Michael Kors Department Store Diss; Disney Swims to Great 3Q; Ralph Lauren Hits and Misses and Hits

More bag for your buck…

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Michael Kors is biting back at the hand that feeds it: department stores. The accessories company is blaming them for its recent losses, fed up with the constant discounts department stores are putting on Michael Kors merchandise. In case you haven’t noticed there is nary a moment when Michael Kors products are not discounted. I dare you to prove that one wrong. The fact that consumers can use coupons for Michael Kors products? Ugh. Don’t even get them started. In fact, CEO John Idol is putting the kibosh on them and also chucking those friends and family discounts. Michael Kors reported a 7% drop in its first quarter wholesale business and is planning on shipping less merchandise to the stores in an attempt to reclaim some much-needed pricing power. Michael Kors feels that consumers forgot the value of its products. Seems like a prudent move considering that Macy’s, in particular, brings in the largest chunk of wholesale revenue for Michael Kors.  In any case, it’s a strategy that Coach also is beginning to employ, except that Coach also plans to pull out of about 250 stores completely. Earnings came in at $147 million and 88 cents a share on $988 million in revenue. That was a slight change from last year’s $174 million and 87 cents on $986 million. The fact that mall traffic and tourism were down didn’t help matters. Even same stores sales took a 7.4% hit, which was especially brutal since analysts only predicted a 4.2% decline. Still, analysts expected 74 cents on $953 million in revenue, so the earnings weren’t all that bleak in the first place.

It’s Dory’s world after all…

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Disney posted impressive earnings throwing a big shout out to its studio division, who cranked out the incredibly endearing and ridiculously, lucratively marketable “Finding Dory.” Okay, so marine life wasn’t the only reason since “The Jungle Book “and “Captain America: Civil War “also contributed to that success. Just not as much. Not nearly as much. In any case,  Disney particularly relished those 3Q earnings considering that its 2Q earrings missed the mark while this quarter it took in $1.62 per share, beating estimates by one penny. But not everything was coming up roses and clown fish at Disney, all because of ESPN and a future for it that looks more bleak than bright. Taking a beating from “cord-cutting” consumers who are giving the heave-ho to cable subscriptions and bundles, ESPN is, not surprisingly, rapidly losing subscribers. The network signed a $1 billion deal with BAMTech to find a way for ESPN to bring “direct-to-consumer ESPN-branded, multi-sports subscription streaming service.” Two words, ESPN: blue tang.

No medals for you…

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Even Michael Phelps couldn’t help win this one. Of course  I am referring to Ralph Lauren’s recent earnings that had the luxury brand posting a 7% sales loss. Ralph Lauren reported a loss of $22 million with 27 cents per share. That’s a far cry form last year when the company took in a profit of $64 million and 73 cents added per share. Revenue, which came in at $1.55 billion, took a hit, but analysts expected that hit to be closer to $1.77 billion so complaining wasn’t necessary. Shares still went up today so clearly these losses have done little to spook investors. That’s because those losses were expected as part of a strategic comeback plan engineered by Ralph Lauren CEO Stefan Larsson, who took over back in November. His grand plan also includes reducing turnaround times from design to shelves and to focus on Ralph Lauren’s core brands – initiatives that he thinks will generate roughly $180 million to $220 million in annual savings. That and closing about 50 stores should have Ralph Lauren returning to its fiscal glory in no time.

 

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Disney’s ESPN Not the Happiest Place on Earth; SEC Looks to Salary-Shame; Netflix and Microsoft Maternity-Leave Shami

Squeak squeak…

Image courtesy of digitalrt/FreeDigitalPhotos.net

Image courtesy of digitalrt/FreeDigitalPhotos.net

The House of Mouse took quite the beating today on Wall Street but no animated rodents are to blame for this one. Instead we look to Disney-owned ESPN whose third quarter performance wasn’t victorious. The cable channel lost plenty of subscribers as consumers look to “cord-shaving” and “cord-cutting” their ever expanding cable bills. The fact is, when cable subscribers look to save money on their monthly expenses, ESPN is usually the first item to be sacrificed as it eats up $6 a month. Just ask the 3.2 million consumers who already dropped ESPN from their channel lineup. Of course, the network still has some 90 million subscribers but it’s not exactly sparking investor confidence because it’s got those investors wondering how ESPN could grow – and make money. At least Disney Chairman Bob Iger has some confidence left for the sports network. Someone should. But it wouldn’t be fair to only blame ESPN for the disappointing earnings. The strong dollar and declines at theme parks also added to the fiscal misery. So you see, it’s not all ESPNs fault. What a relief. Third quarter revenue hit $13.1 billion with $1.45 added per share, much to the disappointment of analysts who expected $13.2 billion. Disney hasn’t had an earnings miss in two years. You know what didn’t disappoint at Disney? “Age of Ultron” and “Cinderella.” That’s what. Together with sales of licensed products, those areas saw double digit percentage increases.

And you get to fly on the company jet?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It’s not everyday the SEC and drama can be found in the same sentence. But now that day has come all because of a new SEC ruling that is stirring quite a bit of trouble. Under the 2010 Dodd-Frank Act, public companies now have to issue a “pay ratio disclosure” detailing the compensation of its CEO and the median compensation of the its average employee. Pay gap, anyone? With a 3-2 vote for the ruling, Republicans are against it saying that it will only serve to “name and shame” CEO’s and companies and has no use or relevance to investors. Democrats feel quite the opposite feeling it’ll help investors determine and vote on pay packages for CEO’s. Of course the groups out there that protest income inequality love the new ruling because it’ll highlight and bring all the right attention to their cause. Between 1978 and 2014, the average CEO pay went up almost 1000%. That, my cyber-friends, is what you call a surge. Problem is, according to the Economic Policy Institute, pay for average employees classified as “non-supervisory” only went up by less than 11%. Talk about discrepancies. Commissioner Daniel Gallagher, who voted against the ruling, argued it will wastefully cost approximately $1.3 billion just to implement the compliance and said, “To steal a line from (Supreme Court) Justice (Antonin) Scalia, this is pure applesauce.” How poetic.

Bundle of joy…

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Image courtesy of digitalart/FreeDigitalPhotos.net

Netflix and Microsoft are trying to one-up each other only this time it has very little to do with tech and sales and more to do with babies. Microsoft just announced its updated maternity/paternity policy which now gives parents 20 weeks of full paid leave plus two weeks before a due date for short-term disability. But it’s not as generous as Netflix’s latest policy, dubbed “unlimited” which gives parents a whole year to be with their newest arrivals, allowing them to come and go and go and…well you get it, right? Netflix brass feel that it’s more important to “focus on what people get done, not on how many days worked.” These generous parental leave policies aren’t exactly trendsetting in Silicon Valley. Only for the rest of the country where the United States ranks dead last among 38 countries in government supported parental leave. But Netflix goes one further with its “unlimited vacation” policy too. “Netflix leaders set good examples by taking big vacations and coming back inspired to find big ideas.”  Great. Sign me up.