Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. Sam Walton is shaking his head again
Wal-Mart (NYSE:WMT) made this column last week for posting disappointing quarterly results, even somehow playing the Obamacare card to explain the thrifty ways of its hesitant shoppers.
This week, it got into some hot water when a store in Ohio set up a food drive for its own employees. Asking employees of the Canton store to donate food items so that fellow employees who had fallen on hard times could enjoy the Thanksgiving holiday was never going to be a good idea. A charitable notion is rarely wrong, but this time it only provides ammo to those who feel Wal-Mart should be paying its cashiers and sales associates more.
A Wal-Mart rep countered that it was intended for those who have unemployed spouses, but that's a tough argument to make; the point is that Wal-Mart employees need food drives to feed their families.
GameStop slumped 7% after warning that it would miss Wall Street's quarterly profit target. The 6,488-store retailer's guidance calls for earnings to clock in between $1.97 to $2.14 a share, and that's not good when you earned $2.16 a share a year earlier. Think about that. The Xbox One and PS4 are out this month. A new Call of Duty game turned heads earlier this month. New consoles should inspire die-hard gamers to trade in their old games and systems to pay for the new platforms, and that's where the margins are the thickest in the GameStop model.
Adding salt to the wound, GameStop's been aggressively buying back stock over the past year, so the actual decline in terms of net income will likely be worse than it seems on a per-share basis.
3. Throwing the book at Costco
Costco (NASDAQ:COST) rarely finds its way into this weekly column. It's the warehouse club that everyone loves for its steady financials, low prices, and high wages. It even scored points with traditionalists as one of the few retailers that won't be open on Thanksgiving next week.
However, it got into a bit of hot water this past weekend when a pastor walked into a Costco in California, only to find a Bible labeled as "fiction" in the store's book department.
Costco has Bibles for sale under the genre of FICTION Hmmmm...... pic.twitter.com/mLZVogkSfd— Caleb Kaltenbach (@calebwilds) November 15, 2013
Costco responded quickly after the incident went viral. It blamed the distributor for mislabeling some of the Bibles but still took responsibility for not spotting it first. However, it's still a rare blunder on Costco's part, making it look bad to many of the traditionalists who were praising the warehouse club for respecting the tradition of the Thanksgiving holiday earlier in the month.
4. There's a LightInTheBox that never goes out
This should have been a layup for LightInTheBox (NYSE:LITB). The China-based Internet retailer of housewares and high-end apparel simply had to follow the lead of China's two other stateside-trading e-tailers that posted better-than-expected quarterly results last week.
It didn't happen.
LightInTheBox posted a loss while Wall Street was holding out for a profit. Sales climbing 33% were at the low end of its earlier range, but then its projected revenue to decelerate to just 16% to 19% year-over-year growth. Analysts were betting on a 28% advance for the company that sells most of its stuff in Europe. That's not good, and this is the second quarter in a row that it stunned investors by hosing down its guidance. That's not the way to win over investors after going public earlier this year.
5. Fries above it
McDonald's (NYSE:MCD) got into hot water earlier this year when its employee assistance line advised a McDonald's worker to consider food stamps to feed her family, but some of the McResources gems that are coming out this week are vintage public-relations nightmares.
According to an admittedly biased advocacy group, Mickey D's is advising employees to sell their holiday gifts and other extra stuff on Craigslist. It is also recommending that they cut regular-sized meals into small bites so that it will make them feel more full. Providing resources to employees is commendable, but when the advice is ammo that can be used against you, it's as if Mickey D's might start setting up a food drive for its own employees.