Under Armour’s Underwhelming Earnings; Trump Tackles Big Pharma Prices; No Easy Riding for Harley These Days

Chink in the armor…

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Under Armour released its quarterly earnings and they were pretty disappointing. Besides the company’s poor performance, it also bummed out Wall Street with a dimmer outlook. Growth for the company had regularly surpassed a 20% rate. But alas, that rate has come to a screeching halt and Under Armor warned us that a more modest growth rate of maybe 12%, with revenues of $5.4 billion, should be expected for 2017. Analysts had been holding their collective breath for a $6.8 billion revenue figure. Oh well. Maybe in 2018. Shares of the athletic apparel company had already taken a 39% beating in the last year. But after unveiling its latest figures, they dropped even more.  CEO Kevin Plank blamed the ever growing nuisance – for him, anyway – of competition. He also admitted that maybe the company should have focused on offering more high-fashion apparel – which seems to be all the rage at the moment – instead of relying on its basics which didn’t perform as hoped. Plank also blamed the slew of retail bankruptcies of brick-and-mortar stores that carried Under Armour merchandise. Unlike Nike and Adidas, who have a lot of their own stores, Under Armour does not and the inability to get merchandise onto shelves definitely took a nasty bite out of the company’s earnings, especially since 85% of Under Armour’s revenue comes from North America. So those closures really hurt. Last but not least, major promotions that took place too early in the holiday season put a crimp in Under Armour’s numbers as well. Profit dipped to $105 million, adding 23 cents per share, when last year it pulled down almost $106 million taking in 25 cents per share. Revenue may have been up 12% to $1.31 billion, but estimates were pegged for $1.41 billion. By the way, in case you weren’t aware, Plank was among the group of business leaders who met with Trump earlier in the month and pledged to bring more jobs to the U.S.

Pill-tastic news…

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Trump held a special meeting today in the Oval Office with eight lucky guests hailing from the big pharmaceutical companies and pharmaceutical industry lobbying firms.  Among the eight attendees were representatives from Johnson & Johnson, Merck & Co. and Eli Lilly & Co, which happens to be based out of Vice President Mike Pence’s home state of Indiana.  Trump urged them to move manufacturing stateside and promised to ease regulations for them if they do. Just like with the auto industry, Trump wants to redo trade policies for this industry as well so that foreign countries pony up their fair share of drugs manufactured in the U.S. In true Trump fashion, the President remarked how foreign countries are “freeloading” on the U.S. because they put price limits on what their citizens can be charged for drugs. He also wants to streamline the approval process, boost production and get prices drastically lowered on drugs.  Shares of most of the companies represented at the meeting rallied today. In the meantime, we’re still waiting on Trump’s announcement for his FDA pick. But he promises that it’s someone “fantastic.” Of course it is.

Fast lane to nowhere…

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If you’ve ever thought about purchasing a Harley-Davidson motorcycle, but haven’t quite got around to buying one, now might just be the time. A surplus of 2016 models has got the iconic bike maker placing big discounts on its inventory, hoping to sell them off in order to bring in the new and improved 2017 models. Profit for Harley-Davidson came in at $47.2 million, which was actually 12% higher than last year’s $42.2 million. Too bad it all goes down from there. Sales in the U.S. were down almost 4%, but at least the rest of the world helped offset a bigger loss with a 2.3% increase in international sales. As for 2017, the company is expecting things will stay the same, as in flat. In fact, the company plans on shipping about 20% less than bikes than last year. The motorcycle industry, as a whole, has been experiencing a decline since May. Part of that has to with the fact that Harley’s dedicated fans are getting older and younger riders aren’t cropping up to fill that void. Hence, Harley-Davidson has a plan intended to draw in more potential bikers, or as Harley-Davidson CEO Matt Levatich calls it, “building riders.” With this initiative, he hopes he can attract a new, and highly diverse generation of Hog enthusiasts.

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Aetna Becomes Obamacare Dropout; Warren Buffet Takes a Big Bite Out of (the) Apple; TJX: Don’t Discount the Discounter

See ya!

