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Tag: travel goods

  • Lululemon stock drops 10% after mixed quarterly results, soaring inventories

    Lululemon stock drops 10% after mixed quarterly results, soaring inventories

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    Lululemon Athletica Inc. stock fell more than 10% in the extended session Thursday after the athleisure-wear maker reported mixed quarterly results and saw inventories soar.

    Lululemon
    LULU,
    +0.59%
    earned $735 million, or $2 a share, in the third quarter, compared with $541 million, or $1.44 a share, in the same quarter last year. Adjusted for one-time items, Lululemon
    LULU,
    +0.59%
    earned $1.62 a share.

    Revenue rose 28% to $1.9 billion, the company said. Same-store sales were up 22%.

    Analysts polled by FactSet expected Lululemon to earn $1.97 a share on revenue of $1.81 billion. Same-store sales were expected to rise 19.1%.

    “We are proud to have delivered another quarter of strong sales and earnings growth, despite an operating environment that remains dynamic,” Chief Financial Officer Meghan Frank said in a statement.

    The retailer said inventories ended the quarter up 85% to $1.7 billion, compared with $900 million at the end of the third quarter of 2021.

    “The company believes its inventories are well-positioned to support its expected revenue growth in the fourth quarter,” it said.

    Lululemon guided for fourth-quarter revenue between $2.605 billion and $2.655 billion, and adjusted EPS between $4.20 and $4.30.

    For the full year, the company expects revenue between $7.944 billion and $7.994 billion, and adjusted EPS between $9.87 and $9.97. FactSet consensus calls for EPS of $9.92 on sales of $7.935 billion.

    Analysts were relatively upbeat about Lululemon heading into the results, saying the company was able to keep its prices higher, even as other retailers cut their prices.

    Retailers have slashed prices on clothing in an effort to clear shelves and entice customers, following an inflation-induced shift in consumer spending to necessities. But Raymond James analysts, in a note this week, said they found that Lululemon “didn’t have broad-based promotions” in the third quarter, or the fourth quarter so far.

    They said that the company leaned on its “We Made Too Much” section to iron out its inventories. And they noted a jump in downloads for Lululemon’s app. However, they said business in China “could be a curveball” amid that nation’s COVID-19 restrictions.

    Piper Sandler analysts, in October, also said that Lululemon remained more insulated than other clothing retailers from big markdowns.

    Lululemon stock is down 4% so far this year. The S&P 500 Index
    SPX,
    +0.75%    ,
    by comparison, has slid 17% over that time.

    Claudia Assis in San Francisco contributed to this report.

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  • FTC sues to block Microsoft’s $69 billion acquisition of game giant Activision Blizzard

    FTC sues to block Microsoft’s $69 billion acquisition of game giant Activision Blizzard

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    The Federal Trade Commission on Thursday sued Microsoft Corp. to block its $69 billion deal to buy Activision Blizzard Inc.

    The acquisition, which would be Microsoft’s
    MSFT,
    +1.07%
    largest and the biggest ever in the video gaming industry, would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business,” the FTC claimed.

    “Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”

    FTC members pointed to Microsoft’s record of “acquiring and using valuable gaming content to suppress competition from rival consoles,” including its acquisition of ZeniMax, parent company of Bethesda Softworks.

    Microsoft President Brad Smith indicated the software giant will fight the lawsuit. In a statement, he said Microsoft has “been committed since Day One to addressing competition concerns.”

    “While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court,” Smith said.

    Activision CEO Bobby Kotick, in a statement, said the suit “sounds alarming, so I want to reinforce my confidence that this deal will close. The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge.”

    Still, In recent weeks Microsoft has taken steps to demonstrate to regulators its acquisition of Activision would not give it an unfair advantage in the gaming market. On Tuesday, Microsoft said it would bring the “Call of Duty” franchise to Nintendo Co.’s
    7974,
    -1.31%
    Switch, a rival of Microsoft Xbox, and Microsoft has said it would make Call of Duty available on rival Sony Group Corp.’s
    SONY,
    -0.06%
    PlayStation.

    “It’s a bad idea,” Geoffrey Manne, president of the International Center for Law and Economics, said of the FTC’s lawsuit vs. Microsoft. “There may be markets in which some activities of some of these large tech companies cause concerns, but when they are expanding into new markets or enhancing competition in markets where they aren’t leaders, we should be encouraging them, not threatening them with lawsuits.”

