Editor’s Note: This is the Paw Print Rewind, a daily recap of the top news headlines.
Nike reports better profits again
Nike, the world’s largest footwear maker, has reported better profits for the eighth straight quarter because of higher high-margin shoe and apparel sales at higher prices, as well as a rise in “future orders” growth.
The Beaverton, OR-based company also raised its sales growth forecast for the current fiscal year.
Nike’s future orders, which are delivery orders from June-November rose 13 percent excluding end of the fourth quarter currency fluctuations.
“[Nike’s results are] extremely impressive across the board. It’s almost mind-boggling how a company this big can post numbers this impressive year in and year out.”
-Brian Yarbrough, Edward Jones analyst
The company’s growth is attributed to trendy products and a lack of strong competition, according to Yarbrough.
Nike’s higher-margin Jordan, LeBron, and Kobe basketball shoe lines have been especially popular in the United States, making it the company’s fastest growing footwear business.
Running shoe sales rose in the quarter.
Sales of higher priced merchandise and growth in its direct-to-consumer business helped boost gross margins 60 basis points in the fourth quarter that ended May 1st, according to Nike.
That is expected to fuel a 50 basis point margin boost in the current quarter, according to company CEO Don Blair.
Nike has been hiking DTC business investments, which includes sales through its retail stores and online, growing 27 percent in the quarter.
The company’s net income rose 24 percent to $865 million ($0.98 per share), while revenues rose 4.8 percent to $7.78 billion.
North American revenue rose 13 percent due to higher footwear and apparel sales. Footwear sales rose 8.6 percent.
Nike now expects sales, excluding currency fluctuations, to grow in the low double digit percentage range during this fiscal year, according to the company.
Lululemon recalls female top draw cords because of injury risk
Lululemon has recalled the drawstrings for 318K women’s tops due to injury risks.
The financial impact of the recall isn’t material, according to the company.
Customers can remove the draw cord or contact Lululemon for a non-elastic replacement, according to the U.S. Consumer Product Safety Commission and Health Canada.
The latest recall, which the Vancouver-based company initiated, affects a variety of tops sold in the United States and Canada between January 2008 and December 2014.
“Our main priority is ensuring our product works for our guests, and we believe this is the necessary proactive action.
“We assessed and accrued for the financial impact … and do not consider this to be material to our business.”
-Lululemon, in a statement
The elastic draw cord with hard plastic or metal tips in some tops’ neck area can snap back and cause injury if it is pulled accidentally, according to the recall.
The company reported five incidents in Canada and one in the United States, according to Health Canada.
Colt Holdings gets revised loan, eases rush to sale
Bankrupt gun maker Colt Holdings has reached an agreement with its bondholders that will postpone the Hartford, CT-based company’s rush into a controversial sale to its current private equity owner while also providing much-needed cash.
Colt Holdings will accept an up to $75 million loan from its bondholders and other lenders to finance its operations while in bankruptcy.
Laurie Silverstein, a Wilmington, DE bankruptcy judge, also allowed Colt to use some of a $20 million loan to meet payroll.
“We are now in a free-fall Chapter 11.”
-Mark McDermott, Skadden, Arps, Slate; Meagher & Flom; Sciens Capital Management lawyer
Sciens Capital Management has proposed buying Colt except for the $250 million in loans.
Egypt al Jazeera journalist trial ruling set for July 30
A ruling in the retrial of two Al Jazeera journalists will be issued on July 30th after being previously sentenced to seven to ten year prison sentences.
Mohamed Fahmy, a naturalized Canadian who has given up his Egyptian citizenship, and Egyptian Baher Mohamed were previously charged with aiding the Muslim Brotherhood.
Australian Peter Greste was deported in February.
Disney bans selfie sticks from theme parks for safety
Disney has banned selfie sticks from its theme parks worldwide for safety reasons.
The Burbank, CA-based company will not allow the smartphone accessories in Orlando’s Walt Disney World, Anaheim, CA’s Disneyland, as well as its Hong Kong and Paris parks.
“We strive to provide a great experience for the entire family, and unfortunately selfie sticks have become a growing safety concern for both our guests and cast.”
-Kim Prunty, Disney spokeswoman
Disney tried to allow selfie sticks in the park, but not on rides, according to Prunty, but violators forced park staff to stop rides for extended periods of time.
Park security personnel will ask guests who arrive with the sticks to stow them in a storage facility or in their hotels or cars.
Disney joins Washington’s Smithsonian Institution, Paris’ Palace of Versailles, Rome’s Colosseum, Universal Studios Indio, CA’s Coachella festival; as well as Chicago’s Lollapolooza in banning the accessories.
SeaWorld allows selfie sticks in its parks, but not on rides and over animal habitats, according to company spokeswoman Becca Bides.
Goldman Sachs settles SEC charges over 2013 trading incident
Goldman Sachs will pay $7 million to resolve U.S. Securities and Exchange Commission (SEC) charges stemming from a programming error that caused the stock options market to be flooded with errors, as well as roiling traders and prices.
The settlement arose from the August 20th, 2013 incident.
The New York-based bank mistakenly sent about 16,000 mispriced options orders to various exchanges, according to the SEC.
This caused about 1.5 million options contracts (150 million shares) to be executed in the minutes about markets opened, even though Goldman tried to cancel the orders.
The problem was compounded when a Goldman “Mission Control” unit employee manually lifted circuit breakers designed to block errant orders, according to the SEC.
Goldman was charged with violating the SEC’s “market access” rule, which requires brokerages that provide customers with direct market access to have reasonable risk and supervisory controls designed to prevent disruptions.
“Firms that have market access need to have proper controls in place to prevent technological errors from impacting trading. Goldman’s control environment was deficient in several ways, significantly disrupted the markets, and failed to meet the standard required of broker-dealers.”
-Andrew Ceresney, SEC enforcement chief
Goldman was pleased to settle, according to a company statement, and has strengthened its controls and procedures.
Goldman’s orders were placed for stock and exchange-traded fund options with ticker symbols beginning with the letters I-K, according to the SEC.
The company lost $28 million from the incident, according to the SEC.
U.S. sues to stop Electrolux from acquiring GE’s appliance business
The United States has filed a lawsuit to stop Electrolux, which owns Frigidaire, Kenmore, land Tappan, from buying General Electric’s appliance business, according to the Justice Department.
The $3.3 billion deal will hurt competition and consumers by combining two of the top three stove, cooktop, and oven makers, according to the Justice Department.
“Electrolux and GE intend to vigorously defend the proposed acquisition.”
-GE, which owns Hotpoint, in a statement
Whirlpool, GE, and Electrolux have 90 percent of the U.S, stove and oven market, according to the Justice Department.
“This lawsuit also seeks to prevent a duopoly in the sale of these major cooking appliances to builders and other commercial purchasers.”
-Leslie Overton, Justice Department antitrust division deputy assistant attorney general
“There is absolutely no barrier of any kind to any other manufacturer participating.
“We are rational and are therefore more than happy to come to a reasonable settlement if the [Justice Department] is. If not we’re just going to have to win in court.”
-Joe Sims, Electrolux antitrust attorney
Smucker cuts Folgers coffee prices
The J.M. Smucker Company has cut prices for its Folgers and Dunkin’ Donuts coffee by six percent, according to the Orrville, OH-based roaster.
“Consumers are getting smarter about recognizing price and package size changes, particularly in coffee, where price volatility is more visible.”
-Ross Colbert, Rabobank International global beverages strategist
“This is an attempt to create the illusion of lower prices while not doing so.”
-Shawn Hackett, Hackett Financial Advsiors president