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In case it wasn’t entirely clear how some big insurance companies feel about Obamacare, perhaps Aetna might shed some light for you. The healthcare insurer is dropping out of the exchange in 69% of its counties. It’s dropping out of 11 of 15 states after eating $200 million in pre-tax losses during its 2Q. Of the 838,000 Affordable Care Act policies it has, 20% will be adversely affected. Aetna, which is the nation’s third largest insurer, isn’t the first health insurance company to do this. United Healthcare Group already dropped out of Obamacare exchanges and as did Kaiser, with more expected to follow. Whichever side you fall on in terms of the Obamacare debate matters not. It’s arithmetic that’s at play here. Aetna argues that they were losing big money to make the Obamacare policies work. Not enough healthy people were signing up and too many unhealthy people were. The premiums that healthy folks pay were/are intended to offset the large cost of the the unhealthy. Unfortunatey, things didn’t work out that way. The Departement of Health and Human Services was supposed to figure out ways to fix that issue. While its says it did, insurers say it didn’t – or at least, not enough. If you’re really bent on having Aetna insure you and your state’s just been dropped by it, you might want to consider moving to Delaware, Iowa, Nebraska and Virginia. Those states will still be offering policies from Aetna in 2017. Well, at least for now they will be.

Well, if Warren Buffet’s Doing it…

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Berkshire Hathaway’s very own oracle is taking a much bigger chunk out of the not-so-proverbial apple – the one based in Cupertino, that is. Warren Buffet upped his stake in the tech company by a substantial 55%. That’s in direct contrast to his fellow billionaire’s recent actions. George Soros just chucked his Apple stake out the window over concerns in China, or rather concerns about China’s policies regarding the iPhone maker. However, there’s a chance he’ll re-invest down the road. Activist investor billionaire Carl Icahn also ditched his Apple shares back in June. When he did this, shares of Apple had taken a slight dip, at which point Warren Buffet swooped in and increased his stake. Now his total stake of 15. 2 million shares is valued at about $1.7 billion. Shares of Apple, by the way, are up 14% since June. Incidentally, Wal-Mart didn’t fare so well as far as Berkshire Hathaway’s portfolio is concerned. The Oracle of Omaha cut Berkshire Hathaway’s stake in the world’s largest retailer by 27%, keeping it at just over 40.2 million shares. But Warren Buffet has had Wal-Mart in its portfolio a decade now and while his stake might be reduced, it’s probably still not going anywhere. For now. Curious what else Berkshire Hathaway has sitting in its very lucrative portfolio? Coca Cola, American Express, Johnson & Johnson, Kraft Heinz, Wells Fargo…to name but a few.

Who you calling off-price?

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Macy’s and friends might be bemoaning the state of the retail landscape. But they won’t get much sympathy from discount retailers T.J. Maxx. Its parent company TJX Cos came out with its second quarter sales results that had the retailer beating predictions.  But all was not perfect from the company that also owns Marshall’s and HomeGoods. It put out a bit of a bleaker picture for its third quarter that caused shares to fall today, despite its stellar performance.  In all fairness, that depressing and most unimpressive outlook is primarily because TJX Cos is waging war against a strong dollar. Besides, the company is giving out wage increases, so its hard to be mad at a company whose fiscal prowess is taking a hit for a very noble cause. There is even a silver lining – the company is turning out to be a big draw, luring shoppers away from malls with its deeply discounted merchandise on major name brands. Profit for TJX Cos was $562.2 million with 84 cents added to shares, while analysts only predicted 80 cents per share.  A year ago at this time, the company picked up $549.3 million with 80 cents added to shares. The stock is up 17% since January.

 

Can’t Cap the Apple; Let It Go, Barbie. There’s A New Disproportioned Blond In Town; Tiffany & Co.’s Luxe Earnings

In case you missed it…

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Image courtesy of Ambro/FreeDigitalPhotos.net

Apple can breathe a sigh of relief now that it is officially king of the world. Sort of. The tech company has officially surpassed the $700 billion mark of its market capitalization meaning it is now the most valuable company in the world. Make that universe. ExxonMobil, on the other hand, is not-so-prominently perched at the number two spot.  What this all means is that Apple’s outstanding shares are worth way more than all of ExxonMobil’s outstanding shares – by $300 billion. To put it in perspective, a tech company whose gadgets many people do not even own, is more valuable than an energy company whose commodity is consumed constantly by nearly every single person on the planet. Sitting in third place is Microsoft, with Johnson & Johnson nipping at its heels in fourth.

