Add the Military to Wells Fargo’s List of Haters; Tesla’s Not Down With Discounts; Beverage CEO’s Earnings Lose Fizz

And the list of offenses just keeps growing…

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As Wells Fargo CEO John Stumpf continued to get a much-deserved beating by Congress today, the bank now finds itself staring down the wrong end of a Justice Department sanction. The reason? It seems Wells Fargo improperly repossessed cars owned by…wait for it…members of the military. That’s right. Wells Fargo was screwing over the very folks who defend this country.  Is your stomach done churning yet?  The bank apparently violated the Service-members Civil Relief Act and both Federal prosecutors and the Office of the Comptroller of the Currency have big plans for the bank that have nothing to do with stock options and hefty bonuses. It’s borderline-disturnbing that Wells Fargo proudly proclaims on its website that it has “a history of making banking easier for our servicemen and servicewomen.” If found guilty, Wells Fargo could end up forking over an estimated $20 million in penalties. That would be in addition to the $185 million that Wells Fargo was fined for opening up those two million fraudulent accounts.  Sadly, Wells Fargo isn’t even the first bank to repossess vehicles from service people who were delinquent on their loans. Banco Santander had to pony up $9 million last year for similar actions.

Blame it on Reddit…

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Image courtesy of digitalart/FreeDigitalPhotos.net

Looks like the discount days are over at Tesla where CEO Elon Musk sent out an email to his employees telling them to stop the practice. Apparently, Tesla has a “no negotiation no discount policy” that was in effect since day one, ten years ago when consumers could first start purchasing the battery-operated vehicles. Musk isn’t even into discounts for employees – which I think is a bit unfair. Just saying. No discounts even when the average vehicle discount in the U.S. is just under $4,000. Of course, discounts can still be applied to floor-model vehicles, test-drive vehicles and vehicles that were damaged during delivery. But for brand-spankin’ new Model S cars, which sell – or should anyway – for about $100,000, don’t even bother calculating their costs other than what the sticker price says. This whole hoopla came about because someone on Reddit posted a question about discounts for Tesla vehicles. The responses to the question did not sit well with Musk, or with analyst Brad Erickson of Pacific Crest Securities. In a research note, Erickson suggested that Tesla was getting loose with discounts in an effort to sell more cars for its third quarter – of which 22,000 were delivered. That figure, by the way, is a 90% increase over last year at this time.  But considering that Tesla has posted an operating loss for 14 consecutive quarters, I suppose there some logic at hand.

Fizzy logic…

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Nick Caporella, the CEO behind the fan favorite drink LaCroix, probably isn’t felling too bubbly right about now. Glaucus Research Group just released a very unflattering report about the Florida-based company, basically accusing it of cooking the books. The report also says Caporella used false invoices and other forms of creative accounting to inflate earnings when they weren’t quite where he wanted them to be. In all fairness, Glaucus has a short interest in the company, in the form of 2.26 million shares.  If National Beverage’s stock falls, Glaucus stands to gain a sizable chunk of cash. And that’s exactly what happened as National Beverage’s stock took an 8% hit today despite calling the report “false and defamatory.” It seems some of Glaucus’ research came from a failed 2012 lawsuit from a former associate.  In any case, shares of National Beverage were up 58% in the last twelve months  – that is, up until its recent drop. Interestingly, the soft drinks National beverages sells, including Faygo and Rip It energy drinks, sell for 40% less than Pepsico’s offerings, yet both companies have the same reported operating margin. Weird, right?  Another unusual tidbit is that despite National Beverages major increases in profit and revenue, its advertising and shipping costs remained flat, according to Glaucus’ report at least. Last month the company reported first quarter earnings where revenue was up 17% to $217 million and profit was up 69% to $29 million. Not bad for a company that basically sells fizzy flavored water and Shasta – remember that one? In the meantime the SEC is staying mum on the subject and the stock closed at $42.67.

