Hasbro’s Singing the Toys “R” Us Blues; It’s Good to Be Amazon; Target Goes on Holiday Offense With New Shopping Strategies

Don’t toy with me…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Hasbro’s getting burned and it’s blaming Toys “R” Us. The toy company gave some abysmal holiday forecasts which sent shares down about 8%. Toys “R” Us owes creditors some $5 billion.  Among them is Hasbro which was left with a $60 million hole now that all those toys from the company aren’t headed to the toy store’s shelves.  It’s worth noting, however, that Hasbro only sold about 9% of its total inventory through Toys “R” Us.  But it isn’t just Hasbro that’s feeling the heat. Shares of Mattel also took a 4% hit today since a Toys “R” Us bankruptcy affects the entire toy industry, in some instances worse than others.  Incidentally, Hasbro’s third quarter profit went up 3% to $267 million and $2.09 per share, while its quaterly revenue increased 7% to $1.79 billion over the same time last year. Expectations were for $1.78 billion in revenue with just $1.94 per share. Hasbro has “The Last Jedi” to thank for some of this quarter’s gains, along with perennial favorites Monoply and My Little Pony.

Carrot dangling…

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Image courtesy of KEKO64/FreeDigitalPhotos.net

Dignity be damned as 238 cities found themselves swooning and doing whatever they could to lure Amazon’s $5 billion HQ2 project to their part of the country. NYC Mayor Bill DeBlasio had major New York City landmarks lit up in “Amazon orange” while Newark, New Jersey shrewdly offered the e-commerce giant $7 billion in tax breaks. Because after all, who more so than Amazon should be entitled to receive a $7 billion tax break? But hey, who can blame any of these cities or their savvy leaders for trying to woo Amazon to their neck of the woods. Just ask Seattle, a city that experienced a $38 billion boost to its economy because each dollar that Amazon invested into the city between 2010 to 2016 resulted in an additional $1.40 for the city. Not sure who figured out that formula but its easy to see why everyone wants in on that action. And while Newark’s offer must be awfully enticing, word on the street is that the current front runners are Boston, Chicago, Atlanta and Detroit.

Target acquired…

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Target’s got some new tricks up its sleeve this holiday season and is going with the “less is more approach.” What there will be less of are promotions. At least the constant bombardment of them. Apparently that tactic didn’t work so well for the retailer last year and only resulted in a 1.3% decline for the company.  But there’s no need to freak out that Target wont be offering any special deals. It’s just going for a more streamlined approach. Instead of constant deals and promotions, it plans to offer special weekend deals while remaining focused on pricing its merchandise correctly and competitively from the start. The company’s 1,800 stores will also offer a much bigger variety of gifts priced under $15. Expect to see around 1,700 offerings in that category. Perennial favorite, “free shipping  with no minimum” will once again resurface from November 1 – December 23 because, hey,  who doesn’t like free shipping. But perhaps Target’s most exciting new feature is the one dubbed “Gift Now.” Shoppers buy gifts and their (un)lucky recipients open them virtually via email. If  the recipient likes the gift, they enter their shipping address in order to receive the item. If not, they get to pick out something else for the same value. If that’s not novel, I don’t know what is.

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Trump Tweets Out Boeing’s Air Force One; Lego’s Brick-By-Brick Expansion Plans; SeaWorld Sees Layoffs

Boeing going gone…

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Image courtesy of vectorolie/FreeDigitalPhotos.net

President-elect Donald Trump was on Twitter. Again. This time he was telling Boeing to cancel the order for the new Air Force One that’s in the works.  In his usual eloquent manner he said that the cost to build the plane “is totally out of control.”  And just what exactly does “out of control” look like when you’re building a fleet of aircraft for the Commander-In-Chief? Well, it depends on who you ask but Trump has that figure pegged at $4 billion, though it’s not entirely clear where he got it. Another report has the Air Force budgeting the new planes at about $1.6 billion. However, it’s expected that the fleet of planes will cost $102 million this fiscal year, and another $3 billion over the next five years. So maybe Trump’s got his ducks in a row on this one. His tweets went on to say: “I think Boeing is doing a little bit of a number. We want Boeing to make a lot of money, but not that much money.” He probably would prefer if Boeing weren’t making that money off taxpayers’ backs. The Pentagon wants to replace the current fleet as it will have reached its 30 year service life in 2017. It has been around since 1990, has flown over one million miles and, in all fairness, could use  more than few upgrades – whether Trump’s on board or not. Which he won’t be because the aircraft is not scheduled to be ready for another ten years or so. Naturally, shares of Boeing fell on the news of Trump’s sentiments. In the meantime, 56% of Americans think Donald Trump uses Twitter way too much. Perhaps the time has come for his cabinet members and advisers to take away his phone.

