Swooshed Out: Nike Losing Ground?; Starbucks Perks Up Hiring Goals; Is the End Near for Sears?

Just not doing it…

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Looks like consumers aren’t doing it for Nike as the athletic apparel company posted some pretty unimpressive numbers for its third quarter. To be clear, Nike didn’t lose money. It just didn’t make as much money as analysts wanted it to. For instance, even though Nike took in $8.43 billion in revenue, a 5% increase over last year, analysts were expecting $8.47 billion this time around. The collective disappointment on Wall Street sent shares down because investors are apparently wondering if the company behind the iconic swoosh can withstand some fierce competition from Under Armour and Adidas. But that wasn’t the only bad news sending shares down today. Nike also said that it expects future orders to be down 4%. Nike did score a profit of over $1.1 billion with 68 cents added to shares, a figure that easily beat analysts’ expectations of 53 cents per share. Last year at this time, Nike took in $950 million with 55 cents added per share, illustrating a very respectable increase. Unfortunately, the bit about the decline on future orders didn’t stop from putting a damper on the fiscal mood on Wall Street.

Well done…

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Starbucks is making headlines today after announcing that it not only hit its goal of hiring 10,000 army veterans and military spouses, but now plans to hire another 15,000. Starbucks had hoped it would achieve that milestone by 2018, but lo and behold, it hit its mark well ahead of schedule and the glowing news was announced during its annual shareholders meeting, much to the delight of…everyone. If you recall, back in February, CEO Howard Schultz – who is stepping down at the beginning of April – managed to annoy more than a few of his coffee drinkers when he announced plans to hire 10,000 refugees globally.  Apparently some folks thought those refugee hirings were in place of hiring veterans and thus began a social media campaign urging people to #BoycottStarbucks.  But alas, that was not exactly accurate and the coffee chain found itself explaining that it intended to hire employees from both groups. And that’s not all. The purveyor of premium coffee also plans on creating another 240,000 jobs worldwide by 2021. Because if you were worried that there weren’t enough Starbucks, the company is planning to open 3,400 new stores, just in the United States. So yeah, it’ll definitely need a few extra baristas.

Throwing in the towel?

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It might just be the end of an era as the 130 year old Sears announced in an SEC filing that “substantial doubts” exist with regard to its future. In other words, the department store is staring at the prospect of bankruptcy, and will end up bringing Kmart with it. What’s a little weird about that news though, is that the company’s fourth quarter results were actually better than expected, albeit, dismal. “Better than expected” here basically means that the retailer didn’t lose as much money in its fourth quarter as it was expected to, at least compared to last year’s fourth quarter. The fact remains, however, that according to eMarketer, of the top 250 retailers, Sears is dead last in terms of performance, as it just can’t compete with the offerings of online retailers. In fact, Sears ate over $5 billion in losses just in the last three years and has already been closing plenty of stores, selling off some of its brands and taken other measures just to stay afloat. Besides that, Sears is having too much trouble with its pension plan obligations which has been also eating up a lot of its cash – $4 billion just in the last twelve years. Add to that its more than $13 billion in liabilities and Sears’ future is looking positively grim.

Starbucks Betting on $10 Coffee; Trump Ready to Dump on Pharmaceuticals; Trump’s June Stock Dump

Jolted…

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Starbucks CEO Howard Schultz is stepping down from his post in April with plans to build a Starbucks’ prestige brand where he will serve as its Executive Chairman. The idea is that by going upscale Starbucks will be able to raise its profile with those pesky millennials. Besides that, the company needs to compete with a number of other upscale rivals that keep rearing their gourmet heads all over the place. One thousand “Reserve” brand stores are slated to set up shop with another 30 large Reserve Roastery (expect to find that word added to a dictionary near you) and Tasting Rooms expected to open up all over the globe. In case you were wondering what one orders from this new prestige brand, you might consider purchasing a $10 cup of coffee that you can sip daintily from a glass siphon.  Or perhaps you’re up for paying $50 for an 8 oz. bag of an exotic, small-lot coffee? I’m sure you’ll find something worth depleting your funds.  In any case, Starbucks also announced plans to open another 12,000 stores –  that’s in addition to its already existing 25,000 stores –  in the next five years.  Five thousand stores are slated just for China. The company also plans to annually boost revenue by 10% while adding between 15% – 20% to its shares, and increase its focus on its food offerings since the coffee giant is convinced it can double its growth in that area.

