Whole Foods is Getting a Whole Lot Sunnier; Nothing Like a Good Shareholder Fight; Urban Outfitter Pleasantly Surprises

Here comes the sun…

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Image courtesy of digitalart/FreedIgitalPhotos.net

Whole Foods is getting solar with a little help from Elon Musk’s Solar City and NRG Energy.  Of its 430-plus locations, up to 184 Whole Foods stores will get the solar treatment and with the stashes of money it is expected to save over the long run, maybe the organic grocer will start pricing their merchandise a little more cost-friendly. Whole Foods went with both companies so as not to be limited. Sounds fair. With a disappointing fourth quarter that saw a $432 million loss and a slower rate of growth, SolarCity’s stock needed this deal which gave its stock a solid 6.3% lift. Because oil prices have been so low, consumers haven’t exactly felt the fiscal pinch to get cost-effective solar installations and SolarCity’s been feeling that effect in its numbers. No word yet on which locations will get the solar experience but the move will put Whole Foods in the same company as Costco and Walmart for being among the top 25 corporate companies to go solar.

United they fall…

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Image courtesy of cooldesign/FreeDigitalPhotos.net

United Airlines has had better…decades, as two investment funds, who together own a 7.1% stake in the airline, are gearing up to turn the airline’s board of directors on its head. PAR Capital Management Inc. and Altimeter Capital Management LP aren’t happy with the way things have been going at the airline, which happens to be ranked as the third largest carrier by traffic and boasts 85,000 employees. The firms have nominated 6 new directors for the United Continental Holding Inc. board in hopes of undoing the “poor performance and bad decisions over the last several years.” Ouch. Because they feel the board is ineffective, one of the board members they are looking to bring in is former CEO Gordon Bethune, who ran the ship from 1994 – 2004, and is credited with turning the airline around back then. Shareholders will vote on the issue at the company’s annual shareholder meeting in the spring. Judging by the company’s low-employees morale, poor customer service, spate of electronic glitches and its inability to improve its on-time performance, there’s probably a whole lot of ugly going on there. The fact is that most of the other big airlines are cranking out huge billion dollar profits, while United Continental is still figuring out how to play catch-up, even after its 2010 merger, which is still plagued by tons of kinks. This news comes just two days after CEO Oscar Munoz announced that he’d be returning to his post on March 14, after being on medical leave since his October heart attack. Oscar Munoz came on board back in September, on the heels of former CEO Jeff Smisek stepping down after it was disclosed that there was a federal investigation involving United Continental and the Port Authority of New York and New Jersey.

So trendy…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Urban Outfitters’ stock rallied today close to 17% and for a few good reasons. First, the company took in a profit of $72.9 million, adding 61 cents per share. Even though last year the company took in $80.3 million and 60 cents a share, it was still a Wall Street beat since analysts predicted that this time around the retailer would only add 56 cents per share. Boom. The company flat-lined in terms of its net sales, posting $1.01 billion, but it was the improved margins that had Wall Street tongues wagging. There are few things that Wall Street loves more than improved margins and execs are expecting more improvement on the Urban Outfitter fiscal horizon. The trendy apparel company also scored big with customers by adding some new beauty products that it started selling both online and in 70 shops within the stores. In fact, that rollout proved to be such a success that 60 more stores will get to revel in that retail experience.  Investors were so wowed by Urban Outfitters results that over a dozen brokerages even raised their target prices for the company’s stock, with some brokerages predicting those shares could go as high as $38 a share.  Not every analyst was as generous, however, the stock did close today at 32.69.

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Using Wallets to Fight Terrorism; Marriott Hotels Gains More Hospitality; Urban Outfitters Now Satisfies Pizza Cravings

