Stupidity is contagious -- even respectable companies can catch it. As we do every week, let's take a look at five dumb financial events this week that may make your head spin.
1. Target practice
The market's generally relieved that things could have been worse at Target (NYSE:TGT) after the discount department store chain posted quarterly results, but let's not give the retailer a free pass.
The cheap-chic retailer slumped after the hacking scandal that exposed tens of millions of credit and debit card transactions. Target's 2.5% slide in comps in light of the fiasco may not seem so bad, but we're also talking about a company that offered storewide discounts the weekend before Christmas to woo skittish shoppers. The markdowns didn't help, and adjusted earnings tumbled 21% for the holiday quarter.
2. Wind beneath my wings
McDonald's (NYSE:MCD) has a problem. It bought a whole lot of chicken wings last year, and now folks just aren't buying them. Go figure. Folks are going to McDonald's for burgers, and even KFC is laughing at McDonald's with its latest commercial that pitches its wings as coming from a restaurant known for its chicken.
The Wall Street Journal reports that Mickey D's was stuck with 10 million pounds of unsold wings, leading to this week's promo, where it's marking down a five-piece order by 40%. The $0.60-per-wing price point may be enough to clear out the inventory, but it's just one more thing McDonald's has done wrong by assuming that the key to reversing its negative comps is adding more items to the menu.
You don't see Five Guys or In-N-Out hurting with their streamlined offerings.
Good luck moving those Mighty Wings, McDonald's.
3. Only the Sony
At the end of the day, Sony Store is no Apple Store. Sony (NYSE:SONY) is shutting down most of its stateside retail locations, the Japanese consumer electronics giant announced.
Shuttering 20 of its 31 remaining storefronts before the end of this year makes sense. Sony is trying to shave overhead, something that worldwide layoffs bear out. It has also been unloading some assets including its Vaio PCs, giving it fewer items to potentially sell in its stores. Sony's retail shortcomings should serve as a cautionary tale for the next corporate titan that thinks its brand is strong enough to successfully operate namesake stores.
Who said I was talking about you, Mr. Softy?
4. Auction action
It's not easy to deal with Carl Icahn when he latches on to your company as an activist cause, and the billionaire trader's latest catch is eBay (NASDAQ:EBAY).
Icahn has taken a stake in the company behind PayPal and the namesake auction site, and he started to shake things up with several accusations including conflicts of interest posed by a pair of directors on eBay's board. Silence is never the right response, but eBay didn't do itself any favors by responding to his claims by amping up the snark.
"Carl Icahn doesn't let the truth get in the way of a good story," begins the press release titled "Stick to the Facts, Carl" headline. Everyone familiar with Icahn knows that he doesn't back down from a fight. Did eBay not see Icahn and Ackman slugging it out with verbal punches on CNBC last year?
Naturally, Icahn fired back with even more critical comments. You would think that a company like eBay, where merchants on the site go to great lengths to secure positive feedback, would know better than to join Icahn in the pool of mud.
5. Business trip
Office Depot's (NASDAQ:ODP) merger with OfficeMax in November was supposed to create huge synergies between the two struggling office supply superstore chains. It may take some time.
Office Depot's stock tumbled 9% on Tuesday on its heaviest volume in more than a year after it posted disappointing quarterly results. A dip in organic sales growth wasn't a shock, but the market wasn't happy with the adjusted deficit. Analysts were holding out for a small profit.
I guess that's why Office Depot stocks red pens.