The wine trade is faced with a massive oversupply of champagne due to overproduction and less demand than usual. ITN's Ben King explains. It is somewhat similar to the problem that hit luxury goods, shoes and services. Ben King says the oversupply should push prices down somewhat but premium champagne sellers fear discounting could hurt their brands. Take a look:
Fox Business reports in the video below that Wall Street firms are cutting back on perks. They had restaurant entrepreneur Alan Stillman on to discuss how this could impact his business and industry. Stillman said the cuts would be more likely to impact purchases of expensive bottles of wine than decrease restaurant visits.
MSNBC.com reports that leading coffee retailer now plans to close 600 stores in the U.S. Previously, they planned to close just 100 stores. It's a clear sign the economy is moving in a negative direction and that some consumers are cutting back on spending. The company may also let 12,000 employees go that work both full and part-time jobs.
The company said it now plans to close 600 company-operated stores in the United States, up from its previous plans to close 100 stores. The company also said it now plans to open fewer than 200 stores in its coming fiscal year.
The Seattle-based gourmet coffee retailer said the company used several criteria in deciding which stores to close, including whether they were profitable or expected to become profitable in the near future. In a statement, it added that "consideration was given to the impact of current and anticipated economic trends."
Starbucks, known for sometimes going so far as to open stores across the street from one another, has recently acknowledged that it may have lost some of its luster during a long period of rapid store openings and expansion into everything from breakfast sandwiches to movie promotions. The company also has been feeling the pinch from a down economy, which has made $4 coffee drinks less palatable for many Americans.
MSNBC also says Starbucks runs 16,000 Starbucks stores worldwide.
Analyst Mitch Pinheiro, who follows the company for Janney Montgomery Scott, said the company would need to get around $900 million for Godiva to avoid diluting earnings.
Pinheiro said Campbell has resisted selling Godiva in the past partly because there was no place to reinvest the money that would equal profits generated by the chocolate company.
He said that has changed. The company could put money toward its planned entry into the soup business in mainland China and Russia and into expanding manufacturing capacity for its increasingly popular V8 juices -- and do it without taking on additional debt.
"I think the fact that the company's putting Godiva up for sale signals that Campbell Soup has strong growth opportunities in its core portfolio," Pinheiro said.
BusinessWeek has an article that looks at the high-end chocolate industry. The article says costs and profits are up for the chocolate industry but that Godiva is also facing new competitors. The article also says Godiva is a strong luxury chocolate brand with $500 million in annual sales. Godiva is expected to sell for around $1 billion. More coverage at Money Morning, FoodProcessing.com and Confectionery News.
You have probably heard of the recent fiasco where Whole Foods CEO John Mackey was busted making comments about rival company Wild Oats on Yahoo's stock market message boards under the pseudonym Rahodeb. If you haven't heard the story Mediapost has a nice recap.
The latest example: John Mackey, co-founder and chief executive of Whole Foods, posted anonymously about his company and the acquisition target Wild Oats Markets on the Yahoo stock market boards beginning in 1999 until last year. Using the pseudonym "Rahodeb" -- an anagram of his wife's name, Deborah -- he routinely bashed Wild Oats, posting nuggets such as "OATS has no value and no future," The Wall Street Journal reports. That particular post was made in February 2005; this year, Whole Foods agreed to purchase Wild Oats for $670 million in February.
The information about Mackey's posts came to light this week, thanks to the Federal Trade Commission, which is seeking to block Whole Foods' buyout of Wild Oats, saying the deal would squash competition.
But, while criticizing a rival anonymously doesn't seem like an especially noble way to run a business, it's also hard to see how, in these circumstances, it proves an antitrust violation.
A Wall Street Journalarticle (via The Food Section) goes into detail about Mackey's comments on the Yahoo forum.
"Would Whole Foods buy OATS?" Rahodeb asked, using Wild Oats' stock symbol. "Almost surely not at current prices. What would they gain? OATS locations are too small." Rahodeb speculated that Wild Oats eventually would be sold after sliding into bankruptcy or when its stock fell below $5. A month later, Rahodeb wrote that Wild Oats management "clearly doesn't know what it is doing .... OATS has no value and no future."
