Lumber Liquidated CEO; Best Buy’s Earnings Electrifying; Home Sweet Lack of Homes

Gee I wonder why…

Image courtesy of iosphere/FreeDigitalPhotos.net

Image courtesy of iosphere/FreeDigitalPhotos.net

If you find yourself up for a challenging career change, look no further than embattled Lumber Liquidators, who now has a job opening…for a new CEO. After months of scrutiny and criticism following a scathing “60 Minutes” report about its dangerously high-levels of formaldehyde-laced flooring, Lumber Liquidators CEO Robert Lynch threw in his corporate towel. He officially resigned from the company and stepped down from the board of directors. Shares of the company took a 16% hit before the market even opened following the news of Lynch’s resignation, adding to the slide that Lumber Liquidators has been taking for months now. In fact, its stock is down more than 60% for the year. However, in Lumber Liquidator’s defense, 97% of its products found in its flooring already installed in customers’ homes was found to be within protective guidelines. As for that other 3%…well, I suppose that explains why the company is under federal investigation.

Best ever?

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Best Buy managed to score some impressive earnings with a big fiscal shout out to big-screen tv’s and “iconic” smart-phones. In case it wasn’t obvious, CEO Hubert Joly deems the iPhone 6 and Galaxy S6 “iconic.” Other money-makers for the company were home appliances, which makes perfect sense since the housing market is easing up  (sort of, see below) making it easier for people to actually afford their homes, which they then need to fill with super convenient items like ovens and refrigerators. Just try living without them. Shares of the stock gleefully went up 7% before the market opened as the company announced it pulled in a profit of $129 million with 36 cents per share added, even though Wall Street only expected the electronics giant to post a 29 cent per share gain. A year ago the company pulled in a $461 million with $1.31 per share added, except that was all because of a tax change, so the year-over-year comparison is almost a moot point. The company saw revenues of $8.56 billion which was actually a slight drop from last year. But again, no one is too concerned because a.) analysts predicted revenues of only $8.46 billion b.) Best Buy is saying au revoir to 66 stores in Canada (yes, just like Target) so a loss of revenue was expected.  Oh, Canada. c.) the strong dollar has been messing with very company’s earnings and why should Best Buy be any different.

Is it? Or isn’t it?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Once again, leave it to the housing market to toy with our fiscal emotions.  April proved to be nothing short of a bummer as sales of existing homes dropped, according to the National Association of Realtors. The culprit, it seems, is the fact that there are not as many listing, and the prices for homes are higher. Supply and demand, I tell you. Arghh!!! Just a little over 5 million homes were sold in April representing a 3% drop. And nobody likes a drop. Part of the problem is that people aren’t listing their homes. Maybe they just like the ones in which they are currently living. Maybe they don’t see listings that they like. In any case, the median price for a home these days is hovering around $219,000, almost 9% more than a year ago.  Of course building more homes is a logical way to fix this housing inventory issue.  And builders are doing just that, as evidenced by the rise in new building applications recently reported. But the problem is that building a new home can take about a year and who wants to wait that long to see some housing recovery?

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Nothing to Chirp About at Twitter; Lumber Liquidators Earnings Nearly Hit the Floor; Ben Bernanke’s Impressive Resume

Chirp…

Image courtesy of Mr-Vector7/FreeDigitalPhotos.net

Image courtesy of Mr-Vector7/FreeDigitalPhotos.net

What’s worse? Having your earnings leaked prematurely or the fact that those earnings were so bad? Hmmm. This one’s a toss up. Either way, Twitter’s bummed on all ends. Earnings reports are released only after the closing bell or right before the opening bell giving traders/investors/wannabes a chance to study the numbers and figure out how to proceed. Twitter’s “inadvertently” pre-maturely released earnings, which occurred on its very own platform, sent the stock south 20% and even caused trading of the stock to be suspended for a period. But that was only Twitter’s second worst day ever.  As for the horrible numbers, sales are actually up 74% over the previous year but the problem – and it’s a big one – is that Twitter’s growth rate is not up. User growth grew 18% to 302 million active users. But last month it grew 20%. Those figures are only supposed to go up. Never down. And herein lies one of social media company’s many many problems. Another is that CEO Dick Costolo’s credibility has come under fire and here’s why: It seems he didn’t see the writing on the wall, namely that all signs were pointing to a major slowdown.

