Trump’s Commerce Sec’y Gets Delisted; Valeant Unvaliant with Female Viagra; Rainbows and Unicorns: Oprah’s Effect on Weight Watchers

Oops, I did it again…

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Looks like things are getting awkward for Commerce Secretary Wilbur Ross Jr. Turns out Trump’s buddy has some Russian connections that might just put him in a bit of a pickle. It goes a little something like this: The Commerce Secretary has some investments in a shipping firm he used to run called Navigator Holdings. The problem here is that this particular shipping firm has ties to some people that are subject to U.S. sanctions. One of those ties is none other than Vladimir Putin’s son-in-law.  Mr. Ross knew that he was supposed to unload all kinds of holdings that could potentially be a conflict of interest once he took office. And he did. Mostly. Just not really with this one. To be fair, Mr. Ross has a lot of partnerships and it’s those partnerships that retain a significant stake in Navigator Holdings. But still. It’s a problem, even if there’s nothing necessarily illegal about his ties to this shipping firm since he didn’t disclose those ties in the first place. This new development, along with tons of other juicy information, came courtesy of the leaked documents known as the “Paradise Papers” from the Bermuda-based law firm, Appleby. As for Mr. Ross, that’s not the only reason he’s been making headlines today. Apparently, on those very disclosure forms, where Mr. Ross neglected to mention his dubious Russian ties, he also neglected to mention that he isn’t a billionaire. Not to say that he’s a pauper. Far from it. However, his estimated assets are less than $700 million, not the $2 billion he said he’s worth. Even worse, for Ross’s ego anyway, is that he’s getting dropped from Forbes 400 wealthiest list, because let’s face it, $700 million just doesn’t cut it.

Typical…

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Valeant is the big kahuna making good waves on Wall Street with an earnings beat that sent the stock up 15% today.  Much of that had to do with a 6% increase across its divisions not to mention the boost it got from unloading some of its debt. The company picked up $3.69 per share on a $1.3 billion profit. But that wasn’t the only reason for the boost. Remember Addyi? It’s the drug that was dubbed the “female viagra”  and Valeant bought it from Sprout Pharmaceuticals around two years ago for about $1 billion. Problem is, the deal had been bleeding money since the beginning. Now, two years later, Valeant actually gave Sprout shareholders $25 million just to take the drug back and put it back in business. But that was only after Sprout sued Valeant because it felt the drugmaker wasn’t marketing the drug well. In all fairness to Valeant however, plenty of medical experts just weren’t that into the drug. Because, besides saying that the drug wasn’t that effective, they also felt that potential users wouldn’t be inclined to taking Addyi given that there was a risk of fainting. Yes, fainting. In fact, the fainting would occur following alcohol consumption while taking the drug. I’m pretty sure anyone could see why that would be a problem.

Weight a minute…

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Oprah Winfrey seems to have the Midas touch, at least with Weight Watchers, as the stock rallied today way over 20% to 54.43, its highest price in four years. Revenue numbers were also ridiculously impressive, coming in at almost $324 million, a 15% increase over last year’s revenue during this period. But back to Oprah. The media titan bought a hefty chunk of the company two years ago and will once again grace Weight Watchers ads. Besides the Oprah effect, the weight-loss company put some major thought into both its digital operations and marketing campaign, which apparently paid off given the fact that the company increased its subscribers by 18% to 3.4 million. Here’s the fun part: Analysts thought the company would do pretty good anyway, bringing in 51 cents per share. But Weight Watchers did better than pretty good, adding 67 cents per share on a $45 million profit. That, by the way, was a $10 million increase from last year at this time. Which kind of has me starting to think about all the companies that good use Oprah on their boards. Twitter, maybe?  Oh, and did I mention that Weight Watchers also raised it full year earnings outlook? Indeed it did and now, instead of expecting to earn between $1.57 and $1.67, it now expects to make between $1.77 and $1.83.  And if that’s not impressive enough for you, consider that shares of Weight Watchers are up 360% just for 2017.

 

 

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Trump’s Treasury Trove; Things are (finally) Looking Up for Target; Neiman Marcus Bets on Rentals

 

Trump’s to treasure…

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Leave it to Carl Icahn to tweet that Donald Trump honed in on his choices for Treasury Secretary and Commerce Secretary. And, believe it or not, those choices may not be as bad as you think. Enter Steven Mnuchin, a veteran Wall Streeter and former Goldman Sachs partner who most recently served as Donald Trump’s campaign finance manager. Okay, that last bit may not be his best selling point. But if it makes you feel any better, controversial Trump White House Chief Strategist Stephen Bannon didn’t care for him and questioned Trump on whether he was “selling out to Wall Street.” Next we have Wilbur Ross, a billionaire investor and major NAFTA critic who also served as part of Trump’s economic advisory team. Ross has a knack for restructuring failing companies and has done so successfully in the energy and textile industries. That’s a big resume plus for the Commerce Secretary post. However, if Ross is serious about the post, he’ll have to step down from the numerous boards on which he serves, besides selling off tons of investments or chucking them into a blind trust. As for Carl Icahn, he tweeted that “Both would be great choices” and that they are “two of the smartest people I know.” And, if Carl Icahn thinks that then it must be so. Right?

Target = hipster?

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Things are looking up for Target. At least according to its CEO, Brian Cornell who said today that he is “increasingly confident” about Target’s new plans and endeavors for its 1,800 plus stores. Part of those endeavors include its foray into small-format stores. Those are basically shops that are targeted – no pun intended – to meet the consumer wants and needs of a specific location. With several under its belt already, Target’s latest small-format shop is slated for a 45,000 square foot space in super hip NYC locale, Tribeca. But Cornell’s enthusiasm went way beyond just the new stores. Shares of the retailer went up almost 9% today in pre-market trading because its third quarter sales decline was smaller than expected. Translation: Target didn’t lose as much money as experts thought it would. Those sales were down almost 7% to $16.4 billion, but that was primarily due to Target selling its pharmacy biz to CVS. As for the company’s e-commerce department, those sales were up 26% over the same time last year, which was especially welcome news considering that e-commerce for Target’s second quarter was down.

All rent out of shape…

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Online clothes and jewelry rental companies are betting that if you’re not a customer now, you will be after you visit them at an actual showroom. And so begins a new journey for companies like Blue Nile and Rent the Runway, who have decided that it would be cheaper to install showrooms and hire staff than to find new ways of advertising that would attract new customers. Blue Nile already successfully tested out this timeless showroom concept with just 300 square feet at one lucky Nordstrom department store, while Rent the Runway is set to unveil a 3,000 square foot space at Neiman Marcus’ San Francisco store on Friday. However, many are skeptical that this is a prudent move for Neiman Marcus assuming that instead of buying Neiman Marcus inventory, customers will simply rent it from Rent the Runway. And is it wise for Neiman Marcus to be playing around with such a novel concept after losing $407 million in its last quarter? But the logic is that Rent the Runway has 6 million customers in an age demographic that Neiman Marcus would like to have. The luxury store is banking that the customers who come and pay to rent the high-end brands will end up being big ticket buyers of those very same high-end brands soon after. Plus, for an additional $30 – $75, Neiman Marcus will throw in styling services for Rent the Runway customers. Rent the Runway’s concept might seem cute but the money is definitely serious. A monthly subscription of $139 gets you up to three pieces at a time which you can keep for the month or send back in less than a day. The company so far raised $126 million in start-up venture capital and already exceeded its 2016 sales projections of $100 million.  So maybe Neiman Marcus is onto something because Rent the Runway sure is.