Obviously, this was a huge mistake by Mackey. CEOs and insiders should stay far away from Internet forums and blog comment sections. The same post from Mediapost.com mentioned above also compares the John Mackey "Rahodep" incident to Wal-Mart's Travel Flog. The flog was pretty bad but Mackey's postings are worse. It has been a much bigger news story and more damaging to Whole Foods than the flog was to Wal-Mart.
John Mackey's blog has been put on hold.
For more coverage of John Mackey's mistake try a Technorati search for Rahodeb. That will give you a number of blogs that are discussing the story.
Bloomberg reports that the popular coffee chain Starbucks Corp. plans to add 10,000 new stores over the next four years. The company already serves a staggering 45 million customers each week.
Starbucks Corp., the world's largest coffee shop chain, will open at least 10,000 new stores over the next four years and double its size within five years, chairman Howard Schultz said yesterday. Starbucks is serving 45 million customers a week, Mr. Schultz said at the company's annual meeting in Seattle, where it is based. Starbucks' long-term goal is to have 40,000 locations worldwide, compared with 13,168 stores at the end of 2006. In another development, Paul McCartney was introduced as the first artist signed to Starbucks' new record label. The former Beatle made an appearance via a video feed from London at the annual meeting.
Wallstrip offers some insight on Starbucks Corp. in this entertaining video below. They talk about how Starbucks is turning into a retail outlet selling books, cds, etc. They mention a couple Starbucks related blogs: StarbucksGossip.com and I Hate Starbucks. If all this coverage encourages you to run out to Starbucks for a caffeine fix just don't try to carry quite as many drinks as Wallstrip's host Lindsay did.
A KFC/Taco Bell in Manhattan faced a disturbing rat problem. Blogging Stocks explains what the rat invasion looked like. You could also watch the video.
It seems that after local news stations heard about the rat sightings they flocked to the store to catch the rodents having their way around the restaurant. The rats were taped running between counters and tables and climbing on children's high chairs. Yikes, definitely not a good scene.
While today's rat race is definitely a disturbing event, it really shouldn't come as much of a surprise to the restaurant owners. Back in December when the store had a health inspection they were giving a passing grade but the inspectors noted at that time that there was evidence of rat droppings in the store.
The store has been closed until the store is completely re-sanitized and given a clean bill of health. According to a statement from KFC/Taco Bell construction in the basement on Thursday "temporarily escalated the situation."
Blogging Stocks also reports that shares of Yum Brands, the parent company of Taco Bell and KFC, traded down 0.7% for the day.
Bloomberg reports that the larger organic food retailer Whole Foods is buying smaller organic food retailer Wild Oats.
Whole Foods Market Inc., the largest U.S. natural-foods grocer, said it agreed to buy rival Wild Oats Markets Inc. for $565 million after reporting its first profit decline in five quarters.
Whole Foods will pay $18.50 in cash for each share of Boulder, Colorado-based Wild Oats, 18 percent higher than its closing price today. First-quarter net income fell 7.8 percent to $53.8 million, or 38 cents a share, Austin, Texas-based Whole Foods said today. Earnings missed analysts' estimates.
Buying Wild Oats will help counter slowing growth at Whole Foods, which faced competition from Safeway Inc., Trader Joe's and other grocery stores selling organic and prepared food. First-quarter sales at Whole Foods stores open at least a year rose 7 percent, down from 13 percent a year earlier.
"Whole Foods had won the size game and was able to call the shots," said Matt Patsky, portfolio manager at Boston-based Winslow Management Co. which overseas $350 million, including Whole Foods shares.
Wild Oats posted a loss in two of the past five years and its sales climbed 26 percent over the period to $1.12 billion, while Whole Foods doubled profit and sales.
Here are a few other details:
Whole Foods will add 110 stores in 24 states and Canada and close a few Wild Oats stores that overlap with Whole Foods stores.
Whole Foods says the integration will take them two years.
The deal could help Whole Foods cut costs as they face rising competition from regular grocery stores adding organic food aisles and sections.
Another article on the merger can be found here in the Denver Post. Wild Oats is based in Denver.