Not in the Moody’s: China Gets a Downgrade; Tiffany & Co. Fails to Shine; Can’t Contain The Container Store’s Earnings

Awkward…

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Look like Moody’s wont be getting a warm reception from China in the near – and probably far – future. It took thirty years, but the investor service downgraded China’s sovereign credit rating. Moody’s is more than a bit skeptical that the country can get its debt issues under control while at the same time trying to maintain economic growth. Hence, it bumped China’s rating down a smidgen from a respectable A1 to a not-as-respectable Aa3.  On the bright side – though I highly doubt China sees it that way – Moody’s did upgrade its outlook for the country from negative to stable. That’s gotta count for something, right? Well, maybe not to the Chinese. In any case, even though China has enjoyed pretty fast growth rates that easily surpassed 6%, it is apparently due in large part to its mounting pile of debt, and Moody’s said that it expects that rate to soon come down closer to 5%. As for China, the Finance Ministry is, shall we say, unhappy about this downgrade and called the move “inappropriate”  and “absolutely groundless.” Oh well. So much for diplomacy.

Not so Gaga for Tiffany…

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All is not bling-y for Tiffany & Co. as the luxury jeweler took a nasty 4% hit on its comparable sales, even during the fiscal quarter that brings us Valentine’s Day. Of course, with that ugly bit of news came an even uglier hit to its stock, taking it down around 10%. Like with so many other brands, the company just can’t seem to get a hold on that finicky demographic we call millennials.  And that’s even after the luxury brand made Lady Gaga its poster gal while poaching Coach’s Creative Director, Reed Krackoff to add a little millennial-desirability to the the label.  Naturally, some blame also went to that pesky strong dollar of ours which seemed to put a crimp on tourist spending.  Net sales were up close to $900 million. Too bad expectations were for $914 million On the bright side, Tiffany & Co. added 74 cents to its shares, beating analyst estimates by four cents. Last year at this time, the company hauled in over $891 million in revenue with 69 cents added per share.

Can’t contain myself…

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Shares of The Container Store Group surged 37% after announcing it not only beat expectations, but it also has a restructuring plan in the works. If any company knows a thing or two about restructuring and organization, it’s gotta be The Container Store, right? At least when I walk into one of their stores, I always find myself feeling grossly inadequate and disorganized. In any case, the company took in sales of $221 million, easily blowing expectations of $213 million out of the water. The company also took in 17 cents per share which was 140% higher than last year at this time. Yes, you read that correctly. 140%. Analysts expected 11 cents per share. But mind you, the company’s stock had been down around 50% since it hit a one year-high back in December.  As for the restructuring plan, sadly, there will be layoffs. It’s an unfortunate result of trying to combat all the e-commerce competition that has dogged The Container Store and countless other businesses.

Yahoo’s Got Major Un-security Issues; Big Pharma Slapped With Big Lawsuit; Super Bowl “Ads” Up to Big Bucks

Some heads are gonna roll…

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Today’s massive data breach is brought to us by Yahoo. Again. It’s estimated that a billion users had their personal data breached back in 2013, which is nearly twice as big as the last data breach Yahoo reported just a few months ago that happened in 2014. Now Yahoo has the dubious distinction of being the target of arguably the largest data breach. Ever. Incidentally, it wasn’t even Yahoo that discovered the breach but rather law enforcement officials. Law enforcement handed over files to the internet company that they received from a third party who said the info was stolen. Way to stay on top of things, Yahoo! Virginia Senator Mark Warner is now on a mission to investigate why Yahoo can’t seem to get its cyber-defense act together, while Yahoo is on its own mission to investigate who was responsible for the breach.  The Senator went to the SEC  back in September to ask them to investigate if Yahoo did what it was required to do by informing the public about the breach that occurred in 2014.  Warner would have preferred that Yahoo informed the public about the breach when it first happened – and NOT three years later. Sounds fair. In the meantime, there’s talk about whether Verizon still plans to acquire Yahoo’s core internet business for $4.83 billion. With Yahoo’s stock experiencing its biggest intraday drop in almost a year, that deal might go buh-bye as Verizon reviews “the impact of this new development.”  Or Verizon will just offer Yahoo a lower price to acquire it. Because, apparently it still makes strategic sense to purchase Yahoo even with two massive data breaches under its belt.

Suited up…

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Twenty states are going after big pharma via a massive lawsuit that probably wont be going away anytime soon. Mylan NV,Teva Pharmaceuticals and four other companies that manufacture generic medicines are now staring at the wrong end of a very big lawsuit. This lawsuit, by the way, is completely separate from the investigations being led by the Justice Department and other agencies. The companies are being sued for conspiring to fix drug pricing on two generic drugs: an antibiotic called doxycycline and a drug used to treat diabetes called glyburide. The suit charges that brass at the pharmaceutical companies jacked up the drug prices by setting them and also allocated markets, which they all knew was illegal. They made sure any incriminating correspondence was deleted or simply avoided written communication. When asked for a comment, one of the companies named in the suit, Heritage Pharmaceuticals Inc., conveniently blamed former executives who had since been fired.  Jeffrey Glazer, former CEO of Heritage Pharmaceuticals is actually expected to plead guilty next month. Mylan predictably denied the charges while Teva said it’s still reviewing the complaint. The others remained mum.

Ad-citing news…

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The Super Bowl is still a couple of months away but the advertisers are gearing up for their multi-million dollar thirty second spots come February 5. Rumor has it Fox is charging between $5 million – $5.5 million. GoDaddy, which skipped last year’s Super Bowl ad festivities, is coming back this year, along with Snickers, Skittles and – get this – Avocados from Mexico. Can’t wait to see how Donald Trump tweets about that one.  GoDaddy skipped last year’s festivities, apparently to focus on breaking into more international markets. That mission has presumably been accomplished as the domain services company is now available in 56 markets. Of course, it wouldn’t be the Super Bowl without beer ads and Anheuser Busch has got a whole bunch of spots lined up touting its refreshing assortment. In the meantime, regular advertisers, PepsiCo and FritoLay are sitting out this year. It’ll be the first time in ten years that viewers will not see a Doritos ad during the big game. But don’t get too choked up about Pepsico’s absence. The company will still figure prominently since its Pepsi Zero Sugar is the official sponsor of the half-time show starring Lady Gaga.