Insult to injury…

Image courtesy of basketman/FreeDigitalPhotos.net

Image courtesy of basketman/FreeDigitalPhotos.net

Because terrorists are pure evil on so many levels, they’ve likely calculated that besides causing devastating loss of life, they can also harm an economy as well. And thus, as the holiday season is upon us, while the French are still in the midst of mourning the tragedy that befell its people just days ago, they are likely to endure yet more damage and fallout as businesses, both big and small, see less traffic and sales in the days ahead. In fact, hospitality chains and airlines have been seeing little activity in major markets and indexes, and several shops, cafes and markets remain closed. American performers Papa Roach and Marilyn Manson had to cancel shows this week and artist Prince canceled performances scheduled for December. As the sixth largest economy in the world, and the second in the eurozone, these losses could have a ripple effect on several other economies as well. However, economists and investors all tend to agree that the economic fallout will be minor and brief. Already today, European indexes either remained flat or rebounded from the dips they took before the markets opened. Unfortunately, tourism might not be as fortunate. Back in 2013, France saw almost 85 million tourists who brought in 42 billion euros in revenue with them. With almost 8% of France’s gross domestic product coming from the tourism industry, it might be the one area to suffer most, as major tourist destinations like the Eiffel Tower and Louvre lost two days of business and other places, like EuroDisney, still have their doors closed.  But as President George W. Bush urged American following the September 11, 2001 attacks “go out shopping more.” And if that’s one way to defeat those terrorist, then I’m happy to travel to Paris to do so.

Do not disturb…

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

The “Deal of the Day” award goes to Marriott International, as in the hotel chain that has over 5,500 properties and 1.1.million rooms, which just scooped up its rival, Starwood, to the handsome sum of $12.2 billion. The deal, in which Marriott will pay approximately $72.08 per share, means it becomes the world’s biggest hotel chain, leaving the second largest chain, Hilton Worldwide and its 4,500 properties, in the dust. This deal also gives Marriott some nice new brands, including the push-posh St. Regis. And who doesn’t like a little pish-posh? According to research firm STR, 67% of available hotel rooms were filled in the first nine months of the year by occupants who shelled out an average of $120.35 a night. However, there are many watching, from investors to travelers alike, to see how this merger is going to affect the various partnerships on both sides. Marriott has partnerships with Chase and United Airlines, while Starwood has deals with American Express, Delta and Über. Wall Street seems to think this is the start of a new trend of hotel chain mergers, as companies like Airbnb, have been eating up a chunk of the industry. Sit tight and you might just see another deal coming ’round the Wall Street bend.

Cheesy…

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Because nothing says trendy like tomatoes and cheese, Urban Outfitters is getting into the pizza business. I’m serious. The company, whose apparel tends to attract millennials, is plunking down an undisclosed sum to buy the Vetri Family Group of restaurants, which includes the Pizzeria Vetri chain. You’re not the only one who finds this acquisition…strange. Investors think so too and sent the stock down 10%. But it’s not like Urban Outfitters has anything to lose. The retail sector has been hitting the fiscal skids with companies like Nordstrom and Macy’s reporting sales that are nothing short of disappointing. It’s also got many wondering if the brick and mortar model is passé. Urban Outfitters has 240 locations, in addition to the Anthropologie and Free People brands (and more than a couple of them already have food establishments in them). And while other retail companies are looking to amp up their e-commerce and tweak their brands in an attempt to improve those sales, Urban Outfitters is taking an entirely different approach by acquiring a business in an industry that is making tons of money at the moment. Marc Vetri of the Vetri Family Group likes the deal and calls it “a perfect match.” It means his company gets to focus more on the food it serves, while Urban Outfitters has to figure out how to help those restaurants expand. Now if only Urban Outfitters can figure out how to grow and expand its own business instead of losing money…

Delia*s Final Chapter;New Mortgage Nirvana Thanks to Fannie Mae and Freddie Mac; Frech Toast Crunch Epic-y Comeback

Down and out…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Delia*s is joining the ranks of the bankruptcy protected now that it has officially filed for Chapter 11. While several of Delia*s teen apparel cohorts, including Abercrombie & Fitch and Urban Outfitters, are merely posting very unfashionable earnings, Delia*s will be getting $20 million just to help liquidate and close down its stores. The retailer, to which bright-eyed teenagers once flocked, can no longer compete with the H&M’s and Forever 21’s of the world. And don’t even get me started on competing with the behemoth that is Amazon. The New York-based chain has 92 stores scattered in malls across the country. With $74 million in assets and over $32 million in debt, its no wonder that Delia*s CEO Tracy Gardner and COO Brian Lex Austin-Gemas resigned. It’s probably safe to say that no one is mourning their departure – well, except maybe for them.

