Shake-y Shares for Shake Shack; Alibaba’s Snapchat-ty Investment; Lumber Liquidators Has Something to Prove

Shake Shack it off…

Image courtesy of joephotostudio/FreeDigitalPhotos.net

Image courtesy of joephotostudio/FreeDigitalPhotos.net

It was the food IPO to watch with 63 locations all over the world and growing. But just a few months later the enthusiasm for Shake Shack has lost some of its flavor. Fourth quarter revenue for the “fast casual” burger joint was up 51% to $34.8 million when analysts only expected $33 million – definitely nothing to balk at. Even same store sales went up 7.2% when analysts forecasted a much more modest 4% increase. So what exactly caused shares of the company to take an 8% dive in after hours trading yesterday? Hmmm. Could it be that bigger than expected net loss of $1.4 million and 5 cents per share? Analysts expected the company to take a loss for the big tax charge related to its auspicious IPO. Problem is, those same analysts figured the burger chain would only lose 2 -3 cents per share. But nobody on Wall Street or elsewhere seems too worried as Shake Shack has big expansion plans and anticipates it’ll pull in revenues for the year between $159 – $163 million.

Things that make you go hmmm…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The big news coming out of Alibaba is all about the big investment it just plunked down on Snapchat.  As in $200 million big.  The Chinese e-commerce giant, which generates more revenue than Amazon and eBay combined, just upped Snapchat’s valuation to $15 billion, all because of this latest cash infusion for the magically vanishing messaging app. This particular move has got everybody wondering exactly why Alibaba chose to do this, especially because Snapchat is banned in China. Yeah you read that right. Might it be a way for the Chinese company, who had the biggest-ever US IPO, tap into overseas markets? Some experts think that might be the case. Or perhaps it has something to do with Alibaba’s lack of success with a messaging app? After all, Snapchat boasts 100 million users that send out 700 million vanishing messages…a day. Incidentally, Tencent, Alibaba’s biggest rival in China, also invested in Snapchat back in 2013. But after all, what’s $200 million to Alibaba, a company that already sees annual revenues of $11 billion.

Who? Me?

Image courtesy of  Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Lumber Liquidators stands by its products and adamantly rejects a recent “60 Minutes” report that its flooring contains high level of formaldehyde. To prove it, they’ll even pay to have questionable floors tested. Apparently the test kits are the same ones used by the Federal government, though what significance that has is something I cannot answer. Even though Lumber Liquidators calls the report “sensationalized” with  “little context,” when its products were tested by “60 Minutes,” some of the flooring did, in fact, not meet California’s standards of acceptable levels of formaldehyde. However, once again, Lumber Liquidators rejects that claim. Same store sales, by the way, plunged 13% in the nine days after the report aired. If a consumer purchased flooring that, when tested, indicates the presence of high levels of formaldehyde, Lumber Liquidators has allegedly offered to pay…for more testing. And if that further testing indicates, once again, high levels of formaldehyde, Lumber Liquidators has allegedly agreed to eat the cost for new flooring. Imagine that. Lumber Liquidators, interestingly enough, has plans in place to open about 30 new stores. These new stores will presumably not be stocked with formaldehyde-laced flooring. And while shares of the company are still down from what they were before the piece aired, they actually did rebound a bit in light of all its efforts to counter the report.

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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…

Image courtesy of woravit.w/FreeDigitalPhotos.net

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?