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Elon Musk Fails to Electrify Wall Street; H&M’s Untrendy Earnings; Dell’s List for Female Entrepreneurs

It’s electric…

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Image courtesy of digitalart/FreeDigitalPhotos.net

Shares of Tesla took a bit of a dive today as investors attempted to illustrate how they feel about Elon Musk’s idea of buying out his other big endeavor, SolarCity. Musk, who owns about 19% of Tesla, feels that a SolarCity buyout will cut costs for both companies and magically create wonderful new lucrative opportunities. He also believes customers will be inspired to buy up a threesome of his electric cars, home batteries and solar system. Did I mention, by the way, that Musk also own 22% of SolarCity? Just saying. Investors, however, think it’s a bad move for Tesla to take in SolarCity, which would add about $2.6 billion in debt to the electric car maker.  Besides, investors aren’t feeling the love over SolarCity’s growth prospects and the increasing competition that keeps popping up. Tesla has yet to turn out a profit and isn’t even expected to do so until 2020. Of course, Musk disagrees with this analysis and is convinced that this is his year to start making some cold hard cash. Plus, he thinks a SolarCity buyout would put Tesla’s valuation at $1 trillion, and I’m guessing he likes how that sounds. SolarCity’s stock, by the way, is down 50% so far this year.

Un-trendy…

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Image courtesy of digitalart/FreeDigitalPhotos.net

Fast-fashion retailer H&M had a disappointing second quarter with profits falling a very un-trendy 17% to $847 million. At least sales went up, but only by 2%, to a decent $6.56 billion. But if that’s not bad enough, shares of H&M are down 17% so far this year. Naturally, the weather – the cold weather, this time – and the strong dollar took their share of the blame, as did tomorrow’s Brexit vote, I kid you not. Sales in the U.K., H&M’s third largest market, fell 7% and CEO Karl-Johan Persson thought it might have been because of the looming “Brexit” vote. Because, after all, aren’t most tweens and teens in Britain pondering that issue while they do their fast-fashion shopping at H&M? Persson, by the way, is not a “Brexit” fan. Incidentally, sales also fell in Portugal , France and Switzerland, yet there is no talk of any of those countries pulling out of the EU.

Woman up!

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There’s a new list out brought to us courtesy of Dell that ranks cities according to how good they are for female entrepreneurs. Called the Women Entrepreneur Cities Index, cities on this list are measured according to how well they attract and support female entrepreneurs of high potential who seek to grow and scale their business. In order for a city to even qualify, it first had to be categorized as a city that was already hospitable to entrepreneurs in general, regardless of sex or race. With that out of the way, the index took into account 71 different indicators – which I will not list, you’re welcome – and divided them into five different categories including, markets, talent, capital, culture and tech. The cities were given scores in these areas and the results may – or may not – surprise you. The Big Apple came in first with a score of 58.6 out of 100. The Bay Area followed second with a score of 58.3. Across the pond, London snagged the third place spot while Paris took ninth. Other U.S. cities that pulled in respectable scores included Washington DC in 7th place, Seattle, Washington in tenth place and Austin, Texas coming in twelfth. If you didn’t see your city listed then fear not as only 25 major global cities were taken into account for this particular list. And here’s a fun fact: A correlation was found between how much an area fosters and nurtures female entrepreneurs and that area’s general economic growth. They go hand in hand. How ’bout that.

Tesla Execs Make a “Break” For It; Aeropostale is Down and Out, Almost; Two Executives Are So Over Under Armour

Awkward…

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Two major executives at Tesla are making a break for it just as the car company is about to (finally) unveil its Model 3. Today’s departure announcements particularly unnerved Wall Street, sending Tesla’s stock down 4% on the news. One of the departing execs is Greg Reichow, the global VP of productions, who was also one of the highest paid executives in the company, taking home a package reportedly valued at $6.4 million. Reichow, who arrived at Tesla in 2011, will graciously stay on until his replacement is properly ensconced in his or her ergonomically designed executive desk chair. But what’s weird is that Reichow’s departure is being called a leave of absence, a classification that doesn’t typically necessitate successors. Also making a not-so-fond farewell is VP of manufacturing, John Ensign. Apparently the executive exits have to do with delays and other assorted hiccups that have been plaguing Tesla. But that’s not the official word coming out of the company. What is official is that a whopping five vice presidents have left Tesla just this year and mind you, it’s only May. In the meantime, Tesla’s Elon Musk is calling these exits a “well earned break.” Hmmm. Not the way I would have phrased it.

Market slap…

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Malls all over the United States and Canada are about to lose a neighbor. Aeropostale, purveyor of apparel that appealed primarily to teenagers, is closing over 100 of its stores for being not profitable. In fact, those stores were so not profitable that the company lost $17 million from them just in 2015. But at least the company expects to make $21 million in revenue from liquidation, which should last from six to eight weeks. No worries if you miss your Aeropostale location as there will still be over 600 left from which to shop. Just don’t bother shopping in Alaska, or Hawaii, or Times Square in New York, or…well, you might want to check before you head out to see if your preferred Aeropostale location is still standing. It may be hard to believe now, but once upon a time, Aeropostale’s market cap was worth $2.6 billion, with shares above $30. Those days, however, are long gone as its market cap might be scratching at $2 million and the stock has been delisted from the New York Stock Exchange after trading under 3 cents this week.

