Costco and DSW reports lower than expected earnings, and cities keep pulling out of consideration for the 2022 Winter Olympics. More news for the busy investor.
Hot Fight Over Hot Sauce is Over
The Irwindale, Calif., City Council has dropped its lawsuit against the makers of Sriracha hot sauce after state officials asked them to do so. The city had filed a public nuisance declaration and lawsuit against Huy Fong Foods because the residents of Irwindale were complaining of burning throats and eyes from the odors emanating from the company’s factory. But city officials met with company CEO David Tran along with representatives of the Business and Economic Development Office of the State of California, and following that meeting, Mayor Mark Breceda said he would request the city council end its lawsuit. Neither the city nor the company released a statement regarding what if any agreement had been reached about ending the odor problem.
Who Will Host the 2022 Winter Olympics?
This week Krakow, Poland officials pulled out of consideration for the 2022 Winter Olympics after almost 70 percent of residents voted against the idea of hosting the games. That leaves just Beijing, Oslo and Almaty, Kazakhstan as the cities will official bids to host the expensive month-long sporting event. Recently, Munich as well as Davos and St. Moritz, Switzerland dropped their bids due to cost considerations. Oslo is considered an unlikely spot due to faltering support from Norwegian officials, and a bid by Lviv, Ukraine is unlikely to be considered due to the current crisis ongoing in that country. Beijing hosted the Summer Games in 2008. Almaty, Kazakhstan is a city of 1.4 million and its biggest sporting event to date was the Asian Winter Games. The Sochi Winter Games cost $51 billion to conduct.
Costco Fails to Meet Expectations
Costco Wholesale reported third-quarter results below the expectations of economists, claiming merchandise costs and other expenses created the poor numbers. Merchandise costs in the quarter ended May 11 rose about 7 percent to $22.55 billion while selling, general and administrative expenses rose about 8 percent. Net income for the quarter rose to $473 million from $459 million one year ago. Net sales rose 7 percent in the third quarter. Costco operates 655 warehouses worldwide.
No New Plot Twists in Amazon-Hachette Stalemate
Fans of Hatchette authors James Patterson and Malcolm Gladwell will continue to have to buy their books someplace other than Amazon, CNN reports. In a statement posted on an Amazon Kindle forum, the world’s biggest seller of books encouraged customers “to purchase a new or used version from one of our third-party sellers or from one of our competitors.” Amazon has reportedly been pressuring Hachette to let it lower prices for 3-books and ultimately pay Hachette less for them. “We have been unable to reach mutually acceptable agreement on terms,” Amazon’s statement said. Some of Hachette’s books have been listed on Amazon-com as “out of stock” and last week the e-tailer removed preorder capabilities for others. Amazon also said in its statement that the “business interruption” only affects about 11 out of every 1,000 items for sale on Amazon.com.
DSW Stock Plummet Anything but a Cinderella Story
Facing worse-than-expected sales and earnings as well as downgraded financial projections, discount shoe retailer DSW saw its shares plummet Wednesday 27 percent, wiping out more than $800 million of value for the company, CNN reports. DSW CEO Mike MacDonald, in a conference call with analysts, blamed extreme winter weather for its poor performance. Sales dipped 0.4 percent during the first quarter, while same store sales dropped 3.7 percent. Website traffic increased, but it wasn’t enough to make up for fewer people coming to the stores. The sell-off left DSW shares at levels unseen since January 2012.
Apple Looking to Get Its Groove On with Beats Acquisition
Apple announced Wednesday its $3 billion acquisition of Beats Electronics, a headphone and music streaming specialist founded in 2008 by hip-hop producer Dr. Dre. It is the most expensive acquisition in Apple’s 38-year history. The price costs of $2.6 billion in cash and $400 million in Apple stock that will vest over an unspecified time period, USA Today reports. The deal is expected to close before the end of September. Bats recoded $1.1 billion in revenue last year. The growing popularity of music streaming services such as Pandora and Spotify has been reducing sales of songs and albums, the sales domain of iTunes for the past decade. U.S. sales of downloaded songs slipped 1 percent last year to $2.8 billion while streaming music revenue surged 39 percent to $1.4 billion, according to the Recording Industry Association of America. Apples own streaming service, iTunes Radio, which launched last September, has not met company expectations.