Floor-ed…

Image courtesy of Serge Bertasius Photography/FreeDigitalPotos.net

Image courtesy of Serge Bertasius Photography/FreeDigitalPotos.net

Things at Lumber Liquidators keep getting worse as the company reported its first quarter earnings and to the surprise of no one, the company took a loss of $7.9 million and 29 cents per share on $260 million in revenue. I have to wonder if analysts didn’t hear about the scathing “60 Minutes” report that accused the company of selling formaldehyde-laced flooring because they expected the company to at least gain 15 cents a share. To give you an idea of just how bad those earnings really are, last year at this time the company took in a profit of $13.7 million and 49 cents a share. In case you were wondering how the company even made any money this quarter, most of it comes from January and February, before the damning piece even ran on March 1. Much of those losses are because of all those legal and professional fees the company has been shelling out to defend itself. But it’s safe to assume that people also are probably not buying from a company that would allow toxins to make their way into the company’s products. And the trouble just keeps coming. Lumber Liquidators says it is aware of the over 100 pending class action lawsuits against it. Even the Department of Justice has entered the fray seeking criminal charges against the company under the Lacey Act. Oh and one more thing, its CFO, Daniel Terrell, needs to brush up his resume as he’s leaving the company.

Ben…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Ben Bernanke’s LinkedIn profile seems to be filling up nicely. First he took a position as a distinguished fellow in residence at the Brookings Institution. Then he picked up a consulting gig at hedge fund, Citadel. Now, the former Federal Reserve Chairman has some new West Coast digs, thanks to PIMCO, who just announced that Mr. Bernanke would be joining its ranks as a senior adviser. PIMCO could definitely use Mr. Bernanke’s guidance right about now as investors have pulled about $100 billion from the fund following the departures of Co-Chief-Investment Officers, Bill Gross and Mohamed El-Erians last year. The former fed chairman will still have plenty of cash to play with as PIMCO handles about $1.59 trillion and runs the world’s biggest mutual fund. He’ll even get to “engage” with clients, which should help win back some of that $100 billion and assuage the fears of those finicky investors.

Kraft Ketch-es Up; Amazon Wants FAA to Start Droning Around; Lumber Liquidators’ Slight Rebound

Ketchin’ Up…

Image courtesy of Mister GC/FreeDigitalPhotos.net

Image courtesy of Mister GC/FreeDigitalPhotos.net

HJ Heinz, as in, ketchup is teaming up with Kraft foods, as in Mac & Cheese and Philadelphia Cream Cheese, to become the world’s fifth largest food and beverage company. And just who is behind this master plan for food domination? None other than everybody’s favorite (and only) Oracle of Omaha, Warren Buffet – well, Berkshire Hathaway really, and Brazilian Venture Capital firm 3G. The two entities are throwing $10 billion at the deal, which seems like a relative bargain since the merger is expected to generate $28 billion in annual revenue.  Of course, federal regulators still need to give their seal of approval, along with Kraft shareholders. But considering that the stock went up a whopping 32% on the news I’m guessing they won’t mind. Plus, if you are one of the lucky shareholders, then look out for a cash dividend of $16.50 per share, not to mention a 49% stake in the new venture.

 Droning on and on…

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Amazon is taking on the FAA, telling them they lack the “impetus” to develop drone policies in a timely manner – said in the nicest possible way, of course. The e-commerce giant wants the agency to move quicker on issuing permits for drone testing. Like a lot quicker. Like before the model drones Amazon plans to use for its Prime Air Delivery Service become obsolete. Oops. Too late. Even Senator Cory Booker agreed with Amazon saying that if the FAA had been around during the time of the Wright Brothers, then commercial flying would have literally never taken flight. Then there are all those restrictions associated with the testing. For instance, drones can’t fly higher than 400 feet, and in some cases 200 feet, and the drones must also always be in view of the pilot. Where’s the fun in that? Amazon, and several other companies are wondering why it takes so long for the U.S., on average, six months longer to issue these permits when in other countries it takes about 1-2 months?  The drone industry is also irritated by it all seeing as how drone delivery is apparently way more economical, faster and cheaper with the added bonus of less traffic and pollution? Who doesn’t like that? But to be fair, the FAA has some not-so-minor concerns about the potential for drones to collide with commercial carriers carrying passengers. Not to mention the potential loss of link between a drone pilot and the drone.

Lumbering on…

Image courtesy of  Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Lumber Liquidators stock went up today by 8%, which actually came as somewhat of a surprise since the stock is down 59% for the year after a scathing “60 Minutes” report that found high levels of formaldehyde in its laminate flooring from China. The reason for its little upswing is presumably because the U.S. Consumer Product Safety Commission has entered the fray by launching a federal investigation into the claims, also involving the EPA, CDC and Federal Trade Commission. Lumber Liquidators is said to be fully cooperating in the investigation. No kidding. But don’t bother holding your breath for results – they won’t be in for several months. Lumber Liquidators, by the way, says “60 Minutes” used a test that is considered unreliable, by Lumber Liquidators standards anyways. The company, which has 350 locations throughout the United States, has graciously offered to come test the flooring in your home. If high levels of formaldehyde are found to be present, then rest assured…Lumber Liquidators will do more testing. If those tests keep coming back positive then yeah, they’ll finally agree to replace the questionable, carcinogenic flooring.

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.

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?