A chink in the armor…

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Under Armour has its own share of departures, bidding a (fond?) farewell to Chief Merchandising Officer, Henry Stafford, and Chief Digital Officer Robin Thurston. The company, who has endorsement deals with NBA’s Stephen Curry and golfer Jordan Spieth, generated $4 billion in sales last year, yet news of these departures spooked investors enough to send the stock down 6%. After all, a Chief Merchandising Officer’s role is integral to a brand that sells footwear and apparel considering their vision sets the look and feel. No minor details. Apparel, by the way, is Under Armour’s largest category. Just saying. Thurston had been with the company since 2013, when the company he co-founded, MapMyFitness, was acquired by Under Armour to the tune of $150 million. The company says that it’s just a coincidence that the two executives are making a break for it at the same time, at least that’s what a company memo said. But it’s a good thing that those two executives also have non-compete clauses in their contracts because it would be kind of awkward if they found themselves working for the competition. Well, awkward for Under Armour, I suppose.

Whole Foods is Getting a Whole Lot Sunnier; Nothing Like a Good Shareholder Fight; Urban Outfitter Pleasantly Surprises

Here comes the sun…

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Whole Foods is getting solar with a little help from Elon Musk’s Solar City and NRG Energy.  Of its 430-plus locations, up to 184 Whole Foods stores will get the solar treatment and with the stashes of money it is expected to save over the long run, maybe the organic grocer will start pricing their merchandise a little more cost-friendly. Whole Foods went with both companies so as not to be limited. Sounds fair. With a disappointing fourth quarter that saw a $432 million loss and a slower rate of growth, SolarCity’s stock needed this deal which gave its stock a solid 6.3% lift. Because oil prices have been so low, consumers haven’t exactly felt the fiscal pinch to get cost-effective solar installations and SolarCity’s been feeling that effect in its numbers. No word yet on which locations will get the solar experience but the move will put Whole Foods in the same company as Costco and Walmart for being among the top 25 corporate companies to go solar.

United they fall…

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United Airlines has had better…decades, as two investment funds, who together own a 7.1% stake in the airline, are gearing up to turn the airline’s board of directors on its head. PAR Capital Management Inc. and Altimeter Capital Management LP aren’t happy with the way things have been going at the airline, which happens to be ranked as the third largest carrier by traffic and boasts 85,000 employees. The firms have nominated 6 new directors for the United Continental Holding Inc. board in hopes of undoing the “poor performance and bad decisions over the last several years.” Ouch. Because they feel the board is ineffective, one of the board members they are looking to bring in is former CEO Gordon Bethune, who ran the ship from 1994 – 2004, and is credited with turning the airline around back then. Shareholders will vote on the issue at the company’s annual shareholder meeting in the spring. Judging by the company’s low-employees morale, poor customer service, spate of electronic glitches and its inability to improve its on-time performance, there’s probably a whole lot of ugly going on there. The fact is that most of the other big airlines are cranking out huge billion dollar profits, while United Continental is still figuring out how to play catch-up, even after its 2010 merger, which is still plagued by tons of kinks. This news comes just two days after CEO Oscar Munoz announced that he’d be returning to his post on March 14, after being on medical leave since his October heart attack. Oscar Munoz came on board back in September, on the heels of former CEO Jeff Smisek stepping down after it was disclosed that there was a federal investigation involving United Continental and the Port Authority of New York and New Jersey.

So trendy…

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Urban Outfitters’ stock rallied today close to 17% and for a few good reasons. First, the company took in a profit of $72.9 million, adding 61 cents per share. Even though last year the company took in $80.3 million and 60 cents a share, it was still a Wall Street beat since analysts predicted that this time around the retailer would only add 56 cents per share. Boom. The company flat-lined in terms of its net sales, posting $1.01 billion, but it was the improved margins that had Wall Street tongues wagging. There are few things that Wall Street loves more than improved margins and execs are expecting more improvement on the Urban Outfitter fiscal horizon. The trendy apparel company also scored big with customers by adding some new beauty products that it started selling both online and in 70 shops within the stores. In fact, that rollout proved to be such a success that 60 more stores will get to revel in that retail experience.  Investors were so wowed by Urban Outfitters results that over a dozen brokerages even raised their target prices for the company’s stock, with some brokerages predicting those shares could go as high as $38 a share.  Not every analyst was as generous, however, the stock did close today at 32.69.