It’s baaaaaaaack…

Image courtesy of foto76/FreeDigitalPhotos.net

Image courtesy of foto76/FreeDigitalPhotos.net

Justin Timberlake brought sexy back so its only fair that General Mills is bringing back French Toast Crunch. Yes, my fellow cereal aficionados, the dark days are behind us as the maker of Cheerios, Yoplait and Progresso Soups has finally found the wherewithal to bring us back our French Toast Crunch. The sister cereal to the ubiquitous and oft-loved Cinnamon Toast Crunch has been absent from grocery shelves in the United States for almost a decade – I shutter to think. With the invasion of Greek yogurt and fast-food wars breaking out, the cereal was unceremoniously discontinued as other alternatives shoved their way onto the breakfast scene. But consumer demand brought General Mills to its corporate knees, together with an online petition and a Facebook page dedicated to resurrecting the sweet, breakfast sesnation. Besides, General Mills figures those kids who group in the nineties downing French Toast Crunch are now at that age where they are paying for their own cereal now (at least they should be) and can buy it themselves (at least they should be).

3% down with that?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

There are some very lucky soon-to-be first-time homeowners milling about thanks to Fannie Mae and Freddie Mac. New terms established by the companies are allowing applicants to put up just 3% down payment to get them into a new home. That’s down from 5%, fyi. Fannie Mae is starting to offer that deal December 13. Looking to refinance? How does reducing your equity to 3% sound? If you haven’t owned a home in three years, guess what? You still qualify.  Starting in March, Freddie Mac will let lower-income first-time home-buyers hand over a 3% down payment provided they agree to housing counseling. Melvin Watt, head of the Federal Housing Finance Agency and the dude who oversees Freddie Mac and Fannie Mae, wants to spur lending to minorities and young adults because the lenders have made more stringent standards following the crash, and the tens of billion of dollars they had to pay towards lawsuits for underwriting less than ideal loans. Republicans, however, are not digging the idea, finding the whole thing too risky and eerily reminiscent of the policies that led up to that awful crash – from which the country is still not fully recovered.

 

 

Bob Marley’s Smokin’ Legacy; Oil Prices Are Down So Why Aren’t Airline Fares?; Urban Outfitters Unhip Earnings

Toke on this…

Image courtesy of Paul/FreeDigitalPhotos.net

Image courtesy of Paul/FreeDigitalPhotos.net

He’s been gone a long time, smoking a big fat joint in the sky, but Reggae icon Bob Marley still managed to score a worldwide exclusive, 30 year licensing deal for the “world’s first cannabis brand” appropriately dubbed Marley Natural. With the help of a Seattle-based, cannabis-focused (how industrious!) venture capital firm, Privateer Holdings, Marley Natural will feature strains of heirloom Jamaican cannabis. Kind of like heirloom tomatoes, except I’d never put tomatoes into a batch of brownies. But it won’t just be cannabis that you can purchase under the Marley Natural brand. The brand will also be putting out other useful stuff like lotions and containers (in which to store your cannabis to optimize freshess). No doubt those items will certainly make nice gifts (but again, you can’t smoke ’em). And bonus: the products will even have a “strong social conscience.” Expect to see the cannabis and other products in places where Federal law allows this sort of thing.

Up up and away…

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Image courtesy of federico stevanin/FreeDigitalPhotos.net

The joys of dropping oil prices will only carry you so far – by car anyways. Because even though airlines saved over a billion dollars in fuel costs last year, they seem to be pretending that they didn’t get the memo about dropping airfares prices. And why should they? After all, we’re still booking tickets at the prices the airlines set. Those prices are coming in at an average of over $370 per ticket, which by the way, does not include fees and taxes. Planes are still full – and often oversold. Airlines are posting great profits and would much prefer to order new planes and give their terminals face-lifts than pass those fiscal delights onto the very contingent that brought about those profits in the first place.

Time to move to the suburbs?

Image courtesy of digitalart/FreeDigitalPhotos.net

Image courtesy of digitalart/FreeDigitalPhotos.net

Urban Outfitters is not looking as hip and cool as it used to be, at least according to its third quarter earnings. Sure the company posted growth, but mainly from its Anthropologie and Free People brands – not from its namesake. Which I suppose stings a bit in the portfolio. While the company beat its sales estimates by $1 million, coming in at $814 million, it was its earnings that provided the fiscal bummer. The company earned just over $47 million and $0.35 per share which might seem solid, but really Wall Street expected earnings of $0.41 per share. What made those earnings that much more fashion-backward was the fact that the same time a year ago the company pulled in $70 million and $0.47 per share. Some were wondering if maybe the company’s disappointing earnings had more than a little to do with some of its more offensive merchandising offerings, like the blood-spattered Kent State sweatshirt or the women’s “Eat Less” t-shirt. Even though the items were eventually pulled from the shelves, it still begs the question if they left an un-hip impression on the very consumers it tends to attract.