    The government’s action in administrative court marks the first serious regulatory threat to Microsoft’s business in more than two decades, when the Justice Department brought a landmark antitrust lawsuit against the software giant that took years and was settled in 2002. Since then, Microsoft had sidestepped antitrust scrutiny and Smith in particular has focused the glare on its tech rivals Amazon.com Inc.
    AMZN,
    +2.24%    ,
    Apple Inc.
    AAPL,
    +1.19%    ,
    Alphabet Inc.’s
    GOOGL,
    -0.94%
     
    GOOG,
    -0.89%
    Google, and Facebook parent company Meta Platforms Inc.
    META,
    +1.26%    .

    Read more: Microsoft’s shadowy presence in antitrust push is angering the rest of Big Tech

    Shares of Microsoft are up 1% in trading Thursday. Activision’s
    ATVI,
    -1.33%
    stock is down 1.5%.

    The FTC’s lawsuit comes the same day it is heading to court in San Jose, Calif., in what is expected to be a three-week trial to bloc Meta’s $300 million acquisition of VR fitness app maker Within.

    The trial is likely to showcase an intriguing look at the agency’s ability to stifle alleged anticompetitive conduct using largely untested legal theories at a time when Congress is sitting on tech antitrust legislation.

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  • Microsoft to bring ‘Call of Duty’ to Nintendo if Activision merger approved

    Microsoft to bring ‘Call of Duty’ to Nintendo if Activision merger approved

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    Microsoft Corp. said late Tuesday it has made a “10-year commitment” to bring the massively popular “Call of Duty” videogame series to Nintendo Co. consoles, when — and if — its merger with Activision Blizzard Inc. is completed.

    In a tweet late Tuesday night, Xbox head Phil Spencer announced the deal. “Microsoft is committed to helping bring more games to more people – however they choose to play,” he said, adding: “I’m also pleased to confirm that Microsoft has committed to continue to offer Call of Duty on @Steam simultaneously to Xbox after we have closed the merger with Activision Blizzard King.”

    Microsoft is awaiting federal approval of its $68.7 billion acquisition of Activision.

    A deal to share one of Activision’s
    ATVI,
    -0.29%
    most lucrative videogame titles could appease some antitrust concerns from regulators. Spencer told Bloomberg News that a similar offer had been extended to rival Sony Corp.
    SONY,
    -2.62%
    for its PlayStation consoles, but said that offer had so far been rebuffed.

    A “Call of Duty” title has not been available on Nintendo since 2013.

    In an interview with the Washington Post published Tuesday, Spencer said there was no Nintendo “Call of Duty” release date set yet, but that if the merger closes — it has a June 2023 target date — future “Call of Duty” games would be released for all platforms at once. “Once we get into the rhythm of this, our plan would be that when [a Call of Duty game] launches on PlayStation, Xbox, and PC, that it would also be available on Nintendo at the same time,” he told the Post.

    Nintendo shares
    7974,
    +0.33%
    rose slightly in Tokyo trading following the news. Microsoft shares
    MSFT,
    -2.03%
    fell Monday, and are down 17% year to date, compared to the S&P 500’s
    SPX,
    -1.44%
    17% decline this year.

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  • Activision Still Trades at a Big Discount to Microsoft’s Deal. Investors Are Making a Mistake.

    Activision Still Trades at a Big Discount to Microsoft’s Deal. Investors Are Making a Mistake.

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    Back in July, Barron’s made the case for buying


    Activision Blizzard


    stock in anticipation of


    Microsoft


    closing its $69 billion acquisition of the company. With


    Activision


    shares trading at a significant discount to the deal price, the stock looked closest to a sure thing in an increasingly uncertain market.

    Four months later, the risks of the deal falling apart over antitrust concerns haven’t changed. What has changed is the outlook for Activision’s business. The firm behind Call of Duty and Candy Crush is suddenly doing quite well on its own.

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  • McDonald’s ‘adult Happy Meal’ toys are selling for up to $300,000 on eBay

    McDonald’s ‘adult Happy Meal’ toys are selling for up to $300,000 on eBay

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    When it comes to nostalgia, McDonald’s customers sure are lovin’ it. 

    The burger chain brought back its Halloween pails on Tuesday, which haven’t been offered in the U.S. since 2016. The plastic trick-or-treat buckets decorated to look like a ghost, a goblin or a jack-o’-lantern (aka McBoo, McGoblin and McPunk’n, respectively) quickly began trending among real-time Google searches on Tuesday. 

