Put up your dukes…
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And the gloves are off between the Department of Justice and Aetna. Aetna announced it would be reducing its role in the Obamacare exchange, stopping to sell individual insurance, and the Justice Department was apparently warned about such actions last month. You see, because ACA has been costing insurance companies so much money, Aetna wanted to scoop up rival Humana to help absorb costs. But the Justice Department was against the merger over concerns that it would increase prices for consumers and limit competition – your typical antitrust concerns. In a letter to the Justice Department dated July 5, Aetna CEO Mark Bertolini made it abundantly clear that Aetna would drop out of the Obamacare exchange if the merger did not go his way. It didn’t. And so here we are. Aetna crticics have cried extortion and threats. Aetna , however, calls it a strategic business decision after eating a $200 million loss in its second quarter. Insurers feel that mergers alleviate the enormous costs brought on by Obamacare. They argue that Obamacare has put a major dent in their economics and the government is not holding up its end of the bargain to help mitigate the situation.
Buyer’s remorse…
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Target has missed its target in what the company called a “difficult retail environment.” Well, for Target anyway. The sixth largest retailer cut its full-year fiscal profit after quarterly sales fell more than expected. One of the culprits was a smaller demand for its tech offerings, specifically Apple products. Of course, it’s to be expected that the company is constantly losing ground to Amazon. After all, who isn’t? The company has also been making a push to redo its grocery division by bringing in more organics, gourmet and healthful offerings. That endeavor hasn’t quite hits its stride. And that’s a problem since Target’s grocery division accounts for a fifth of the company’s revenue. Target did turn up a profit of $680 million. Too bad it was a 10% decrease over the same time last year. Sales were down 7.2% to $16.2 billion which was almost on par with estimates. CEO Brian Cornell griped that customer visits went down and now expects a profit range of $4.80 – $5.20, when before it was between $5.20 – $5.40. It seems his turnaround plan is taking a bit longer to actually um,…turn. In other Target developments, to address its transgender-bathroom policy, the retailer is plunking down $20 million to install single stall bathrooms to its remaining stores that don’t already have them.
Buh-bye…
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Shelve this one under history as Barnes and Noble booted its CEO Ronald D. Boire. The bookseller felt the exec, who had the job for not quite a year, was “not a good fit.” However, to be fair, he did previously fit in at Brookstone, Best Buy, Sony and Sears Canada. Executive chairman Leonard Riggio will take over until a more permanent replacement can be found and Riggio can finally begin his much-anticipated retirement. The board said of Boire’s untimely departure that the decision was in “best interest of all parties for him to leave the company.” Ouch. In B&N’s most recent quarter – under Boire – the company took in $876.6 million. Impressive, right? Wrong. B&N took in $910 million the year before. It also lost $30.6 million, far more than the $19.6 million it lost during the same time last year. As efforts to trim costs and turn the company around have yet to yield any meaningful results, shares of the company have also managed to tank to its lowest price in eight months. While B&N has 640 stores dotting the planet, it is still losing ground to that animal we call Amazon. And once again, who isn’t?
Pujonomics. 