$LULU Sheer Transparency Shows Weak Management

Lululemon (Nasdaq:LULU) stretched fashion too far and tried to sell a yoga pant which is too sheer for general community use. A full refund is offered. The initial word is a supplier made a mistake. The supplier has worked with Lululemon before.

So Lululemon has a production quality control problem and relies blindly on its supply chain. Now the stock has blown off its quarterly earnings and confusion abounds. The mistake is unacceptable. Lululemon took its eye off the ball and went to sleep. you cannot do that with vendors and supply chain management. In the world of fashion apparel the faux pas is death. Watch for several executives to start looking for work and here is why. The board has several retail savvy directors. They should know which questions to ask. Look for the following to offer some leadership:

Brad Martin 60. Director since 2007. CEO of Saks 1989-2006 and a director of Dillards. Gotta be shaking his head and having a WTF moment.

Michael Casey 66 Director since 2007. He retired from Starbucks as the CFO. starbucks buys its coffee all around the world and knows supply chain.

Robert Bensoussan. Fmr CEO of Jimmy Choo and now an investor in brands and retail. Jimmy Choo pedigree is hard to argue with.

Jerry Stritzke 51 President and CEO of Coach since 2008. Previously held several executive positions with Limited Brands.

You have to remember this is the same company who attempted to market a T-shirt which had supposed transdermal properties until the New York Times busted them with the help of some rigorous scientific analysis.

Then there was the Ann Rand shopping bag thing which is so unlike Yoga. But we all knew that.

So these retail guru’s are gonna take care of business. Right. I mean if they can’t who can? Like all these yoga women were going to be accidentally naked.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Office Depot Board Battle $ODP New Broom Sweeping or Elegant Fist Fight

Office Depot (NYSE:ODP) woke up this morning and found that its largest shareholder wants to re-constitute the board. Starboards Value LP  have proposed six of their own and want to do it now before the upcoming merger of equals with OfficeMax.

Activist shareholder Starboard Value LP is saying the existing board cannot handle the new venture. Office Depot and OfficeMax are clearly also rans in the battles with Staples. So the merger is not a brilliant flanking move but a consolidation and lets hope it works stratagem.

The new board of directors is not the championship team that knows the way to the Super Bowl. Lets take a look at a few of the longer serving members on ODP’s board:

W Scott Hedrick 66 is the lead director and has been long serving. Very long serving. Which means he has not provided any differentiating leadership that would have allowed ODP to beat Staples. The corporate blurb says “he brings important institutional knowledge and he has a solid basis for his analysis of our financial strategies” Sounds like he is an excellent analyst.

Brenda J Gaines 62 was formerly President and CEO of Diners Club and previously a rising star in Citigroup. So some more financial experience and insight into plastic money and payments. Not a critical skill for a commodity supplier of office supplies.

Marsha Johnson Evans 64 is a retired Rear Admiral USN and a human resources type. If you look at the sales associates in Office Depot they did not use the high pieces of her advice.

Nigel Travis whose resume lists Dunkin Donuts, Papa John’s, Blockbuster and Burger King is clearly a fast food guy. Not sure how many transferable skills and experiences applied to office supplies.

Justin Bateman 38, sits on the board by virtue of an investors rights agreement with BC partners who has a substantial investment stake in ODP. He should have the best ear for take over value.

Starboard’s CEO Jeffrey Smith wrote in a letter to Office Depot. “Instead, now
is the time to act to immediately improve the current operating performance of
the business on a stand-alone basis and to be in position to maximize the longer
term synergies with OfficeMax if the merger is approved.”

Among the board nominees are Smith and two executives Starboard had already said
it was working with: Robert Nardelli, former CEO of Home Depot and Chrysler, and
Joseph Vassalluzzo, a long-term Staples executive. Also nominates are James
Fogarty, CEO or Orchard Brands, Cynthia Jamison, a board member at Tractor Supply Co.
and David Siegel, CEO of Frontier Airlines.