    But the appetite for these Halloween buckets is nothing compared to the recent McDonald’s
    MCD,
    +1.10%
    collaboration with streetwear company Cactus Plant Flea Market, which dished out a $12-$13 box (better known as the “adult Happy Meal”) that featured a food combo and a collectible figurine targeted toward the grownups who grew up on Happy Meals.

    They sold out quickly, and now some enterprising fast food lovers are hawking the adult Happy Meal toys over online resale sites for thousands of dollars.

    So what’s the appeal? Nostalgia, nostalgia, nostalgia. “Everyone remembers their first Happy Meal as a kid … and the can’t-sit-still feeling as you dug in to see what was inside,” McDonald’s wrote in a press release. “And now, we’re reimagining that experience in a whole new way — this time, for adults.”

    The limited-edition Cactus Plant Flea Market Box at McDonald’s rolled out on Oct. 3, feeding the inner child of the average customer by offering a choice of a Big Mac or 10-piece chicken nuggets main dish, french fries and a soft drink, as well as one of four “toys” featuring redesigned McDonald’s mascots like the Grimace, the Hamburgler and Birdie, as well as a new “Cactus Buddy!” figure (yes, the exclamation point is part of his name.)

    The Cactus Plant Flea Market boxes sold out in many places on the same day that they came out. Some McDonald’s employees took to Reddit and TikTok to share how much they were not lovin’ it — which was reminiscent of the hatred many Starbucks
    SBUX,
    +0.07%
    employees felt toward the viral unicorn frappuccino in 2017. 

    And now, both the toys and the boxes have become near impossible to come by — unless you’re willing to cough up a lot of cash. A medium Cactus Plant Flea Market Box costs about $12, with large box closer to $13 — and one New Jersey mom noted that in her area, a Big Mac combo with fries and a drink runs under $10, so she spent $3 basically get the collectible toy.

    But one eBay listing offering three of the collectible Cactus Plant Flea Market, still unwrapped and in their original packaging, is asking for a whopping $300,000.

    The sold-out Cactus Plant Flea Market Boxes, aka McDonald’s “adult Happy Meals,” are popping up on resale sites for thousands of dollars.


    Screenshot

    Another listing on the fashion marketplace Grailed, which is marked as an “authenticated” post, features the “Cactus Buddy!” figure for the asking price of $39,999 (10% off of the original $44,444 price tag.) 

    The sold-out Cactus Plant Flea Market Boxes, aka McDonald’s “adult Happy Meals,” are popping up on resale sites for thousands of dollars.


    Screenshot

    But there are dozens of other listings for the individual toys and boxes on resale sites such as eBay and Facebook Marketplace in the much more palatable $10-$30 range, or bundles with all four collectible figurines running between $60-$70. 

    McDonald’s was not immediately available for comment, but a rep told Axios that, “The hype for the Cactus Plant Flea Market Box was so real that some of our restaurants have sold out of the limited-edition experience.” They added that, “We’re thrilled by the excitement we’re seeing.”

    The official McDonald’s Twitter account has also been fielding queries from disappointed potential customers who haven’t been able to get their hands on any of the adult Happy Meals, apologizing that this was only a limited time offer. 

    Time will tell if more “adult Happy Meals” will be offered in the future. There’s clearly a customer base hungry for more. 

    This isn’t McDonald’s first viral sensation, of course. The fast food giant has also scored success with celebrity collaborations featuring K-Pop sensation BTS, or singing diva Mariah Carey — which also reportedly sold out.

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  • A Tesla stock plunge could destroy ‘zombie stocks’ such as GameStop and Peloton, warns equity research firm New Constructs

    A Tesla stock plunge could destroy ‘zombie stocks’ such as GameStop and Peloton, warns equity research firm New Constructs

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    Tesla shares could decline dramatically — and that could mean disaster for a number of stocks that have already seen deep share-price cuts, according to equity research firm New Constructs.

    The research firm, which uses machine learning and natural language processing to parse corporate filings and model economic earnings, called the stocks in danger “zombie stocks,” and defined them as companies with poor business models that are burning cash at an alarming rate and are at risk of seeing their stock decline to $0 per share.

    The research firm estimates there could be some 300 zombie companies across the marketplace.

    “The Federal Reserve’s aggressive rate hikes so far in 2022 have ended the era of free money and exposed a worrisome dynamic throughout capital markets: zombie stocks,” wrote New Constructs CEO David Trainer, in a note.

    See Now: Tesla earnings are coming, but do record deliveries mask a demand problem?

