Uber Drama Revs Up; Gymboree’s Next Chapter in Life: 11; Aldi Ready to Feed You For Less. Much Less

These are the days of Uber’s life…

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Image courtesy of marcolm/FreeDigitalPhotos.net

The Silicon Valley soap opera we call Uber is making awkward, unpleasant headlines again. This time it’s because the rumor mill is swirling with talk that Uber CEO, Travis Kalanick, is about to take a leave of absence. Which begs the question about how this new development will affect Uber, if at all. Then we turn our attention to the now ex-number two honcho at the ride-sharing company, Emil Michael, who has left the Uber building. It’s doubtful he’ll be missed that much since he was apparently pressured to step down. In fact, Kalanick was advised to let Michael go earlier this year, however he declined to entertain that suggestion – a decision that eventually bit him in his corporate butt. Perhaps had Kalanick let Michael go when asked to do so, he might not find himself figuring out how to spend all his newfound free time. All this unpleasantness – well for Kalanick and Michael, anyway – ensued following a meeting with Eric Holder’s law firm. You remember him, dontcha? He’s the former U.S. Attorney General and if he’s got some recommendations, it’s prudent to follow them. Holder’s firm was retained by Uber to conduct internal investigations following accusations of sexual harassment and gender bias. The findings, his firm reported, were “ugly.” That doesn’t bode well for the world’s most valuable privately held company, now does it?

Another one bites the dust…

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Image courtesy of aechan/FreeDigitalPhotos.net

Today’s Chapter 11 bankruptcy filing is brought to you by Gymboree, the children’s clothing store chain which can be found in just about any mall in the United States. Well, maybe not for much longer. The company still plans to remain in business, it’s just going to be shuttering anywhere from 375 to 450 of its stores. But rest assured, if you’re a frequent patron of the chain, there will still be well over 800 stores left from which to do your kids’ clothes shopping. If you are at all shocked about the store closures and bankruptcy filing, then clearly you aren’t one of the many creditors Gymboree refused to pay in the last few months. With increasing online competition and a major slowdown in mall traffic, it’s no wonder Gymboree just couldn’t make bank. The company is staring down the wrong end of $1.4 billion worth of debt and hopes to nail down a plan to help it shed about $1 billion of it.  The kicker, though, is that the company is still profitable, a bonus that a lot of analysts think will help propel Gymboree towards a bright, shinier fiscally nourishing future.

Grab your cart…

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Image courtesy of KROMKRATHOG/FreeDigitalPhotos.net

Grocery chain Aldi has got some lofty goals. And if you’re thinking you’ve never heard of the chain, then just wait. The company just announced a $3.4 billion plan to make sure you do. Aldi has set its grocer sights on becoming the third largest grocery chain behind Kroger and Walmart. The grocery store chain currently boasts 1,600 locations from which to purchase your groceries, but by 2022, it expects to have 2,200 stores gracing the country.  Some 1,300 of its pre-existing stores are also being treated to a $1.6 billion remodel. And who doesn’t love a little remodel? However, the biggest thrill of all is that Aldi is going to attempt to price its merchandise over 20% lower than its rivals while adding 25,000 jobs in the process. If that doesn’t sound appetizing, the I don’t know what does.

Grocery Disrupt: Amazon’s Latest Venture Good Become a Store Near You; Tyson’s New Add-Venture; Trump’s Taxing Tariff Tweets

Move over, humans…

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Just when you to start to wonder what else Amazon could possibly do to disrupt and reinvent the retail shopping experience, along comes Amazon Go, an actual brick-and-mortar-store brought to you by the e-commerce giant. Talk about irony. The concept, which is still being tested by Amazon employees, allows shoppers to literally grab food and walk out. No lines. No cashiers. Customers just take their cellphones and tap them on a turnstile to get logged into the store’s network, which in turn connects to the Amazon Prime app, already conveniently installed on their phones. Customers pick items off the shelf and put them into their cart while, with the aid of sensors and artificial intelligence, the same items are also placed in virtual shopping cart. If a shopper decides that they don’t want an item, they simply place it back on the shelf and the item also disappears from the virtual cart. Like magic. Should you crave something a bit more immediate, the store also offers up fresh food, prepared on site. Once customers are done, they simply walk out while the app does all the work, which basically involves adding everything up and then charging respective Amazon accounts. The company has been on the hunt to gain a big presence in the food retail industry, an industry which still fiscally eludes it, and also happens to be one of the biggest retail industries. Ever.  Its fresh food delivery is nice and all, but Amazon’s set its sights on competing with the big grocery players like Wal-Mart, Krogers and Target. The food retailer index took a 1% dive on Amazon’s news while shares of Amazon went up. But established grocers can breathe a very brief sigh of relief easy as Amazon still has a few months before it opens up the store to the public. And humans, fear not. One tech investor said that people are still a very big, necessary component of the retail experience and to scrap the notion that jobs will be lost to machines. Phew.

