Winners and Losers of the Week: A Coffee Deal and a $99,734 Used Car
Companies can make brilliant moves, but there are also times when things don't work out quite as planned. From a deal between a doughnut maker and a coffee brewer to a sandwich maker using an unusual chemical to condition its dough, here's a rundown of the week's smartest moves and biggest blunders in the business world.
Tesla Motors (TSLA) -- Winner
One of last year's biggest winners just keeps on revving. The maker of luxury electric cars hit another all-time high this week.
Tesla got a major boost when auto sales tracker ISeeCars.com reported that Tesla's Model S sedan was selling for more used than it sells for as a new vehicle. It saw the pricey plug-in electric vehicle fetching an average of $99,734 in resale deals. The average transaction price at the showroom is $93,000.
Tesla's demand continues to outstrip supply, and that's why new buyers sometimes have to wait as long as three months for a Model S after placing an order. Either way, it has to be a strong marketing point to know that a new car won't be devalued the moment the keys are handed over to the buyer.
Subway -- Loser
The world's largest sandwich chain announced that it would stop using a chemical called azodiacarbonamide as a dough conditioner.
The chemical isn't necessarily harmful, but it's something that FoodBabe.com blogger Vani Hari reports is used to increase the elasticity in everything from shoe rubber to yoga mats. Yikes! Hari is also the blogger that got Chick-fil-A to improve its food offerings in recent months.
Removing the chemical is the right thing to do, but this still goes in the "loser" column since now folks know that Subway was using a chemical used in yoga mats to condition its dough. For a chain that prides itself on its healthy eats and promotes "eat fresh" as its mantra, it's not an image that will help it drum up new business.
Green Mountain Coffee Roasters (GMCR) -- Winner
Green Mountain Coffee Roasters struck a deal with Krispy Kreme (KKD) to get the decadent doughnut maker's signature java into its Keurig single-serve brewers. Krispy Kreme's Smooth and Decaf flavors will make their K-Cup debuts later this year.
Green Mountain has deals in place with many leading supermarket brands and chains that are known for their coffee, but Krispy Kreme had been a holdout. It didn't have to sign up with Green Mountain. K-Cup patent protection expired in late 2012, allowing any third party to make the refills for Keurig machines. However, Krispy Kreme realizes that there's an advantage to working directly with Green Mountain as an official licensed provider.
Weight Watchers (WTW) -- Loser
Shares of Weight Watchers fell on Friday, opening the door to headlines of the diet manager shedding or losing weight.
Things are actually pretty bad at Weight Watchers. Revenue fell 11 percent during the holiday quarter, and profitability was nearly cut in half. However, the real dagger comes from Weight Watcher's forecast for earnings to clock in between $1.30 a share and $1.60 a share in 2014. Analysts were targeting a profit of $2.78 a share.
"The start of our year is proving to be every bit as challenging as we thought," Weight Watchers' CEO said during the conference call. Ouch. Isn't the start of the year the time when folks make New Year resolutions that find them heading out to the local Weight Watchers branch?
United Parcel Service (UPS) -- Winner
UPS hasn't been the slam dunk that investors thought they were buying into as a no-brainer play on the explosion of online retail. After all, consumers are shopping on the Internet more and more, and that means more orders for UPS to deliver. Despite that upbeat climate, UPS is growing its business at a single-digit clip.
However, the parcel delivery giant is rewarding its investors by putting a little more change in their pockets. On Thursday night it announced that it would be increasing its quarterly dividend by 8 percent, encouraged by its improving cash flow.
What can Brown do for you? Well, it's making income investors a little happier.
Motley Fool contributor Rick Munarriz owns shares of Green Mountain Coffee Roasters. The Motley Fool recommends Green Mountain Coffee Roasters, Tesla Motors, and United Parcel Service. The Motley Fool owns shares of Tesla Motors and Weight Watchers International. Try any of our newsletter services free for 30 days.