What a pill…

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Donald Trump’s latest executive plans involve bringing down drug prices and the pharmaceutical companies that keep increasing them with seemingly reckless abandon. Which is kind of ironic since pharmaceutical stocks saw a huge surge following Trump’s election. And here they thought they had an ally. Hah! A Kaiser Family Foundation survey leading up to the election found that people felt drug prices were the number one healthcare issue for the next President. Well, I guess the President-elect is ready for it then. Sort of. Trump has yet to outline any concrete plans on how he is going to achieve this goal. But during his campaign, Trump did say that he is all in favor of consumers having their meds re-imported. He also wants Medicare for the elderly to renegotiate drug prices directly with pharmaceutical manufacturers. That should be fun to watch, especially because both the industry and many many Republicans are vehemently against that idea. Stay tuned for that drama. Just today, Pfizer Inc. and Flynn Pharmaceutical Ltd. were slapped with some massive record fines in the UK after raising drug prices by…wait for it…2,600%. Now, Pfizer will cough up about $106 million, while Flynn will fork over approximately $6.5 million. I guess they should be happy that they were busted in the U.K. and still have time to clean up their act in the United States before Trump-dom takes effect. In the meantime, Allergan Plc. CEO Brett Saunders is bracing himself for the new president’s impact and said Trump could end up being more “vicious” on pharmaceuticals and their drug pricing than Hillary Clinton might have been. But he also pledged to limit price increases to less than 10% per year. Or perhaps he did that lest Trump unleash his Twitter wrath on Allergan, just like he’s done to several other individual companies including Carrier Corp., Ford and Boeing.

Under-stocked…

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Yesterday, President-elect Donald Trump’s team announced, with no explicable reason as to the timing, that he sold off all of his stocks back in June. Don’t hold your breath for proof of that sell-off as none was provided. While being interviewed today on the “Today” show by host Matt Later after being named Time Magazine’s “Person of the Year,” Trump explained that he decided to unload his stock holdings in order to avoid any conflicts of interest. How very gallant of Mr. Trump.  And even though the press was not made aware of it until yesterday, Donald Trump insisted that everybody already knew. We just don’t know who “everybody” is. Mr. Trump went on to say that he sold off his stocks since he knew he would win the election and would be making deals for the United States that could affect various companies in all sorts of different ways. That was indeed very thoughtful of him. He also said he didn’t even own that much stock.  Which is debatable at best since a recent filing from December of 2015 valued his holdings at $40 million. But in all fairness, his stock market holdings pale in comparison to his real estate holdings which apparently make up the bulk of his net worth.  Ethics experts, however, are suggesting those real-estate holdings might also be a conflict-of-interest as well. Just saying. It’s worth noting that since his sell-off, the S&P 500 went up over 10% while the Dow Jones Industrial Average hit some very impressive all-time highs. Since Trump’s victory, many stocks have also hit all-time highs and, of course, he’s taking credit for it.

Newspapers Gone Charitable; Not All is Golden in Europe for McDonald’s; Starbucks Not Letting an Itty Bitty Downturn Get in its Way

Read all about it…

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Not-for-profit has been taking on a whole new meaning lately for some unlikely reasons: newspapers. The Philadelphia Inquirer, the Philadelphia Daily News and Philly.com have gone tax-exempt. It’s probably not the first place you think of when you want to make a charitable contribution, but it’ll gladly take one now. Along with an additional $20 million donation, billionaire H.F. “Gerry” Lenfest, who controlled these publications, took the Philadelphia Media Network, tweaked things around a bit and morphed the newspapers into a public benefit corporation (PBC) that will be called The Institute for Journalism in New Media.  A little wordy, maybe, but the entity itself is dedicated to “independent public service journalism and investigative reporting that positively impacts the community, while also creating innovative multimedia content.” Got that?  The paper will still be run as a “for-profit” biz while getting you a tax deduction in the process.  In case you didn’t know, Kickstarter is also a PBC. Just saying. It’s an interesting idea just not an original one for a newspaper as there are a few other newspapers in Florida and Connecticut that have taken this approach. It’s a way to try and make newspapers relevant and successful in a digital era, not to mention, a last-ditch attempt to try and keep a publication from going bust

Hamburglar?

