Nike’s Sales Bruised By Yeezy; McDonald’s Gets Busted for Over-Valuing Value-Meal; Lookout! There’s A Lot More Walgreens/RiteAid Coming Your Way

Yeezy breezy…

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Nike’s quarterly profit might be up 7% thanks to strong demand in China and the United States, but that doesn’t mean everything is coming up roses at the athletic apparel company. Fierce competition from Under Armour and Adidas have been hammering away at Nike’s sales, partly because Adidas knocked it out of the park this year, thanks to Kanye West (it’s okay, I cringed too) and his Yeezy line, which saw sales go up 62%. Under Armour’s Stephan Curry’s shoe and apparel line definitely stole plenty of Nike’s mojo too. So Nike has been in quest mode to find all sort of ways to boost sales from, improving online sales features to cutting prices on some of its more popular offerings. One of Nike’s divisions that took a beating this quarter and fell short of expectations was its ever-important basketball division.  Apparently, consumers weren’t feeling the love for LeBron James and Kevin Durant sneakers when they were sporting a $200 price tag. Nike is banking that a $150 price tag will have people biting a little more. The company is also working on a faster supply chain dubbed “express lane” to bring products to market within weeks instead of months. In an effort to set itself apart from the competition, Nike’s come out with self-tying lace-up shoes. If you’re that lazy, they might actually be worth the $720 price tag. Profit from Nike came in at $842 million, with revenue of $8.18 billion and 50 cents added per share. That’s especially good since Nike’s stock has fallen 17% in the last year and Wall Street only expected $8.1 billion and 43 cents per share. Last year at this time the company posted $785 million  in profit and added 45 cents per share.

Un-happy meal…

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McDonald’s is staring at the wrong end of a lawsuit for 41 cents. 41 cents. Turns out the value meal is anything but since it would be 41 cents cheaper to buy the items individually than to buy the bundled package for $5.90 in certain locations. Enter plaintiff James Gertie who discovered this mathematical irregularity at two McDonald’s restaurants in the Chicago area.  The restaurants in question are operated by Karis Management and Gertie wants the suit to get class-action status for consumer fraud and deceptive practices. He says the lawsuit is about principle and is seeking a refund for any customer who purchased the meal at a McDonald’s restaurant operated by Karis. Those 41 cent refunds could add up to a lot of cash as Karis operates ten restaurants in and around Chicago. In the meantime, Karis has yet to comment on the case or the price discrepancy.  As for other McDonald’s all over the world, well, you’re just going to have to do your due diligence to see if their numbers add up or not.

Urge to merge…

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Walgreens Boots Alliance and RiteAid will finally get their way now that they sold off some 865 RiteAid stores to retail chain Fred’s. That’s what the two companies had to in order to appease the Federal Trade Commission so that it could go ahead with its $9.4 billion merger. Together, the new entity will still have over 12,000 locations from which to choose and will effectively become the largest drug store chain in the United States, effectively taking up 46% of the market. Fred’s currently has almost 650 discounted general merchandise stores and is looking to become the third largest drug store chain in the United States.  It’s also trying to reinvent itself by ditching its former name of Fred’s Super Dollar.  Fred’s had to borrow a whopping $1.65 billion in order to get those 865 stores, but it also had to pledge, as collateral, just about everything it has in the form of assets, and maybe even throw in a few bodily organs as well, to secure that loan.  The stores actually cost $950 million but other expenses, operating and otherwise, necessitated the full $1.65 billion. It should prove to be well worth it, however, as the deal will more than double Fred’s size.  Plus, the deal sent shares of Fred’s surging a mind-blowing 85% to $20.75. And who doesn’t like an 85% surge in shares, right?

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Walmart Bums Out Wall Street; Puma Deals a Mighty Blow to Yeezy; Is IBM Back in the Game?

Fall-mart…

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Walmart announced earnings and, in the process, managed to put a damper on Wall Street’s day. The company posted .6% growth and while nobody argues that growth is bad , the company still missed expectations of 1% growth. It’s now expected that Walmart will post a very boring flat line to illustrate its net sales even though previous forecasts called for 3% to 4% growth. Profits for Walmart fell almost 8% to $4.57 billion and posted revenues of $129.7 billion. While that may seem like a nice beefy number, analysts still expected $131 billion in revenue. The numbers weren’t helped by Walmart’s decision to close 269 stores worldwide, including 154 just in the United States. Then there were those wage increases and investments into its digital commerce that ate a bit into those profits. But Walmart is banking on the fact that those investments will yield big returns, even if it does mean a little wait. After all, if it’s gonna compete with Amazon, it’s gotta put in the time and money. Of course, mother-nature gets some of the blame too, seeing as how warm weather put a crimp in sales of cold weather merchandise. But don’t rule out the strong dollar, which also deserves plenty of the blame. At least shares are up over 6% in the last three months and the retailer is raising its dividend by 4 cents to generous $2 per share. Woohoo.

Swift karma…

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Puma had a very good quarter and much of the credit for that can go to Rihanna. Yes, that Rihanna. As the brand’s creative director, the pop star is helping shape the female future, as Puma refers to this endeavor. The company had higher than expected sales growth for its fourth quarter, just as Rihanna launched her first full goth-inspred line for the athletic apparel retailer. Back in the fall, RiRi’s remake of Puma’s classic suede kicks sold out within hours of going on sale. Puma’s profits were up 2.6% to 10.9 million euros, easily beating forecasts of 6.5 million euros. Sales rose 11.5% to 979 million euros when analysts expected just 839 million euros in sales. And maybe Kanye West should take to Twitter to hit up his sister-in-law, Kylie Jenner, for some cash, instead of Facebook CEO Mark Zuckerberg. She’s been named as the company’s brand ambassador, contrary to his hopes that she would be on his Team Yeezy Adidas line.

Have patients…

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IBM. Remember that name? The company just whipped out $2.6 billion for its latest acquisition, Truven Health Analytics. Under CEO Ginny Rometty, IBM has so far spent $4 billion in acquisitions in the last 12 months but this latest one is IBM’s biggest purchase in three years. Wall Street reacted kindly by giving shares of IBM their biggest jump since 2013, and sending them all the way up to $134. That’s especially reassuring for IBM since it posted 15 straight quarters of declining sales. Truven was acquired since IBM brass thought it would fit nicely into its Watson Health biz unit. FYI, Watson is IBM’s fabulous collection of artificial intelligence technologies that does all kinds of super fun stuff like taking data apart to analyze it, interpret it and see if any patterns can be predicted.  With this acquisition, IBM will have health info on 300 million patients and employ 5,000 people worldwide.