Elon Musk Sets a Record; Whole Foods Says Sorry; Labor Department’s Mixed Messages

Electrifying…

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

Elon Musk can sit pretty for the next few minutes and now would be a good time for the Tesla haters – if there are any – to make a run for it. The electric car company scored some rockin’ good digits in its latest quarterly earnings reports brutally beating estimates with a 52% surge over last year’s quarter. But it gets better as the company also set a new record, selling over 11,500 cars during this period. To be exact,11,507 drivers are now tooling around in their brand new $75,000 Model S sedans. Yes, I am jealous. And I am about to get even more jealous as Tesla gets revved up to unveil the Model X – an all-wheel drive SUV.  Elon Musk’s plan is to find new homes for 55,000 Telsas over 2015. Problem is, it’s already July and he isn’t even halfway there, having sold just 21,537 thus far. Even though haters insist that there’s simply a lack of demand for the very swanky electric automobile, Tesla execs blame the company’s limited capacity for production. So there.

Isn’t that a bit much for strawberries?

Image courtesy of zirconicusso/FreeDigitalPhotos.net

Image courtesy of zirconicusso/FreeDigitalPhotos.net

Whole Foods might be the business darling of organic food, but some of their business practices were nothing short of toxic. Executives at the company admitted that some customers were overcharged for fresh cut fruits, fresh juices and even sandwiches. But apparently, it had only been happening in New York City where residents are already used to overpaying anyways. Next time you find yourself in the sliced fruit section at Whole Foods, check out the riveting video starring Whole Foods executives John Mackey and Walter Robb, flanked by produce on a television monitor, perhaps hovering over  Kingfisher melons balls and kale shakes. In the video, the gentlemen apologize  for the actions of a small percentage of its employees who “mis-weighed” some items, and priced them higher than what they should have been. In fact, around 80 different items were tested and they all weighed less than their worth. But, apparently there were also some items that were marked lower than what they were supposed to be. That’s how it determined that the errors were unintentional. But the Co-CEO’s apologized for that too. All this comes after a very unflattering investigation by the NYC Department of Consumer Affairs that called it “the worst case of mislabeling they have seen.”

Seven year itch…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Employers added 223,000 new jobs in June but the remarkable thing about it – I mean besides people getting paychecks – is that the unemployment rate hit a seven year low falling to a somewhat respectable 5.3% from May’s 5.5%. Unfortunately, wages didn’t behave as respectably and stayed put. Nevertheless, these numbers point to an economy that is getting its juice back and may even cause those dudes and dudettes at the Fed to raise interest rates. But before we get all worked up, the Labor Department also warned us that the number of Americas working or simply looking for work fell as well. It’s a problem because it could mean that many folks who would love to have some steady gainful employment are downright discouraged and put the kibosh on their job hunt. At least the folks who did score jobs are helping the economy by spending their hard-earned cash.

Elon Musk’s Mighty Tweet-ful; Confident Are We? Yes We Are; Cable Companies Unite

Surprise!

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Image courtesy of Master isolated images/FreeDigitalPhotos.net

Tesla shares continued its climb today all because of one itty bitty tweet Tesla CEO Elon Musk tweeted yesterday. It helped, by the way that he has close to two million followers and the tweet in questions was re-tweeted thousands upon thousands of times. The tweet went as follows: “Major new Tesla product line – not a car – will be unveiled at our Hawthorne Design Studio on Thurs 8pm, April 30.” Hmmm. Whatever could that be?, thought everybody on Wall Street, and beyond. The top guess is a battery for buildings that stores energy from a home’s solar cells. Definitely a useful item, provided it works. Incidentally/conveniently, Mr. Musk is chairman of Solar City. His tweet-timing was impeccable, as pre-suspense-filled tweet, shares of Tesla were hovering around $181.80, which might seem impressive, just not for Tesla. Shares of the company had been going south on news that competition is fierce and things in China aren’t going as smoothly as thought. Post-suspense-filled tweet, shares went upwards of $192.