Lego to stand on…

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Image courtesy of Idea go/FreeDigitalPhotos.net

Lego CEO Jorgen Vig Knudstorp is stepping down from his position and that’s actually good news. Knudstorp is leaving his post in order to move on to greener pastures as Chairman of  the Lego Brand Group. The toy company is on a mission to restructure itself to keep up with its growth momentum. By creating the Lego Brand Group, the company plans to explore new business ventures, opportunities and ideas that will help expand the brand in new, exciting and highly profitable ways. For the first half of the year the company posted an unwelcome surprise drop in profit of $499 million though its revenue still went up. The company blamed Americans, or rather, the fact that sales in the United States were flat. But, that’s probably the same thing. In any case, as part of his new gig, Knudstorp will be overseeing the family’s 75% stake in the company which is currently run by fourth generation Lego owner Thomas Kirk Kristiansen. Chief Operations Officer Bali Padda will take over for Knudstorp, officially becoming the first non-Dane to hold the post. The privately held company is headquartered in Denmark and employs over 18,000 people. Knudstorp, who said he plans to stay at Lego for the rest of his career, joined the company back in 2001, when the company was losing about $1 million a day. Lego just couldn’t compete with an exponentially-increasing digital toy industry. But it turns out it didn’t need to when it made Knudstorp CEO in 2004. Under his leadership, he made changes, booted people, brought in new folks and saw Lego’s revenue jump fivefold. Last year the company fiscally surpassed both Mattel and Hasbro, even with all their Barbie/ My Little Pony/Hot Wheels/electronic toys, to become the number one toy company in the world. No small feat considering that unlike Mattel and Hasbro, Lego pretty much makes just one product with assorted variations: a plastic brick.

Under water?

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Image courtesy of TAW4/FreeDigitalPhotos.net

With shrinking attendance, decreasing revenue and dwindling profits, SeaWorld announced plans to say a not so warm goodbye to 320 of its employees, both salaried and hourly. It was only back in 2014 that SeaWorld said goodbye to another unlucky 300 employees. The  soon-to-be-former employees will be receiving “enhanced severance benefits” which is fancy talk for some cash and maybe health insurance to tide them over for a little while. SeaWorld has even offered to help them find work elsewhere. How moving. The entertainment company is on a mission to restructure itself in any way possible to keep it from losing any more money than it already has. Of course, cost-cutting always factors in, along with examining how best to improve and streamline the rest of the business. Back in March SeaWorld made the decision to stop breeding Orca whales and also scrapped the shows in which the whales starred. SeaWorld is also blaming Disney and Universal for their disappointing digits, unable to woo away visitors from their PETA-friendlier attractions. Also, there seemed to be a drop in Brazilian visitors, presumably because they remained in Brazil for the Olympics, one might suspect, which apparently affected SeaWorld’s earnings.  Who knew SeaWorld relies on a Brazilian contingent to patronize its parks to help churn out a buck or two?

Greek Banks Open for Business Again. Sort of.; Avengers: Age of Ultron Beats the Street; Morgan Stanley Profit Beat

Bank on it…

Image courtesy of patpitchaya/FreeDigitalPhotos.net

Image courtesy of patpitchaya/FreeDigitalPhotos.net

After one long, fiscally painful week where Greek Prime Minister Alexis Tsipras begrudgingly agreed to terms for a bailout with Greece’s creditors, the country’s banks are finally back up and running. It only took three weeks to get to this point. But at least now both the IMF and ECB can look forward to getting some of their money back and Greece gets to stay in the euro. It’s a win-win. Sort of. And while here in the states, running to the bank can be nothing short of a tedious errand, in Greece, that one act is now reason enough to celebrate. Of course with the sales taxes in Greece increasing so dramatically  – from 13% to 23% –  celebrating such an event might become prohibitively expensive. But like I said, at least Greece gets to stay in the euro. As these austerity measures take effect, Greeks will now be able to make deposits, access their safety deposit boxes and above all else, make withdrawals. Only now, they aren’t limited to daily withdrawals of $65 per day anymore. Instead, Greeks can actually withdraw a whopping max of 420 euros ($455 bucks)  a week. As for transfers abroad…those are gonna have to wait.

Dinosaurs, Avengers and Star Wars – oh my!

Image courtesy of  Dr Joseph Valks/FreeDigitalPhotos.net

Image courtesy of Dr Joseph Valks/FreeDigitalPhotos.net

It’s been a super-hero kind of a quarter for Hasbro whose earnings had a major boost from Avengers: Age of Ultron, Jurassic World and perennial classic, Star Wars. The toy company actually posted a smaller than expected decline. Yes, you read that right. But what’s really weird – in a good way – is that the toys typically favored by boys were the big winners/earners this quarter. Usually, its the female driven categories that hog the earnings glory. Only this time, that category that includes Nerf Rebelle and My Little Pony took a 22% hit in net revenue. But, the company’s revenue didn’t go down as much as analysts thought it would. And that’s why everyone seems to be so stoked about the $779 million in revenue Hasbro did bank. That’s a welcome difference from the estimated $773 million Hasbro was expected to take in. And because it’s the cool fiscal thing to do these days, the strong dollar/foreign exchange rates took some flack for the drop in the toy company’s revenue. Otherwise, profit was a cool $41 million adding 33 cents per share when Wall Street only expected a paltry 29 cents per share.

They got the beat…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Morgan Stanley’s profit fell by 8.5% over last year’s results. But no one’s too upset. I mean, don’t get me wrong. Nobody’s whipping out the champagne (that I know of) but the bank still managed to score some impressive gains in all three of its main businesses so hope isn’t exactly lost. With a little help from brokerage fees and increased trading, Morgan Stanley banked a $1.8 billion profit adding 79 cents per share – after a tax benefit. Analysts only expected the bank to earn 74 cents per share. However, not be a downer but last year at this time the company scored a profit of $1.9 billion with 92 cents per share. However,  Morgan Stanley does get bragging rights – for this quarter anyway – as it had the biggest revenue increase out of all six major U.S. banks,  pulling down a whopping $9.7 billion. Last year at this time that figure was closer to $8.6 billion.The question is, can they keep pulling that trick off?

HSBC’s Bankers Were Not Being “Franc”; No Toying With Hasbro’s Earnings; Netflix Says ¡Hola! to Cuba

Oops! Did I do that?

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

What do arms dealers and popstars have in common? They have bank accounts at HSBC. The British-based bank’s Swiss subsidiary now stands accused of the unthinkable: Helping some of its wealthy clients avoid paying taxes (cue audible gasp). So what’s HSBC’s excuse, because let’s face it, there’s always an excuse. HSBC blames it on the fact that even though the Swiss division was picked up by HSBC back in 1999, it hadn’t been fully integrated into the rest of the company and thus didn’t abide by the highest standards it could have. And by highest of standards I mean “significantly lower” standards. HSBC clients were able to walk out of the bank with “bricks” (their word) of cash – just like what you see criminals carrying in briefcases in the movies. Swiss bankers didn’t much care because those “bricks” were in foreign currency and not in francs . Also, bankers structured accounts in fiscally creative ways in order to help all these super-wealthy clients save tons of money by not paying all those irritating European taxes. See where I’m going with this? Talk about customer service.  And who must HSBC thank for all this embarrassing publicity? Enter Herve Falciani, a self-proclaimed whistle-blower and former HSBC IT employee, who graciously gathered all the juicy data and supplied it to officials, and of course, the media too – but that’s after he tried to first sell the information (a whole other blog entry). About 100,00 clients are on these lists with over $100 billion in assets swirling around. Names like Phil Collins, David Bowie, and Tina Turner turned up. John Malkovich’s name also made an appearance but he said he had no knowledge of the account and it may have been something done by Bernie Madoff who once handled some his assets.

Toy Score…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Hasbro, the second largest toymaker, just posted its fourth quarter earnings much to the delight of well…everyone. The company topped analysts’ expectations with more than a little help from the forces of Nerf and Transformer toys. No joke. Sales of those products and other selections geared toward the junior male consumer increased 21% and there’s nothing Frozen about it. Strangely enough, sales of its girl-focused toys, including My Little Pony and Nerf Rebelle, didn’t fare as well. And by “well” I mean sales slid down 10%. But the company did score a profit that was up 31% to close to $170 million adding about $1.22 to each share. Sales were also up 1.3% to $1.3 billion (nifty how those numbers matched up). However, analysts expected revenue to be $1.33 billion and Hasbro was very quick to blame that strong dollar of ours against other foreign currencies. Stupid dollar! Just kidding.  And bonus: The Hasbro board is even upping its dividend to $0.46 per share, which shareholders get to cash in on May 15 – provided they have those shares on record by May 1.

Bienvenido….

Image courtesy of Naypong/FreeDigitalPhotos.net

Image courtesy of Naypong/FreeDigitalPhotos.net

Nothing says diplomacy quite like Kevin Spacey.  Online video subscription service Netflix is seizing upon the easing of restrictions on Cuba to bring its premium entertainment to the shores of the Island Nation. Muy bien! Netflix has been in Latin America since 2011 and it already has 5 million subscribers there. While it’s still not clear just how involved the government will be in this new endeavor, with a little help from some broadband internet, international payment methods and a rate of $7.99 a month, “Orange Is the New Black” is set to make its way over to Cuba in no time – provided  subscribers are of the select 5% who have unfiltered access to the internet.

 

Botoxed-Off, Toyed-Off and Great Whites Great For Tourism

In this week’s pharmaceutical saga…

Image courtesy of patpitchaya/FreeDigitalPhotos.net

Image courtesy of patpitchaya/FreeDigitalPhotos.net

Allergan, the company behind the super-important and super glam, Botox, is making news while erasing wrinkles. How ’bout that. The company announced its plan to cut 1500 jobs – roughly 13% of its work force  – hoping it will make things more efficient and productive. In the meantime Valeant, together with Pershing Square Capital, has been trying to buy(out) Allergan for $53 billion and has been tattle-telling on Allergan to regulators -and anybody else who’ll listen, about alleged rumors and other comments it made. More like the stuff of playgrounds than boardrooms but at least it keeps things interesting. The Irvine, California-based company is trying to fend off Valeant’s offers for a (hostile) takeover which Allergan says “substantially undervalues” the company. Unfortunately for Allergan, its biggest shareholder Capital Research Management just sold off its own 6.3% stake in the company, which seems to suggest that it doesn’t feel Allergan’s value is going much higher than what Valeant is offering.

Not feeling very playful…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Hasbro, maker of some of America’s most beloved board games, like Monopoly and Twister, is finding that America is not so much loving them anymore. The company that also makes Play-Doh and Nerf toys took a hit in its earnings even though sales in its boys division pulled off a 32% surge to the tune of $335 million in sales. Despite their super-hero status, there was only so much Marvel Superheroes and Transformers could do as no force seems to be greater than Wall Street which hoped for $842 million and a profit of $.37 per share. Sadly, Hasbro was only able to reign in $829 million and a penny less in earnings per share. My Little Pony and her and perfectly coiffed equine friends also helped with a $163.8 million in sales but those board games took a 12% beating. However, this time last year, the toy company pulled in over $766 million, so at least it wasn’t a total bust.

Great Escapes…

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

Instead of filling would be beach goers with fear, Great White Sharks have been causing a tourist spending frenzy. The carnivorous ocean denizens are creating quite a stir in the retail arena with sales of shark paraphanerlia surging. Sure, the sighting of a fin might evoke fear and panic, but don’t rule out the need for shark hoodies, shark-themed candies and the ever cuddly great-white shark plush toy. Since 1916, there have been over a hundred unprovoked attacks – thirteen of them deadly. From Cape Cod down to the Florida coast and beyond, you can count on one thing – Sharks are good for the economy.