might make zero sense to you but makes plenty of cents – and dollars for both Burberry and Coty. And here’s how it’s going to work: Burberry, which pulled down revenue of 203 million pounds last year (well, it is an English company) has got the creativity end covered because, well, it does. There is a reason, after all, why Burberry can charge so much money for its merchandise. But Coty is all about distribution, and in fact, the company is quite accomplished in that arena. Burberry was shrewd enough to recognize where it could use a little oomph. Or in this case, the English brand needed a lot of oomph. So the brand did some research and shopped around before it settled on a deal with Coty.  And Burberry will be in good company at Coty, as it will join other premium fragrances including Balenciaga, Gucci and Marc Jacobs, not to mention the Clairol and Rimmel brands.

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Game on Oprah! John Oliver’s $15M Giveaway; Fortune 500 Companies’ Latest Surprises; Burberry Boss Paycheck Getting a Whole Lot Smaller

New queen of daytime…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Move over Oprah. John Oliver just achieved god-status in the television talk show realm after buying nearly $15 million in medical debt and then forgiving it. Poof. Just like that. On his latest show “This Week Tonight with John Oliver,” the talk-show host took on the debt collecting/buying industry, which can be dubbed “shady” at best. Oliver said, “It is pretty clear by now (that) debt buying is a grimy business, and badly needs more oversight, because as it stands any idiot can get into it.” So John Oliver did “get into it,” and spent just $50 to start his very own debt collection company called Central Asset Recovery Professional aka CARP. It’s no coincidence, he pointed out, that the company is named after the bottom-feeding fish. Oliver’s company was almost immediately offered close to $15 million in medical debt from 9,000 Americans, social security numbers, names and addresses included, for just half a cent on the dollar. In case you were wondering, that came out to about $60,000. Then, with the simple push of a red button, John Oliver, forgave the debt, presumably with funds from his own bank account. But most importantly, Oliver easily trumped Oprah Winfrey’s 2004 television giveaway, when she gave out $8 million worth of cars to 276 audience members. And he didn’t even do it for ratings. Sort of.

Rank and file…

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Fortune Magazine’s annual list of the biggest 500 companies by revenue for fiscal 2015 is out and it was Netflix that was making big waves this year. The video streaming site, which launched in 130 new countries in January, and was the top fiscal performer for 2015, ticked up 95 spots to the 379th spot. However, while the climb was quite impressive, there are still 378 companies that rank higher than Netflix. Rounding out those top spots are Walmart, ExxonMobil, Apple and Berkshire Hathaway. No big surprises there. Apple, by the way, which moved up to two spots from last year’s fifth place, was the most profitable company on the list, earning $53 billion for fiscal 2015. Companies including GM, Ford and AT&T also cracked the top ten with Amazon landing at number 18 and Walgreens following close behind at number 19. Microsoft managed to crack the top 25 for the first time ever as Facebook climbed 85 spots this year to claim its 157th ranking. Interestingly enough, more than half of the companies on the list saw a drop in sales, with energy companies taking the biggest beating of all.

Pay raze…

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The CEO of Burberry Group PLC, Christopher Bailey, will now have to switch to generic brands when he goes grocery shopping. After failing miserably to post respectable earnings results, the dapper exec will watch as 75% his paycheck vanishes into thin air. The CEO, who also serves as the Chief Creative Officer – and herein, might lay the problem –  will earn a paltry $2.74 million this year, a far cry from the $10.8 million he scored last year. Shareholders are also withholding his bonus for missing profit targets. That might seem a bit harsh, but shareholders in hundreds of companies are getting fed up with massive executive salaries that are completely at odds with results. Bailey, however, is not the only executive at the company who will be experiencing the fiscal wrath of the Burberry shareholders. Executive directors at the fashion house will also be stripped of their bonuses this year, because after all, it’s not like Bailey was solely responsible for shares of Burberry taking a 35% hit in the last twelve months. Burberry has announced that it will implement a cost-cutting plan – that has little to do with Bailey’s pay cut – in addition to a share-buyback program. Prudent moves when a companies reports disappointing fiscal earnings. But the earnings may not be entirely Bailey’s fault. Consider that 40% of Burberry sales come from the Chinese, who are in the midst of their own fiscal woes.