In confidence…

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

More jobs. More money from those jobs. Americans are confident that these pleasant things are in store for the U.S. economy and if you don’t believe me you can just check out the latest reading from the Consumer Confidence Index. Americans aren’t just a little confident, either. They’re a lot confident. A lot more confident than they were last month and a lot more confident than the 96.4 predicted by analysts. A year ago, that reading was a paltry 83.9. Last month’s reading stood at a respectable 98.8, and analysts expected little if any change to these digits. Instead, the reading took a major jump to 101.3, the second largest reading since December 2007. Americans are sure that spending will improve and increase when and if the weather (ever) gets better. I did say if, mind you. According to the Commerce Department, spending didn’t change much in February but since it accounts for 70% of the economy, everything really will be awesome (thank you, Lego movie) if and when it goes up, according to our confident expectations.  Interestingly enough, when polled, a majority of consumers confidently said they were in the market for a car. Just not so much a house. Or a major appliance for the house. Or a even a vacation to get away from their house. Maybe next month they’ll feel differently.

Charter this…

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Image courtesy of ratch0013/FreeDigitalPhotos.net

So cable companies are finding themselves in a bit of a bind lately because non-cable entities are putting a huge damper on their sales. By non-cable entities, I do mean companies such as Netflix, Amazon’s version of television and other purveyors of finely produced, amply-entertaining, award-winning, nail-biting, binge-worthy fare. So what’s a cable company to do? Well lately, several of them have begun merging/buying/joining with each other in an effort to pick up subscribers and soften the blow to their sales figures. Today’s latest deal involves the fourth largest cable company in the U.S., Charter Communications. Charter is looking to pick up Bright House networks, the sixth largest cable company in the U.S, to the tune of $10.4 billion. For this lofty sum of money, Charter will pick up 2 million more subscribers and become the second largest cable company in all the land. Because Bright House has all these customers in Central Florida, Alabama, Michigan, Indiana and California, it’ll give Charter a nice big hold on those areas, provided the deal goes through, of course. News of the deal sent shares of Charter north. As for Bright House, well, it’s a privately held company.

Tesla’s Earnings Are Charged; Whole Foods Surprises; Posh Earnings for Kate Spade

It’s electric…

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Tesla investors are squealing with energy efficient delight today as the electric car company released third quarter earnings that beat the Street. Perhaps you might have noticed a few more Model S cars tooling around your neighborhood? Well it’s no coincidence that Tesla set a delivery record for those fabulously, environmentally-friendly automobiles. Expect to see even more of them as CEO Elon Musk plans to ship out 50,000 Model S cars in 2015. In fact, just in this quarter alone, Tesla whisked off over 7,800 cars to new owners – over 41% more than last year at this time. Unfortunately, the company didn’t fare so well on its net loss – a whopping $75 million. However, the company blames stuff like the costs involved in opening stores in Asia, not to mention all those pesky fees for research on its upcoming SUV. Analysts predicted Tesla would lose a penny a share. But wouldn’t you know it – it raked in $0.02 per share instead. Analysts also predicted revenues of $892 million but were foiled once again as the company posted $932 million in revenue.

Whole-Y organic cow…

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

It wasn’t the best quarter, or year, for that matter, for Whole Foods. After all, having to compete against mainstream supermarkets that offer up organic fare for so much less is…hard. But it looks like the grocery chain did okay, after all, seeing as how it reported a 5.8% profit increase in its quarterly report. Perhaps it’s those touching, poignant commercials that have caught your organic eye. Or maybe you enjoy the perks from the Whole Foods customer loyalty program (who wouldn’t?). The company also put the spotlight on value and its attempt to lower prices. That profit spike was also probably helped by its tech offerings like Instacart and the Apple Pay option. Whatever it was, the green green grocer managed to bag a $128 million, $0.35 per share profit from its 360+ stores. There was only one not-so-slight problem: Whole Foods had its lowest growth rate in four years.

Now that’s pretty…

Image courtesy of Sicha Pongjivanich/FreeDigitalPhotos.net

Image courtesy of Sicha Pongjivanich/FreeDigitalPhotos.net

Nothing says fashionable like a 30% rise in sales. Which must make Kate Spade & Co. very posh indeed. Especially because those surprisingly fashon-forward numbers came after the company said its margins would likely be an “issue.” The trendy label even saw shares climb 10% in pre-market trading today. All while fellow fashion companies and competitors Michael Kors and Coach have been seeing numbers that would make even the most durable fabrics want to shrivel up into nowhere. So what gives? Well for one thing, at Kate Spade promotions are out, for now anyways. What is in are theme-driven sales. You might not care for the lack of promotions not being offered but it’s certainly working for Kate Spade’s numbers. The company earned $0.02 per share  with net sales up 36% to over $250 million. To be fair though, analysts did expect $4 million more. But that might change now that it is teaming up with the Gap. The company has 98 stores and 57 outlets. Kate Spade is hoping it can double its sales by the end of 2016 to $2 billion (aren’t we all?).