The news comes as the Seattle, Wash.-based firm is being criticized after two black men were arrested in a Philadelphia Starbucks store after asking to use the restroom without making a purchase. The incident has led to protests and boycotts nationwide, while the manager involved in the situation has since left Starbucks’ Philadelphia location where the arrest took place.
“Closing our stores for racial bias training is just one step in a journey that requires dedication from every level of our company and partnerships in our local communities,” said Starbucks CEO Kevin Johnson in a statement Tuesday.
Closing thousands of stores could be costly for the company.
Starbucks-owned stores made about $4.7 billion in revenue over the most recent quarter, according to the company’s latest earnings report. Divide that by three, and you get about $1.6 billion per month. Divide again by 30, and you get about $53.3 million every day. Divide again by 24, and you get about $2.2 million every hour. So if you assume each company-owned Starbucks store will close for about four hours over a single afternoon, that’s roughly $8.8 million in revenue the company will potentially miss out on, by this admittedly back-of-the-envelope math.
It’s worth noting a couple of caveats: Not every company-owned Starbucks store will close, so this estimate may be slightly high. Meanwhile, some customers may simply wait until Starbucks re-opens to get their fix on the day of the closures, but as a self-identifying caffeine addict, I’d argue most people will just get their fix at a rival chain or local coffee shop.
But for Starbucks, the price may be worth paying. The company’s stock price and reputation have both suffered in the wake of the Philadelphia Starbucks arrest incident. Shutting down Starbucks stores is the kind of strong response from Johnson that might help restore the shaken trust and confidence between Starbucks, its customers, its employees, and its investors.
Starbucks will close more than 8,000 stores for one afternoon next month to hold racial bias trainings after two black men were arrested while waiting at a Philadelphia location, an incident that has prompted protests and calls to boycott the coffee giant.
More than 8,000 company-owned stores will close on the afternoon of May 29 to provide the training to nearly 175,000 employees, the company said in a press release on Tuesday. The training will “address implicit bias, promote conscious inclusion, prevent discrimination and ensure everyone inside a Starbucks store feels safe and welcome,” per the company’s statement.
The two men were arrested on Thursday after Starbucks employees called 911 to report them for trespassing when they asked to use the restroom but were denied because they had not yet purchased anything, according to police. Their arrest was filmed by another patron, who said the men were waiting for a friend to arrive. The store manager involved in the situation no longer works at that Starbucks location, a spokesperson said.
“While this is not limited to Starbucks, we’re committed to being a part of the solution,” Starbucks CEO Kevin Johnson said in a statement.
“Closing our stores for racial bias training is just one step in a journey that requires dedication from every level of our company and partnerships in our local communities.”
The training curriculum will be designed by civil-rights leaders and experts on combatting racial bias, including former U.S. Attorney General Eric Holder; Bryan Stevenson, founder and executive director of the Equal Justice Initiative; and Sherrilyn Ifill, president and director-counsel of the NAACP Legal Defense and Education Fund.
President Trump is relentlessly attacking retail giant Amazon, saying recently the company has put “many thousands of retailers out of business,” claiming it pays “little or no taxes to state and local governments,” and slamming its arrangement with the United States Postal service as unfair.
Trump’s claims about the roughly $700 billion Seattle, Wash.-based Amazon are mixed in their accuracy.
It’s certainly true that rival retailers large and small have struggled amid Amazon’s growing dominance in the field. But some would say that’s the natural and even desirable result of a more efficient or otherwise smarter firm entering a marketplace.
Trump’s assertions about Amazon’s tax practices and its effect on the USPS, meanwhile, are dubious at best. Amazon indeed pays taxes, though like many corporations (and individuals) it takes steps to minimize its liabilities. And many observers argue Amazon is in fact a lifeline for the USPS, which relies on parcel delivery to make up for the death of other mail in the digital age. (The USPS’ economic struggles stem largely from a law that requires it to pre-fund future retirees’ health benefits.)
But it’s still a unique phenomenon for a sitting President to publicly attack an American company. And Trump could indeed take action against Amazon, if he so chose. Indeed, his assault appears to have investors spooked — Trump’s tweets have repeatedly coincided with falloffs in the company’s stock.
Should Amazon and its CEO, Jeff Bezos, be worried about Trump’s Twitter tirades? Maybe not, if recent history is any judge. Trump has gone after a number of publicly-traded companies in recent months, including Lockheed Martin, Toyota, and more. Even if Trump’s missives caused a dip for those companies’ stocks, the effect was typically temporary, if notable at all.
Below, see how President Trump’s attacks have impacted various companies’ stock prices in recent months. Clicking each company name will show a stock chart for the two weeks prior to and after a Trump tweet critical of that firm. (Of course, many factors can weigh into a company’s stock valuation at any moment.)