Quite frankly the new replacement players sound way better than the old team.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

 

Google Reader I Get It! Go To Twitter Immediately! $GOOG $TWIT

Google (Nasdaq:GOOG) has annoyed a loyal client base by crucifying its Google Reader product. Rather than being smart enough to migrate it into something more valuable they are throwing it away.

So after a few minutes of “WTF” am I gonna do now the light shone from on high. Switch everything to twitter immediately if not sooner and just make those guys more valuable.

Simple. Can’t imagine why it took me so long to figure it out.

Bye Bye Google.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Nabors Big Bucks Switcheroo! Err I Mean CEO Pay Fix Up. $NBR

Nabors Industries (NYSE:NBR) is paying Chief Executive Anthony Petrello $60 million to give up potentially unlimited annual bonuses and tie his future compensation more closely to company performance.

Bird in hand is worth two in bush for Anthony Petrello. Nabors has been criticized by investors for its outlandish executive compensation packages. This is supposed to be a fix, or improvement or whitewash or…?

Compensation is set by the board. Check out the guys who signed off on the deal and put all the gold into this guy’s pockets

Myron Sheifeld 82 is a lawyer and supposedly a pre-eminent bankruptcy practitioner and scholar. Why does a drilling company need an 82-year-old bankruptcy guy?

James Payne 75, oil man and wheeler-dealer.

James Crane, private equity wheeler-dealer.

John Lombardi 69, career academic

John Yearnwood 51, geologist and Schlumberger alumnus.

Michael Linn, oil man wheeler-dealer.

If you have come to the conclusion that these guys stink you are correct. Governance activists are lining up. The pay cheque shuffle is just some hocus pocus.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Google Bitch Slaps Reader Clients. Then They Go Home. $GOOG

Google (Nasdaq:GOOG) bitch slapped its Google Reader customers and announced the big delete on July 1. No upgrade. No sale. Just we don’t want to play anymore and are going home.

Corporate rationale is they want to put more emphasis on a few products and Reader is being kicked to the curb.

Said in another fashion the Google brain trust failed to make this one work and they are beating a retreat. No information on exit costs which can easily be absorbed.

But the subliminal message to customers is we will drop you if as and when we feel like it. Google customers will become loath to trust Google’s longevity and commitment in other area’s.

The Brand has been damaged.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Philip Morris New CEO. Next Change Out Board of Directors. $PM

Philip Morris International (NYSE:PM) appointed Andre Calantzopoulos as the new CEO. Previously the Chief Operating Officer he moves up an important rung. Louis C Camilleri relinquished the CEO position and stays on as chairman. Governance experts will applaud the separation of the two posts.

What changes can be expected at the board level? Six out of twelve directors are 65 or older. Lucio A Noto, the Presiding Director is 73. Growth is expected in foreign non US jurisdictions. Read Asian and then drill down to China. Which Board members are assets in this strategy.

Jennifer Li 44 is the CFO of Baidu which means China. She has impressive credentials from General Motors. Also given her age she should have some staying power. Baidu and China sponsors must approve of this appointment.

Ms. Kalpana Morparia 62 assumed her current position with J.P. Morgan India Private Ltd. in 2008, and is a member of J.P. Morgan’s Asia Pacific Executive Committee.

So we have the all important China and India markets at least initially covered. Carlos Slim Hetu 72 is one of the richest men on planet earth so that sounds pretty good for influence and guidance.

Harold Brown 84 the former defence secretary may provide some geo-political context in a warrior conflict context. But can he contribute to establishing market share in controlled economies. Probably not.

So watch for some constant changes. Most of the board for obvious reasons was appointed back in 2008. So after five years it would not be unusual to start changing out the old guard.

I do not expect a Euro-centric flavour to the changes if they expect to make more inroads in Asia.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

General Motors Reverts to Bad Old Ways. Cadillac May Become 1% Loser $GM

Campbell Ewald logo

Campbell Ewald logo (Photo credit: Wikipedia)

General Motors (NYSE:GM) if the rumour mill is correct is close to awarding the $250 million per annum Cadillac account to Campbell Ewald. Campbell Ewald has had a relationship with GM since the Great Gatsby Years of the early 1920’s.  The Cadillac brand which used to compete neck and neck with Lincoln Continental well both are considered pedestrian compared to Lexus, Mercedes-Benz and BMW.