    New Constructs does not define Tesla Inc.
    TSLA,
    +7.01%
    as a “zombie stock,” citing CEO Elon Musk’s ability to raise capital, but does see the electric car manufacturer as a bellwether for the sector. “It shares many of the common characteristics of a zombie stock, such as an outrageous valuation and high cash burn,” wrote Trainer. “We believe Tesla’s unrelenting share price rise over the past three years – where investors completely ignored company fundamentals – inspired the birth of many of today’s zombie stocks.” 

    Tesla reports its third-quarter results after the closing bell on Oct. 19.

    The company’s stock was trading around $220 on Monday, an increase of over 1,000% compared to three years ago. But Trainer feels that Tesla is at risk of falling more than 80% to $25 a share.

    Tesla’s Optimus bot: ‘High school science project’ or robotics game changer?

    Tesla’s stock has fallen 37.6% in 2022, outpacing the S&P 500 Index’s
    SPX,
    +2.65%
    decline of 22.7%.

    “Its valuation remains nosebleed high because the cash flow expectations baked into the stock price are unreasonably optimistic,” Trainer wrote. “Our message to investors is to take profits in Tesla and avoid zombie stocks at all costs.”

    New Constructs recently added cloud-based communication company RingCentral Inc.
    RNG,
    +6.49%
    to its list of “zombie” stocks. Other companies on the list are Freshpet Inc.
    FRPT,
    -2.03%    ,
     Peloton Interactive Inc.
    PTON,
    +7.04%    ,
     Carvana Co.
    CVNA,
    +6.30%    ,
     Snap Inc.
    SNAP,
    +6.01%    ,
     Beyond Meat Inc.
    BYND,
    +0.64%    ,
     Rivian Automotive Inc.
    RIVN,
    +6.93%    ,
     DoorDash Inc.
    DASH,
    +6.15%    ,
     Shake Shack Inc.
    SHAK,
    +4.01%    ,
     Chewy Inc.
    CHWY,
    +10.76%    ,
     Uber Technologies Inc.
    UBER,
    +4.98%    ,
     Robinhood Markets Inc.
    HOOD,
    +3.24%    ,
     Tilray Brands Inc.
    TLRY,
    +7.32%    ,
     Affirm Holdings Inc.
    AFRM,
    +6.72%    ,
     SunRun Inc.
    RUN,
    +1.70%    ,
     Blue Apron Holdings Inc.
    APRN,
    +3.26%    ,
     and meme stocks AMC Entertainment Holdings Inc. 
    AMC,
    +6.00%
    and GameStop Corp.
    GME,
    +5.40%    .

    See Now: RingCentral added to ‘zombie’ stocks list by equity research firm New Constructs

    “Investors are now fed up with these kinds of companies, especially amid this year’s stock market volatility,” wrote New Constructs’ Trainer. “If investors start to give up on Tesla and take profits on the stock, which is up over 1,000% over the past three years, that spells terrible news for all of the other zombie stocks that don’t have the cash-raising luxury that Tesla has.”  

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  • WSJ News Exclusive | Peloton Co-Founder John Foley Faced Repeated Margin Calls From Goldman Sachs as Stock Slumped

    WSJ News Exclusive | Peloton Co-Founder John Foley Faced Repeated Margin Calls From Goldman Sachs as Stock Slumped

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    John Foley, the co-founder and former chief executive of Peloton Interactive faced repeated margin calls on money he borrowed against his Peloton holdings before he left the fitness company’s board last month, according to people familiar with the situation.

    As Peloton’s shares slumped over the past year, Goldman Sachs Group asked Mr. Foley several times to provide fresh funds or additional collateral for personal loans the bank had extended to him, the people said. The company’s share price has fallen nearly 95% from its $160 peak in December 2020.

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  • For Long-Term Investors, It’s Time to Buy Tech Again. Here Are 20 Stocks to Look at First.

    For Long-Term Investors, It’s Time to Buy Tech Again. Here Are 20 Stocks to Look at First.

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    One cruel truth the stock market confirmed this past week is that trying to pick the bottom for technology stocks is a fool’s errand. The Nasdaq Composite’s terrible September—it was down 10.5% on the month—has made the bottom-fishing that took place over the summer look ill-advised. As I’ve noted before, the first downturn in tech earlier this year was all about valuations. This new phase of the decline is all about softening earnings. When it comes to price-to-earnings ratios, the market is running into a denominator problem.