Speaking of food…

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What to do when you’re a $20 billion company whose prime business is chicken, beef and pork, and you keep losing money to the alternative-meat and fresh-food industry? Why, you set up a venture capital firm, of course. And that’s just what Tyson Foods did in an attempt to compete with a burgeoning industry that is literally eating into its business model. Apparently, plant-based protein and food sustainability is where it’s at these days and if you can’t beat ’em then join ’em by investing in their start-ups. Hence we have Tyson New Ventures LLC, a $150 million venture capital firm that Tyson launched to tap into a market that favors more plant-based and fresh food. The venture capital firm will look to companies that are working on making food-related “breakthroughs” and new innovative technology and business models that relate to food. Tyson already announced its first investment a few months ago, when it bought a 5% stake in Beyond Meats, a company that makes meat-like products. Tyson has got nothing to lose either, considering its last earnings report was nothing short of dismal, and the news that its long-time CEO Donnie Smith was stepping down did nothing to instill confidence in investors. Tyson isn’t the only firm to try out this venture capital idea. Other companies like Campbells Soup, Coca Cola, General Mills and Kellogg’s have all established similar firms with pretty much the same objective: to continue to be a prominent player in a shifting market and industry landscape.  So far this year venture firms have already thrown $420 million into various food and agricultural companies. In 2015 that number approached $650 million.

A day without Trump?

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Over the weekend, President-elect Donald Trump mentioned, in a series of tweets of course, that he wants to get back at U.S. companies who dare shift jobs and production overseas. His preferred revenge tactic would be in the form of a 35% tariff and, strangely enough, his fellow Republicans don’t seem to be on board. The top House Republican, House Majority Leader Kevin McCarthy, does not support Trump’s tariff idea and thinks that the best, most effective way to create and keep jobs in the U.S. is via major tax reform. There seem to be a whole bunch of issues at play with Trump’s (overly) ambitious tax-revenge plans, including the fact that such a move goes against the whole spirit of free trade and has the potential to spark trade wars. And nobody likes wars, whether they involve armed conflict or goods and services. Tax specialists and other assorted experts have also said that it’s fairly debatable as to whether or not Trump’s tactics are even legal.  Republicans are, however, partial to over-hauling the corporate tax code in an effort to keep U.S. companies from fleeing to more tax-hospitable countries. They’d like to cut that pesky corporate tax rate to 20% or less which would allow the U.S. to be more competitive globally. House Republicans are also in favor of imposing corporate taxes to all imported goods and services and scrapping them for exports. But leave it to the critics to argue that changes like that might be seen as violations of the World Trade Organization.  In any case,  it remains to be seen how exactly Trump will get his way, if he does. That’s because tariffs aren’t typically applied to specific companies but rather entire classes of goods. Besides, the president doesn’t get to make those kinds of decisions anyway. That’s for Congress to decide and Congress doesn’t seem, shall we say, receptive, to Trump’s tariff talk.

Tesla Doing the Electric Slide – Downward, Whole Foods Not Looking Too Wholesome and Woe Is the Housing Sector!

Electric power struggle…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

It might be a Consumer Reports top pick, but for Tesla Wall Street had a very different reaction. While the luxury electric car company did beat the analysts’ expectations, it also reported a loss of almost $50 million this quarter. Not exactly electrifying news for the company which at this time last year boasted its first profit. As a result, the stock was more fizzle than sizzle. Productions delays of the their Model X car didn’t exactly leave the Street brimming with enthusiasm over the company either. But CEO Elon Musk is not crying himself into a corner as he’s got great big plans for Tesla including building a massive battery factory – or what they’re calling a “gigafactory” – with Panasonic. Musk is also taking the wonders of Tesla abroad with China already having received deliveries of the Model S. Now if he could just figure out a way around those pesky car salesmen in New Jersey…

A whole lotta of food competition…

Image courtesy of KROMKRATHOG/FreeDigitalPhotos.net

Image courtesy of KROMKRATHOG/FreeDigitalPhotos.net

Whole Foods (WFM) is looking a little wholesome these days as the stock lost almost 17% of its value. It missed analysts’ predictions through no fault of their own. Sort of. After all, who can really compete with the likes of Krogers (KR) and perennial powerhouse retailer, Wal-Mart (WMT), both of whom are offering up organic fare for considerably cheaper prices. So rather than attempt a futile price war with these grocery behemoths, Whole Foods is going to try improving the customer experience instead. What that means for you is that Whole Foods will institute new  – and faster – payment and check out procedures. If they really want improve the customer experience, they might want to provide some babysitting so that parents can roam the stores freely without opening up half the grocery packages before they even get to checkout. That’s just my humble opinion. Currently they have 373 stores in the US, Canada and UK. Yeah, I didn’t know about the UK either.

Housing is a bummer…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Just when you were getting excited for spring and all the new fiscal excitement it brings, Janet Yellen goes ahead and kills that buzz by reporting that the housing sector…well…it’s just not really not doing its part to assist with the economic recovery. The amount of filings for building permits fell and those are pretty decent barometers of how the housing sector is doing. As for existing home sales, they seemed to have flat-lined. Those not-so-minor details combined with the fact that the rate of recovery took a veritable stall is leaving the Fed less than enchanted with prospects for a stepped up recovery. The Fed Chairwoman also wouldn’t divulge when low short term interest rates would go back up. If you’re in the market for a cheap mortgage or other type of loan, you better hope they stay low. But Janet Yellen is still holding out for a higher rate of recovery and even expects unemployment numbers to go down, albeit slower tha we would like. Currently, the unemployment rate is holding at a very unflattering 6.3%. Pre-recession that rate was between 4% and 5%.