A recently former GM Chief Marketing Officer Joel Ewanick had moved the account to Minneapolis based Fallon Worldwide Inc in a supposed attempt to bring in some fresh thinking. Everyone agreed that Cadillac needed some; no lots of fresh thinking.

Problem was according to Fortune magazine some reps to the board about some promotional deals with Manchester United did not bear scrutiny. Sooo….likes gets whacked. Not sure what his side of the story was. Like how hard is it to convince a stodgy GM board but anyway they parted ways. And as is usual in the post apocolytic scenes the former decisions are reversed. Good or bad they must be expunged.

OK so like if you are very new to GM let me point out they have recently gone bankrupt and only by the grace of Obama at the behest of unions fearing huge job loses were they propped up and forced to survive. Just recently they still had to go to congress to get senior officer pay packages approved because Uncle Sam still owns some 20%.

You have to get the cleansing process. after you whack a senior guy you go back to what is safe. But the safe contributed to the bankruptcy. Cadillac lost its iconic status.

As is my way lets look at the Board of Directors especially the independent ones and see what influences there were to allow this course of events. Cadillac is a premium supposedly ultra luxury brand. So experience in marketing premium ultra luxury should be an asset.

Short answer no one on the board has this pedigree. Take a quick look at the career DNA’s and decide for yourself. Then think about the quality of future issues if you care to venture out so far.

Thomas Schoew 59, was EVP Walmart, before that exec with Black and Decker. Currently a director of KKR and Northrop Gruman. OK the Walmart pedigree tells all.

Theodore M Solso 65, Chair and CEO Cummins the Engine People. Also director of Ball Corp and Ashland. No luxury brand expertise.

Robert Knebs 69, Was chairman of Burlington Northern Santa-Fe and was chair of UAL. Infrastructure guy.

Phillip Laskawy 71, Chair and CEO Ernst Young and DNA pedigree in financial services. Essential a numbers guy and probably a damn good one. but nowhere on the Cadillac file.

David Bonderman 69,  Co-founding partner and managing partner of TPG, chair of Ryanair a low air fare discounter. Board seat on Caesar’s hints at high roller savvy but not quite.

Neville Isdell 68, Chair of Coca Cola mass consumer drink out of the bottle experience. not enough champagne to get the Cadillac brand and what it really needs.

Erroll Davis Jr. 67, Alliant Energy pedigree and more recently superintendent of Atlanta Public School System. Noble works but not exactly the gilded lifestyle experience.

Kathryn Marinello 55, Pedigree in Human Resources such as Ceridian, Senior Advisor to Providence Equity Partners and Ares Capital. Not to mention ten years as President & CEO GE Fleet Services.

Patricia Russo 59, CEO Alcatel-Lucent and before just Lucent. Director of alcoa, HP, KKR and Merck. OK so I cannot find the luxury brand experience in technology and pharma.

Cynthia Ann Telles 59, Doctor and member of faculty of UCLA Medical School-Psychiatry. A shrink with big peer respect. But Cadillac stuff does not show.

Carol Stephenson 61, President and CEO of Lucent Canada. Canadians you just have to watch them closely. They have health care and abundant energy resources plus decent education. Cadillacs not so big.

Michael Mulligan was a four star admiral and brings to the table geo-political insights.

James Mulva 65, Chair and CEO ConocoPhillips. Also director of GE Company.Big strategic stuff good. Fancy self-indulgent Cadillacs not there for it.

So basically no one on the Board gets Marketing much less the all important fat margin niche of luxury Marketing. The Cadillac account gets switched and good luck with that.

Much luxury growth will be in developing countries. Will a Michigan based advertising company with a few overseas offices get it.

Not the way I would place my bets.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski