Macy’s Mixed Up Day; Uber Pumped for Some IPO Magic; Madoff Victims Rejoice. Well, Maybe Not.

It could have been worse…

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

There’s good news. And there’s bad news. Well, for Macy’s anyway. So let’s start with the bad because, why not. The department store chain just released its third-quarter earnings and very unhappily reported that comparable same-store sales fell 3.6%. That’s not even the bad part. What’s worse is that analysts expected those sales to fall, but only by 2.6%. This latest quarter marks Macy’s 12th consecutive quarter of straight declines and these dismal results come smack in the middle of Macy’s turnaround plan called “North Star.” To be fair, however, it was expected that this turnaround plan wasn’t going to change numbers overnight. As for the good news, Macy’s profit rate went up, helped by cost-cutting measures and store closures. That helped the retailer take in $36 million, almost double what it took in last year at this time. Online sales also went up by so much, that it almost took the sting out of the fall in comparable sales. Almost. So naturally, shares went up today, as well. A smidge. But those shares were at the highest point they had been in nine months. Too bad, though, they are still down more than 50% in the last twelve months.

IPWhoa!

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Uber is almost ready to make its big Wall Street debut.  Almost. The company’s new CEO, Dara Khosrowshahi, wants to make that happen by 2019. With a $70 billion valuation, Uber is the most highly-valued private company in the world. According to Khosrowshahi, “We have all of the disadvantages of being a public company, as far as the spotlight on us, without any of the advantages of being a public company.” Even Travis Kalanick, the ousted CEO but current board member, agrees. As for Kalanick, he’s not really gone and you can bet he won’t be forgotten. Not if he can help it anyway. IPO’s weren’t the only thing Khosrowshahi’s been discussing lately. Earlier this week, the CEO unveiled his own “cultural norms” for the company, and one of them goes a little something like this: “We do the right thing. Period.” A far cry from the climate under Kalanick that had a former employee write a scathing blog post detailing allegations of sexual harassment.  Which brings us to the much-discussed Soft Bank deal, where Uber is poised to give a very hefty 20% stake to the Japanese bank. For the right price, of course. Khosrowshahi insists the deal is really, truly going to happen. For real. It. Will. Happen. The primary issue being the price, because isn’t it always?

It’s about time…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Thousands of victims of Ponzi Schemer Bernie Madoff are set to receive over $770 million in compesation for the money they lost. The $770 million is part of a $4 billion fund set up to compensate victims. And sure, that’s good news. Except for the fact that it took nine years to happen and much of those funds will only cover about 25% of the losses.  But guess what? It still counts as “the largest restoration of forfeited property in history.” Close to 25,000 checks will be mailed to victims, ranging from institutions to individuals in 49 states and 119 countries.  If you recall, Bernie Madoff was accused and found guilty of perpetrating a $65 billion Ponzi scheme. These days, the schemer of the century is chillaxin’ in Club Fed for the next 150 years.

Fall-Mart; Twitter Fires, Twitter Hires; Feeling Spent

Execu-llent…

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

Even though Twitter announced yesterday that it is shedding 8% of its workforce, today the social media company announced that its adding someone new to that very same workforce. Enter Omid Kordestani who is jumping the Google ship in order to bring his fiscal talents over to embattled Twitter.  Omid will assume Jack Dorsey’s old title of executive chairman, which he dropped last week when he, once again, assumed the title of CEO. Omid Kordestani comes to Twitter from not-at-all embattled Google Inc. where he not only left the post of Chief Business Officer, but also $115 million in equity awards. That’s according to a regulatory finding, anyway. Omid, who was apparently employee number 11 at Google, and affectionately called Google’s “business founder” by Larry Page, left the company in 2009, but returned in 2014, only to head on off into the Twitter sunset.  Even though Omid Kordestani started his Twitter account back in 2012, his most recent tweet about his new post, was only his eleventh time using the platform. His lack of tweeting is, presumably, about to change.

Not “fine” by me…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Wal-Mart might be the mother-of-all retailers but, as they say, the bigger they are, the harder they fall, especially on Wall Street. And unfortunately, a big company like Wal-Mart has a nasty little way of taking the Dow Jones Industrial Average with it.  This particular fall was, unfortunately, rather epic. Wal-Mart took a $20 billion hit because it’s predicting a very disappointing forecast. The world’s largest retailer doesn’t expect to experience growth for fiscal 2016 (which ends in February, btw). Investors loathe bad forecasts. Well, who doesn’t? This bad forecast gave way to Wal-Mart’s biggest stock drop in 15 years and shaved 9% off the value of its shares. Of course, the strong dollar gets part of the blame as it’s hurting sales abroad. But then there’s the investment the company is putting into its e-commerce. Wal-Mart is looking to plunk down $900 million next year, and over a billion dollars the following year to beef its tech efforts. All that cash is going to gouge those much relished profits. Also eating into those profits are wage increases that the company is giving out to thousands of employees. But what really got Wall Street in a fit was when Wal-Mart CEO Doug McMillion told CNBC interviewers that Wal-Mart will do “fine” during the holiday season. And that one word means anything but to investors.

Save it for later, will ya?

Image courtesy of  FrameAngel/FreeDigitalPhotos.net

Image courtesy of FrameAngel/FreeDigitalPhotos.net

Retailers aren’t exactly giddy these days as more Americans decided to save up all that money from low gas costs instead of spending it. As a result, retail spending only experienced a .1% gain in September even though analysts predicted gains from .2% to .6%. Since consumer spending accounts for 70% of the economy, that .1% gain is nothing but brutal fiscal news. In fact, seven out of thirteen retail categories experienced declines. Ironically enough, gas stations took a 3.2% hit because…can you guess? Lower prices at the pump. Hence, they couldn’t pull in all that cash like they did in the past. What isn’t ironic, just annoying and mildly disconcerting, is that this .1% was the biggest drop since January and represented no change from August. So get out there and spend!

Doggy Doo Quarter at JPMorgan Chase; No December Retail Magic; Carnitas Crisis at Chipotle

Dog poo days…

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Image courtesy of imagerymajestic/FreeDigitalPhotos.net

Jamie Dimon, CEO of JPMorgan Chase, the biggest bank by assets, is not having a very good day, it seems. Mr. Dimon said the bank will “try to avoid stepping in dogs**t.” A highly technical term coming from the mouth of one Wall Street’s most powerful (and presumably, potty-mouthed) bankers. I guess when you have had better fiscal quarters, “stepping in dogs***” seems an adequate description. Sure the bank pulled in $1.19 per share. So yeah, it made money. There are a ton of companies who would be thrilled to pull in earnings like that. But the bank missed expectations. When you’re JPMorgan Chase and analysts expect you to pull in $1.31, well then, missing analyst expectations is more than a bit of a drag. It also suggests that its competitors will fare similarly. JPMorgan Chase took  a 6.6% hit in its quarterly profit. A $1 billion plus legal bill, courtesy of Uncle Sam’s litany of investigations, is certainly partly responsible for putting a crimp in those earnings.  “Banks are under assault,” says Mr. Dimon when asked about all those legal fees. And I’m sure you’re hurting for him. But let’s face it, that $1 billion is nothing compared to that $13 billion settlement JPMorgan Chase ponied up back in 2013 over its less than desirable role in the sub-prime mortgage crisis.

Not so merry after all…

Image courtesy of ratch0013/FreeDigitalPhotos.net

Image courtesy of ratch0013/FreeDigitalPhotos.net

The most wonderful time of the year was not the most wonderful, fiscally speaking. Far from it, in fact. The Commerce Department and the National Retail Federation regaled us with the lousy news that December showered us with bad tidings of a .9% drop in retail from the previous month. Sales hit $616 billion, which seems awfully jolly. It was even a 4% increase over the same period last year. But again, I reiterate – a .9% drop, month to month. Is it too late to say bah humbog? I think not. Interestingly enough, some of that drop in consumer spending was actually because not as much money was being spent on gas. Dropping oil prices made holiday driving a bit more fiscally festive, just not lucrative. Fun fact: About 10% of retail sales comes from gas purchases. But those steep discounts from retailers, as they desperately attempted to lure shoppers, actually proved to be a major downer for those retail numbers. Hence, there is no good fiscal cheer to be had. But we’re not supposed to get too worked up over this drop since it marks the first time since 2011 that holiday sales even increased by more than 4%. So carry on then.

Big problemo…

Image courtesy of KEKO64/FreeDigitalPhotos.net

Image courtesy of KEKO64/FreeDigitalPhotos.net

Chipotle has put the kibosh on its barbecued pork offerings at about 600 of its eateries after it was found that one of its major pork suppliers was not acting with integrity i.e. not complying with animal welfare standards. So uncool on so many levels.  Chipotle’s policy of serving “food with integrity” should do much to strengthen the beautiful bond between diners who appreciate the sentiment  and the restaurants that seek to uphold it . But alas, it’s not known if and how badly this carnitas crisis will affect Chipotle’s quarterly sales and profits.