A humorous look at the companies that caught our eye, for better or worse, this week
CRUDE OIL
Oil prices are going to rebound any day now, right? Yeah, and a fat guy in a red suit will actually squeeze down your chimney on Christmas Eve. Days after the Organization of Petroleum Exporting Countries failed to reach an agreement on cutting production, the group announced that it pumped more oil in November than any month since April, 2012, lifted by strong output from Iraq. The only thing energy investors are getting for Christmas: tax losses.
Lt. sweet crude $35.62 (U.S.)/brl, down $4.35 or 10.9 % over week
KEURIG GREEN MOUNTAIN
You know when you have four espresso shots to start your morning and you’re like, “Woooooo hoooooo! Let’s DO this!” That’s exactly what Keurig Green Mountain investors said after the company, which makes Keurig coffee brewers and K-cups, received a $13.9-billion takeover bid from Europe’s JAB Holding Co. With JAB offering $92-a-share in cash – a 78-per-cent premium to the market price – the stock got a massive caffeine jolt.
GMCR (Nasdaq), $88.96 (U.S.), up $37.26 or 72.1% over week
REITMANS
Things we’re still waiting for:
1) World peace;
2) The second coming of Elvis;
3) A turnaround at Reitmans.
Hurt by a combination of the low Canadian dollar – which put a dent in gross margins – and a writedown of marketable securities, the struggling apparel retailer swung to a loss of $300,000 for the three months ended Oct. 31, down from a profit of $12.9-million a year earlier. Just like Reitmans’ customers, investors are shopping elsewhere.
RET.A (TSX), $4.02, down 8¢ or 1.9% over week
LULULEMON ATHLETICA
Business quiz! Shares of Lululemon Athletica fell this week because:
a) Due to a manufacturing error, the company produced millions of yoga pants with just one leg;
b) Donald Trump endorsed Lululemon clothing, saying it “sculpts my butt like no other product I’ve tried before.”
c) The company reported a 12-per-cent drop in third-quarter profit and cut its full-year earnings forecast.
Answer: c.
LULU (Nasdaq), $46.12 (U.S.), down $3.06 or 6.2% over week
STAPLES
For shareholders of the two largest U.S. office-supply chains, it was like getting a skid of copy paper dropped on their foot. Citing the potential for higher prices, U.S. and Canadian regulators filed a challenge to Staples’ proposed $6.3-billion takeover of Office Depot (which owns Grand & Toy in Canada), causing shares of both companies to plunge. But look on the bright side: With the companies vowing to fight the challenge in court, lawyers will be using a lot of paper.
SPLS (Nasdaq), $9.50 (U.S.), down $2.86 or 23.1% over week