Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let’s take a look at five dumb financial events this week that may make your head spin.
1. Sheer squad
Poor Lululemon Athletica inc. (NASDAQ:LULU) shoppers.
They paid a stiff ransom for a pair of black luon yoga pants, and now it turns out that the pants are practically see-through when they stretch.
Spoiler alert: People doing yoga stretch.
Even with Lululemon Athletica inc. (NASDAQ:LULU) faulting a supplier as it recalls all of the affected pants that it sold this month, it’s the high-end yoga retailer that looks bad here. Affluent shoppers with active lifestyles pay a premium to shop at Lululemon Athletica inc. (NASDAQ:LULU) to avoid quality issues, but the Canadian chain has had way too many recalls lately.
The thing is that Lululemon Athletica inc. (NASDAQ:LULU) can’t afford to mess up. It carries a stiff valuation, and now with more than 200 stores, it’s not as if it has limitless expansion. There are only so many markets that will put up with a place selling $100 yoga pants. The retailer is warning that comps will soften here as it waits to restock on black luon pants, but eventually the hard times may come simply because patrons have had enough.
2. Another Penney for your thoughts
J.C. Penney Company, Inc. (NYSE:JCP) keeps finding new ways to drag itself into this weekly column.
A Bloomberg report shed some unwelcome light on the fact that CEO Ron Johnson and nine executives are taxing shareholders through weekly commutes to the department store chain’s headquarters in Texas.
Yes, retail executives travel extensively in their jobs. They’re not always at the office. However, at a time when J.C. Penney Company, Inc. (NYSE:JCP)’s bottom line is obliterated by thinning stores, does J.C. Penney Company, Inc. (NYSE:JCP) really want to be abusing its corporate jets this way?
3. Bitter Harvest
It’s never a good sign when auditors bow out of a company, shaking their heads.
That’s what the bean counters at Harvest Natural Resources, Inc. (NYSE:HNR) have done, leaving the oil and gas company to delay the filing of its 2012 annual report.
There’s a “material weakness” in the company’s accounting. Harvest Natural Resources is coming across enough errors that it expects to possibly revise the past three years of financial statements.