Remington Outdoor Co., the 200-year-old maker of rifles, handguns and bullets controlled by Cerberus Capital Management, filed for bankruptcy, after the election of a “true friend” to the White House ironically wound up stifling sales.
The chapter 11 filing in Delaware bankruptcy court Sunday comes with a revised plan to eliminate $620 million in debt, pay most creditors in full, and hand over most of the company to a group of lenders. Remington, which makes weapons for military, law enforcement, and hunting customers, had already outlined a plan on Feb. 12 to file for bankruptcy and give control to lenders including Franklin Resources Inc. and JPMorgan Asset Management.
The filing came after a weekend of marches across the U.S. seeking tighter laws to fight gun violence. Remington said in court filings that its efforts to finance a turnaround were complicated by parties who were reluctant to lend to a gunmaker. After approaching 30 potential lenders, financial adviser Lazard Freres & Co. found “the vast majority” indicated “they were reluctant.” Eight parties who entered into further discussions later declined, and one outside lender who had agreed to provide a $100 million bankruptcy loan changed its mind, according to the filing.
Remington’s fortunes took a hit last year after the election of Donald Trump, a self-proclaimed “ true friend” of the gun industry. Gun enthusiasts traditionally stock up on firearms at times when political winds suggest tighter gun control lies ahead. But Hillary Clinton’s defeat erased those fears, leaving retailers stuffed with unsold inventory.
Chief Financial Officer Stephen P. Jackson described the reason for the company’s demise as a “significant decline” in sales and revenues in the last year after it had increased production rates to meet demand in 2017 that never materialized.
The Madison, North Carolina-based company has 2,700 employees at seven U.S. manufacturing plants, according to court filings. It plans to win bankruptcy court approval of the restructuring by May 3.
The turnaround differs slightly from a prior plan already negotiated with lenders that would cut debt by about $700 million and inject $145 million of new capital. The current plan will eliminate $620 million of funded debt in exchange for equity in a new company. Financing to get that done totals $338 million, including a $193 million asset-based loan, a $100 million debtor-in-possession financing loan, and a $45 million “bridge” or “rescue” loan from Remington’s parent company to its operating subsidiaries.
After the outside lender backed out of the $100 million loan, Remington got financing on better terms from its term-loan lenders and secured noteholders, according to the filing. The company seeks to keep fees for the loan under seal, according to a court request.
The reorganization will convert the rescue loan into 17.5 percent of equity in a new company, and the $100 million loan will convert to an exit loan, while the asset-based loan will be repaid in cash, according to court papers. Pre-bankruptcy term loan lenders will get 82.5 percent of the new parent entity, while third lien lenders will get cash and warrants. Current equity will be canceled.
The company has asked to forgo the usual procedure of filing a full schedule of its debts and assets and seek final approval of a plan by May 3.
Recent setbacks for Remington have included an aborted public offering in 2011 and an investor revolt after one of its rifles was used in the Sandy Hook Elementary School mass shooting.
The troubles have been a blow to Cerberus, owned by private-equity billionaire Stephen Feinberg, who has been a prominent Trump supporter. New York-based Cerberus acquired Remington in 2007 and saddled it with almost $1 billion in debt.
After the Sandy Hook shooting, Cerberus announced it would sell the company, as its own agitated investors demanded an exit, but it failed to find a buyer.
Concerns about rising gun violence, mass shootings and accidents have prompted litigation, some of it including Remington. In 2016, the Massachusetts attorney general sought information from the company on complaints and recalls, citing an investigation into its compliance with state laws and regulations on gun safety. Remington has also been sued by individuals claiming some guns are defective, and voluntarily recalled some of its models.
The industry came under added pressure in February when a gunman using an AR-15 assault rifle was used in the Stoneman High School mass murder in Parkland, Florida, just days after Remington announced plans for a pre-arranged bankruptcy. That weapon was a Smith & Wesson, made by a unit of American Outdoor Brands Corp.
Remington, which began with a hand-built rifle in 1816, went on to supply more than half the ammunition used by U.S. and its allies in World War I and World War II, according to its website. It currently employs 3,500 people and is among the largest American manufacturers of ammunition and firearms.
More than 11 million firearms were manufactured in the U.S. in 2016, up from fewer than four million a decade ago, according to data from the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Another pillar of American gun industry, Colt Holding Co., also took a trip through bankruptcy in 2015.
The case is: In re Remington Outdoor Company Inc., 18-10684, U.S. Bankruptcy Court, District of Delaware (Delaware.)
