Tesla Takes On Ford; J. Crew Says Bye to Own Icon; Burberry Wants to Go Big

Race to the finish…

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Image courtesy of Danilo Rizzuti/FreeDigitalPhotos.net

Tesla’s market cap just left Ford Motor Co. in the eco-friendly dust today. It’s all because of a much anticipated, yet massive Model 3 rollout scheduled for later this year. Assuming everything goes smoothly with that massive rollout – and why wouldn’t it? – Tesla has pinned some very pricey hopes and dreams in the form of growth targets. Those growth targets sent the company’s stock up 5.7% and why shouldn’t they? After all, the luxury electric car company smacked down analysts estimates when it reported a shipment of 25,000 vehicles for its first quarter. In case you were wondering – because I know you were – that was almost a 70% increase from last year at this time. To be fair, however, the increase is not as impressive at second glance considering that Tesla experienced some production pains beginning in October. So the company was basically making up for the pains. In the meantime, as the second largest auto company in the United States, Ford delivered 6.7 million cars and trucks last year while Tesla delivered less than 80,000. Then, last year Ford hauled in a revenue of close to $152 billion while Tesla took in just $7 billion. Yet Tesla’s very magical market capitalization now comes in at $47.6 billion, compared to the much much older Ford Motor Co.’s $44.9 billion. Let that one sink in for a bit. And in case you were in the market for some Tesla shares, its stock is currently trading at around $293 a share.

Crew-cuts…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

J. Crew’s long-time creative director, Jenna Lyons, is out after just five years on that gig and over 20 years at the label. Which is just so cray cray since she is responsible for making so much of what made J. Crew…well, J. Crew. She is credited with turning the brand around a few years ago and making it super-popular and ultra-hip. In fact, she was so good at what she was doing that she became the face/icon of the prepster brand. But then there were a bunch of unfashionable issues, a 6.7% sales drop, following a more than 8% drop the year before.  The company, if you recall – and it’s okay if you don’t – was purchased for $3 billion back in 2011. Now the retailer is staring at the wrong end of $1.5 billion in debt. All that had company brass scratching its preppy head and wondering where did things go south and how could they be remedied. Apparently, part of that remedy involved saying goodbye to Lyons. Despite that, J. Crew is a retailer like any other, and we all know how darn ugly the fiscal landscape has been like as of late for all the players, big and small. But back to Lyons, rumor has it that her exit was a mutual decision.  Although, I’ve often wondered if the word mutual takes on a very different definition when describing people who find themselves leaving their high-level executive jobs.

Just so ya know…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Pish-posh designer Burberry just signed a $225 million licensing deal with Coty. – as in the musk-maker. However, rest assured as there will be no trench coats involved. Instead, Coty will get exclusive global rights to Burberry’s make-up and fragrance brands – which might make zero sense to you but makes plenty of cents – and dollars for both Burberry and Coty. And here’s how it’s going to work: Burberry, which pulled down revenue of 203 million pounds last year (well, it is an English company) has got the creativity end covered because, well, it does. There is a reason, after all, why Burberry can charge so much money for its merchandise. But Coty is all about distribution, and in fact, the company is quite accomplished in that arena. Burberry was shrewd enough to recognize where it could use a little oomph. Or in this case, the English brand needed a lot of oomph. So the brand did some research and shopped around before it settled on a deal with Coty.  And Burberry will be in good company at Coty, as it will join other premium fragrances including Balenciaga, Gucci and Marc Jacobs, not to mention the Clairol and Rimmel brands.

It’s All About the Brexit; Gearing Up for Some Star Spangled Traveling; Chipotle Wants to Reward You

The British are leaving, the British are leaving…

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Image courtesy of Chris Sharp/FreeDigitalPhotos.net

The Brexit vote continues to cause trouble and it probably will be awhile before it stops. Janet Yellen has canceled her appearance at a bank conference in Portugal that was organized by the European Central Bank. The Fed chief was supposed to speak on a panel with the Bank of England’s Governor Mark Carney and ECB president Mario Draghi. Carney now has more pressing matters to attend to, as does Draghi, who is now heading to Brussels for a summit with EU leaders to brief them on the impact of the Brexit vote and hash out a response to the U.K. referendum. The S&P yanked its AAA credit rating on the UK since the index feels that “this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K.” Ouch. On Friday, the pound plunged to its biggest one day drop EVER, as Barclays Plc and the Royal Bank of Scotland Group Plc had their shares halted as a result of the plunge. Meanwhile, Treasury Secretary Jack Lew doesn’t get the feeling that there is a financial crisis brewing. Well, at least he said as much on CNBC recently. And if Jack Lew says it, then it’s good enough for me. I think. However, analysts aren’t as optimistic about the British economy and think the “Brexit” vote just might put the UK in a recession, besides dealing a major blow to European economic growth. Those analysts feel that the U.S. will also take a hit or two as well, but without any recession drama. And in case you were counting on a rate hike anytime soon, don’t. The Brexit vote put the kibosh on it and that’s not necessarily a good thing.

Brake for it…

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Image courtesy of Chris Sharp/FreeDigitalPhotos.net

According to AAA, 43 million Americans are expected to travel this holiday weekend, beginning Thursday, June 30 thru Monday July fourth. That number is 5 million more than the amount of travelers on Memorial Day weekend and 1.2% more than the amount of travelers from last year’s holiday weekend. 84% of those traveling – 36.3 million, if you please – will be doing it by car, and if the the thought of heavy traffic congestion makes your skin crawl, then you can thank low gas prices for the increased congestion. The national average price for a gallon of gas is coming in at just $2.31, its lowest price since 2005 and 17% and 47 cents lower than it was last year at this time. But at least the traveling and the money being spent on those trips is good for economic growth. Americans saved a whopping $20 billion on gas spending this year so what better way to make up for it than by getting out on the road and commuting at least 50 miles from their homes. On a darker note, because of the increased traffic, the National Safety Council is expecting 450 auto-related deaths and 53,600 car-related injuries. But at least airfares will be lower and maybe even a safer way to travel this holiday weekend.

Muy caliente…

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Image courtesy of Piyachok Thawornmat/FreeDigitalPhotos.net

Chipotle is biting the jalapeno-laced bullet and will now be offering up a rewards program. Yeah, that’s news. Before it’s food bore the makings of e. coli, salmonella and norovirus, Chipotle was a veritable rewards program snob, refusing to implement one. But I guess a slew of food-safety scandals and the fact that shares of the company have lost more than a third of their value since October gave the fast-food chain a fresh – no pun intended – perspective on its economics. Hence, we are now introduced to the Chiptopia Summer Rewards Program. It’s not clear if Wall Street feels this move is strategic as Chipotle does as the stock went down today almost 3%, closing at 388.78.The rewards program will begin July 1 and run until September. However, should the rewards program prove rewarding for Chipotle and actually help it reclaim any of the glory it lost last year as a result of its rash of food safety issues, then expect the rewards program to stay put. But diners beware as this loyalty program is not like other loyalty programs that require you to accrue points or spend a certain amount of money. Instead, Chiptopia rewards its customers by the amount of visits that they make in a given month. There are three levels customers can reach: mild, medium and hot. I will spare you the sordid and complicated details. However, in order to get those points customers will always need to purchase an entree with their order. Should they achieve the illustrious “hot,” status having visited Chipotle  eleven times – in one month -, then they get to enjoy three free burritos, which by the way, will count towards more rewards.