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So what are the Golden Arches accused of doing this time? Three Italian consumer organizations are charging that the fast-food chain is causing franchises in Italy to inflate the cost of menu items. You see, in order to snag a European franchise lease, a lessee must sign a twenty year contract – a contract that is twice as long as what other franchises require. But then, McDonald’s is also accused of licensing the premises for above market rates – by about ten times –  making it nothing short of a big pain in the but to switch competitors. So, in order to defray the costs of these above-market lease rates, European McDonald’s franchises jack up the prices on menu items with consumers bearing the brunt of the cost. At least that’s according to a survey cited by the coalition filing the complaint. Apparently, a whopping 68% – 97% of McDonald’s menu items in various Italian cities are more expensive in franchises than in company stores. Franchises make up 75% of McDonald’s European revenue and worldwide McDonald’s has made $9.27 billion in revenue from these franchises. But before the EU even considers launching a formal investigation into these alleged shifty practices, authorities will first send out a formal questionnaire. Depending on how well those questions are addressed will determine if there is sufficient cause to even open an investigation. Besides, those same EU authorities are already busy investigating McDonald’s in Luxembourg over allegations that it managed to evade paying $1 billion in taxes on its European operations.

Slowdown? What slowdown?

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There might be an economic downturn in China, but that’s not stopping Starbuck’s from expanding its empire there. Sure there are already 2,000 Starbucks stores caffeinating the world’s second largest economy. However, Starbucks feels that the country could use at least 1,400 more stores and plans to have them all serving up lattes by 2019. Starbucks CEO Howard Schultz feels that China has the potential to become the company’s biggest market. And that’s not so crazy considering that China is already Starbucks’ second largest market and is the fastest growing one too. At a recent Starbucks event in China called the “Starbucks China Partner-Family Forum” (Alibaba’s Jack Ma was at the event so you know it was a big deal), Schultz wanted to reassure the Chinese that he totally gets their culture and has tremendous admiration for it. Hence, he made sure to acknowledge and give major props to the parents of its baristas. In fact, Starbucks wants so badly play nice with China and shower the country with oodles of corporate respect that he is offering to cover 50% of monthly housing expenses for Starbucks employees in China. For baristas there who so valiantly served up drinks for ten years, Starbucks is offering them a “career coffee break” – a year long paid sabbatical. Hěn hǎo!

 

A Dow-ner of a Day on Wall Street; On Rate Hikes and Coffee; Chipotle’s Latest Effort Is Calorie-Free

All fall down…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Fewer things are uglier than a 1,089 point plunge on the dow. And that’s just how Monday started off, within the first few minutes of trading. By closing, however, the market was down only 588 points. Phew. Apparently the market is correcting itself, so the drops shouldn’t be too alarming. Also don’t look too much into last week’s 1,000 point drop. At least that’s what the experts are saying. The term “correction” is meant to reassure us. So are you reassured now? But correction or not, overnight there was a big sell-off in China that brought about a very unsightly 8.5% hit to the Shanghai Composite Index which the Chinese media is very unaffectionately calling “Black Monday.” Yes. It’s that bad. And worse since the repercussions of this hit are spreading through Europe, and yes, even our shores. Feel free to cringe now. The world’s second biggest economy is slowing a little too much for our liking. Countries that depend on China to buy its commodes and luxury goods companies that have enjoyed selling to the Chinese are  now freaking out and revising their outlooks. Although, Apple CEO Tim Cook graciously pointed out, much to the delight of Wall Street, that the Chinese are, in fact, still buying, albeit, at a slower pace and that Apple actually had a record few weeks in China. Well, lucky Apple.

As for that rate hike…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Whether you see it as a good thing or bad thing, plans for Janet Yellen and the Fed to hike rates in September just might have hit a wall thanks to the financial turmoil rocking the world as of late. Sell-offs, swings and losses (oh my!) just might have done the trick to put the kibosh on the Federal Reserve’s intention to raise rates next month, at least according to investors, who probably know a thing or two about that. In fact, that hike is now looking like it will take place around March. It’s all sort of ironic since the Fed seemed almost non-plussed about China’s fiscal comings and goings because the U.S. economy was the hogging the spotlight for the way it’s been picking up speed lately. Oh well. Guess that thinking caught up with the Fed. Incidentally, Starbucks CEO Howard Schultz, always at the forefront of the cause du jour, sent out an email advising employees to be sensitive to investors who seem a bit edgy, not from caffeine withdrawal, but rather from the volatile global market situation. He writes: “be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations.” Can I get a kumbaya?