Let It Go?

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Image courtesy of digitalart/FreeDigitalPhotos.net

Could it be? Is Barbie’s rock star status taking a hit? According to the National Retail Federation, the original, plastic, disproportioned blond has been unseated by “Frozen.” Anna, Elsa and company have become the number one go-to gift this holiday season putting Barbie in second place. The survey has been conducted for the last eleven years and this is the very first time in the survey’s history that Barbie is not  provocatively posed at the number one spot. The whole “Frozen” phenomenon has thus generated about $1.3 billion in sales, globally. Good news for Disney, bad new for Mattel, the company behind Barbie. What’s even worse news for Mattel is the fact that in 2016, Hasbro picks up the license for the “Frozen” dolls. If you happen to be  wondering what the number one toy boys will be getting, look no further than the Lego aisle.

Little blue boxes…

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Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Just as I chucked my Tiffany & Co. catalog into the recycling bin, the luxury retailer posted its third quarter earnings. Unlike myself, apparently, many of you are not only not chucking the catalog in the recycling bin, but you are actually going into the pricey retailer and plunking down major wads of money for its very expensive merchandise – just not so much for their cheaper silver lines, interestingly enough.  In fact, here in America, sales were up 10%. Which is especially good since Asia doesn’t seem to be sharing America’s enthusiasm for the luxe jeweler where sales there were down 12%. Revenue did rise 5.2% to $957 million and $0.76 per share. However, analysts were expecting the company to rake in $0.77 per share on $969 million. Maybe the holiday season will help add a little more brilliance to Tiffany & Co.’s fourth quarter.

Yellen at Congress, JP Morgan Chase-ing Earnings and Johnson & Johnson Sits Pretty at the Top

Cooing Wall Street…

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Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Fed Chairwoman Janet Yellen graced Congress today with her presence and arguably dovish remarks during her semi-annual report on monetary policy. True, her comments  may not have been the stuff HBO series are made of but they did rattle Wall Street and sent its stocks and indexes south for a bit. The Fed Chairwoman wouldn’t offer up a time-table on any plans to raise short-term interest rates and still wants help from the Central Bank. “The economic outlook is very uncertain,” she said. Ugh. Not exactly the words you want to hear from the Fed. She also was not moved by the improving unemployment numbers yet she wasn’t too concerned about the slightly increasing inflation. “We have seen false dawn,” Yellen said, probably not meaning to be as dramatically poetic as the statement sounded. She’salso not too happy about the housing sector and again inadvertently sounded slightly poetic when she referred to the biotechs and social media sector as “stretched.” She apparently feels their stock values are very un-poetically inflated.

Bank’d

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Image courtesy of 2nix/FreeDigitalPhotos.net

The country’s second largest bank (by assets), the almost indomitable JP Morgan Chase graced the world with its second quarter earnings today. It beat Wall Street’s predictions. Yay! But wait a minute…its earnings and revenue both took a dive this year with an 8% decline in second quarter profit which I know has you all broken up inside. The bank’s shares gained $1.46 a share when Wall Street predicted $1.29 but its revenue fell $5.99 billion from $6.5 billion a year ago. Just like its banking pal Citigroup – who also released its earnings yesterday and also reached a multi-billion dollar settlement with the Department of Justice over its bad mortgage practices – JP Morgan Chase saw its trading revenue fall.

Unbeatable?

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I double dare you to go to your local pharmacy/supermarket with your full shopping list in hand and try NOT to walk out with a brand that isn’t part of the Johnson & Johnson family. Or then again, don’t bother because it simply is not possible. The company owns…well everything. Almost. Which explains why its second quarter earnings trumped Street estimates jumping 9% in its revenue to $19.5 billion and gaining 13% on its profits. Sure sales of stuff like Tylenol and baby oil helped. And don’t forget about Neutrogena and Aveno (yeah, it owns those as well). But Johnson & Johnson also made some nice chunks of cash with help from its Hepatitis C drugs Olysio and Sovarid. Yeah it has those too.