    The market downturn, the weaker economy, and the reversal of some pandemic-era trends have exposed weaknesses in the business models of companies such as


    Peloton Interactive


    (ticker: PTON),


    Zoom Video Communications


    (ZM),


    Shopify


    (SHOP),


    Affirm Holdings


    (AFRM), and


    Snap


    (SNAP), and investors have adjusted valuations accordingly. But there are still some powerful underlying secular trends that should eventually drive tech stocks higher. Investors with long time horizons and strong stomachs might consider inching into the market. I have a few ideas on where to look.

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  • Nike stock drops 10% as execs predict cheaper clothing for at least the rest of the year

    Nike stock drops 10% as execs predict cheaper clothing for at least the rest of the year

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    Shares of Nike Inc. plunged as much as 10% after hours Thursday, after the athletic-gear giant’s executives said price-cutting efforts to flush off-season clothing from warehouses in North America would dent gross margins for the rest of its fiscal year and warned of a big potential hit from the stronger dollar.

    Management also said they expected their rivals to keep cutting prices through at least the end of the calendar year, as they try to clear their own stockpiles. But the Nike executives said inventory levels in North America likely “peaked” in its first quarter, which ended on Aug. 31, and expected levels to even out — with newer, seasonally-aligned, in-demand product — in the months ahead as it prepares for the holiday rush.

    “We’re taking decisive action to clear excess inventory, focusing on specific pockets of seasonally late product, predominantly in apparel,” Chief Financial Officer Matthew Friend said on Nike’s earnings call.

    He added that he expected the moves to have a “transitory impact” on gross margins for the year.

    The lopsided inventory levels, which grew 44% during Nike’s third quarter, followed factory closures last year in Asia, where most of its footwear is made, that led to late product deliveries, Friend said.

    But those late deliveries are now getting mixed in with holiday-season deliveries that are set to arrive earlier than planned. The earlier arrivals, executives said, were a function of earlier ordering — due to the shipping delays that have characterized the past year —and then a sudden, more recent improvement in those shipping times.

    And as the U.S. dollar strengthens, Friend said he expected the full-year negative impact of foreign exchange on reported sales and earnings before interest and taxes to be $4 billion and $900 million, respectively.

    Still, executives said inventory management in China was “ahead of plan” as it recalibrates supply and navigates COVID-19 related restrictions there. And they said that consumer demand was still strong, despite rising prices. Friend and CEO John Donahoe both repeated that Nike remained customers’ “No. 1 cool” and “No. 1 favorite” brand.

    Donahoe said shoes like the Air Max Scorpion — which offered the “most air ever, in terms of pound per square inch” — reflected Nike’s commitment to innovation. The company’s Travis Scott and LeBron 20 sneakers also remained popular, executives said. The back-to-school season, and demand for its Jordan and Converse sneakers, were also solid.

    As for fiscal first-quarter financials, Nike reported net income of $1.5 billion, or 93 cents a share, compared with $1.9 billion, or $1.16 a share, in the year-earlier period. Sales came in at $12.7 billion, compared with $12.2 billion a year ago.

    Analysts polled by FactSet expected earnings of 92 cents a share on sales of $12.28 billion. Shares of Nike
    NKE,
    -3.41%
    were last down 9.3% after hours, but fell more than 10% at one point after the close.

    Prior to the report, analysts following Nike had zeroed in on the impact of the stronger U.S. dollar, the impact of China’s COVID lockdowns, as well as the effects from bigger discounts to sell shoes and other gear that sat around for too long due to backups in the company’s supply chain. The back-to-school season, and competition with the likes of Adidas AG
    ADDYY,
    -5.21%
    were also points of focus for Wall Street.

    Gross margins fell to 44.3% from 46.5% during the quarter. Nike executives said the decrease “was primarily driven by North America, which took measures to liquidate excess inventory through Nike Direct markdowns and wholesale marketplace actions.”

    Inventory for Nike stood at $9.7 billion, a 44% increase from the year-earlier period, due to what executives described as “ongoing supply-chain volatility, partially offset by strong consumer demand during the quarter.”

    Nike, in June, said it expected “higher promotional activity” in the first quarter, as it tries to sell seasonal items that arrived late, following the factory closures last year in Asia. However, for the full year ahead, management at that time said it was planning for “mid-single-digit price increases.”

    Executives also said then that they were planning to expand sales that go directly to consumers, via its own stores and online. The company over the years has been trying to rely less on retail chains like Foot Locker Inc.
    FL,
    -6.36%
    for sales.

    Shares of Nike have fallen 43% so far this year. By comparison, the S&P 500 index
    SPX,
    -2.11%
    is down around 24% over that time.

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