Scrumptious…

Image courts of Stuart Miles/FreeDigitalPhotos.net

Image courts of Stuart Miles/FreeDigitalPhotos.net

Chipotle’s got a plan. But this one has nothing to do with adding to its millennial-appealing menu. That part seems to be covered. It seems that a stronger economy, an increased demand for restaurant dining and a minimum wage increase across states and companies has put quite the crimp in the talent pool for Chipotle employees, resulting in fewer applicants and not enough workers to dish out the aforementioned millennial-appealing fare. To combat that, Chipotle is launching a “National Career Day” where on September 9, the Denver-based chain plans on hiring some 4,000 new employees. The company is hoping to attract talent with this latest initiative, throwing around terms like “six-figure salaries” for high-performers to earn (far) down the road. Chipotle’s already part of the the Starbuck’s led 100,000 Opportunities Initiative. Starbucks, McDonald’s, Wendy’s and a slew of other companies have all been offering up all kinds of new interesting perks to attract a greater talent pool, from college reimbursement to more paid vacation. Al things I can certainly appreciate. Chipotle already employs about 60,000 people and on September 9 the company will likely increase its workforce by 7%. All you have to do is register at http://www.nationalcareerday.com. All U.S. Chipotle restaurants will conduct interviews between 8 and 11 am and if you land a gig, look forward to making more than $10 per hour to start.

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…

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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.

Starbucks: Can’t We All Just Get a Latte; Pinterest Valuation Not So Pint-sized; Irish Airline’s Got a Flight For You

Race to the frappucino…

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Image courtesy of amenic181/FreeDigitalPhotos.net

Starbucks’ latest campaign called “Race Together” has little, if nothing, to do with coffee. However, CEO Howard Schultz sees it as “…an opportunity to re-examine how we can create a more empathetic and inclusive society — one conversation at a time,” and presumably one $5 drink at a time, too. The idea is to have Starbucks baristas write, not just your name on your cup, but the phrase “Race Together,” in an effort to engage its customers, frequenting its 12,000 locations, in a dialogue on the very sensitive topic of race. The idea took form back in December, when Mr. Schultz held an internal meeting following the shooting deaths of unarmed black men in Ferguson, Staten Island and Oakland, California.  Several forums and thousands of employee statements later, #RaceTogether was born, and on March 20, USA Today will join hands with Starbucks as it offers a supplement to that day’s edition offering various ways to begin dialogue and promote discussions on race. It’s just another day in the life of Starbucks and Howard Schultz, who likes it when his company practices “conscious capitalism” (yes, that is a thing and yes, there are other companies who practice it) which is basically using a company’s invaluable resources for the power of social/societal good as opposed to…dare I say it…profit.

Pin it…

Image courtesy of Mister GC./FreeDigitalPhotos.net

Image courtesy of Mister GC./FreeDigitalPhotos.net

What would the world do without Pinterest? It’s a good thing we’ll never have to know as the social media/online bulletin company just picked up – ridiculously quickly, I might add – some $367 million. That cash is going to help fund some lofty international expansion plans, which makes perfect sense since 2014 saw Pinterest picking up 135% more international users. In fact, some 40% of Pinterest’s accounts come from beyond our cozy borders.  Some of this new funding comes from some veteran Pinterest investors, but newcomers are also joining the online bulletin board fray. It helps that Pinterest started selling ads, though, in the magical land of Pinterest, ads are elegantly referred to as promoted pins. Nothing like a little ad revenue, or rather, promoted pins to fiscally stir things up a bit. Thanks to these latest generous investor contributions, Pinterest’s valuation is now going to be in the $11 billion stratosphere. Although, if you want in, here’s your chance as the company is apparently still looking to raise about $211 million.

Bon Voyage!

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Image courtesy of bplanet/FreeDigitalPhotos.net

Ireland’s famed budget airline, Ryanair, announced plans that it will begin to offer flights from 12-14 European cities between 12-14 U.S. cities.The company also announced that those flights could be as little as $15. No joke. Of course, that price doesn’t necessarily include an actual seat to sit in during the trans-atlantic flight, but hey, minor details. Indeed, there are many fees which will be quickly added to that attractive little fare, like meals, baggage fees, breathing…So by the time you finish selecting all those “extras,” you’ll likely be shelling out something closer to $275 per ticket. Which isn’t so bad when you consider that full budget airlines charge at least double that amount. And you’ll only have to wait 4-5 years. You see, Ryanair still needs to acquire a fleet of aircraft equipped to those make trans-atlantic flights. But like I said before, minor details.