(NEW YORK) — Toy company executive Isaac Larian says he and other investors have pledged a total of $200 million in financing and hope to raise four times that amount in crowdfunding in order to bid for up to 400 of the Toys R Us stores being liquidated in bankruptcy.
The unsolicited bid still faces many hurdles, including finding other deep-pocked investors and getting a bankruptcy judge to agree to it. But this is the first public plan to keep the cherished toy brand in existence in the United States.
Such a long-shot move would also greatly benefit Larian’s primary business. He’s CEO of Bratz doll-maker MGA Entertainment, which relies on Toys R Us for nearly 1 in every 5 sales.
Larian says he and the other investors, which he declined to name, believe salvaging part of the Toys R Us business will be good for the toy industry, customers and workers. They’re interested in more than half the 735 U.S. stores Toys R Us plans to liquidate, and want to be able to use the valuable brand name.
And they’re hoping the outpouring of affectionate nostalgia when Toys R Us announced its plans — #SaveToysRUs has been a trend on social media — translates into pledges toward their $1 billion goal.
Toys R Us sought court approval last week to liquidate its remaining U.S. stores, threatening the jobs of some 30,000 employees and spelling the end for a chain known to generations of children and parents for its sprawling stores, sing-along jingle and Geoffrey the giraffe mascot.
The store has an iconic place in American culture, said Larian. “We can’t just sit back and just let it disappear.” Larian, who is a billionaire, is using his own money, not MGA funds, for the bid.
Why might Larian be successful with a retail chain struggling to stay relevant in the age of Amazon? For one thing, Larian wouldn’t have the massive $5 billion in debt that hampered the current owner of Toys R Us. He also says the toy industry needs a big chain like Toys R Us, where children can touch and feel the toys and toymaker’s can test new products.
The chain’s liquidation will have a “devastating effect” on the toy industry, said Larian, who estimates that 130,000 jobs in the U.S. could be lost when you include layoffs at suppliers and logistic operations. He said a total Toys R Us liquidation could mean MGA would have to lay off workers at an Ohio plant that makes the Little Tikes toy vehicles. That brand accounts for 25 percent of MGA total sales, and Larian says only Toys R Us really had enough room to display the cars. It’s harder to ship such bulky items on Amazon.
The Toys R Us troubles have hurt big toy makers like Mattel and Hasbro, which have been key suppliers to the chain. MGA, based in Van Nuys, California, is the world’s largest privately held toy company. The planned liquidation would have a bigger impact on smaller toy makers that rely more on the chain for sales.
“People do not realize the hole that can’t be filled by other retailers,” said Larian, noting that Toys R Us accounts for 18 to 19 percent of MGA’s worldwide sales. “The pipeline is too big.”
Larian claims that if 400 U.S. Toys R Us stores are salvaged, he could save one-third of the 130,000 jobs.
The planned closure of the U.S. Toys R Us stores over the coming months will finalize the downfall of the chain that succumbed to heavy debt and relentless trends that undercut its business, from online shopping to mobile games.
When the chain filed for Chapter 11 bankruptcy protection last fall, it pledged to stay open. But after what CEO David Brandon called a “devastating” holiday shopping season, Toys R Us announced in January it would close 182 stores, and then last week that it would liquidate.
The company said last week it’s trying to bundle its Canadian business with about 200 U.S. stores and find a buyer. Larian has personally aligned with another investor in a separate bid for those operations, though he declined to specify the value of it.
Toys R Us is also likely to liquidate its businesses in Australia, France, Poland, Portugal and Spain. It’s already shuttering its business in the United Kingdom. That would leave it with the stores in Canada, as well as in central Europe and Asia. It operates more than 700 stores outside the United States.
Facebook Inc. is under investigation by a U.S. privacy watchdog over the use of personal data of 50 million users by a data analytics firm to help elect President Donald Trump.
The U.S. Federal Trade Commission is probing whether Facebook violated terms of a 2011 consent decree following the revelations that user data had been transferred to Cambridge Analytica without their knowledge, according to a person familiar with the matter.
Under the 2011 settlement, Facebook agreed to get user consent for certain changes to privacy settings as part of a settlement of federal charges that it deceived consumers and forced them to share more personal information than they intended. That complaint arose after the company changed some user settings without notifying its customers, according to an FTC statement at the time.
Spokesmen for Facebook and the FTC didn’t immediately respond to requests for comment.
If the FTC finds Facebook violated terms of the consent decree, it has the power to fine the company thousands of dollars a day per violation.
Facebook declined in New York trading, falling 3.2 percent to $167 as of 9:31 a.m. in New York. That follows a drop of 6.8 percent Monday.
The Facebook revelations have also prompted bipartisan, transatlantic concern. The U.S. Senate Commerce Committee announced Monday evening it would like a briefing on “the use and sharing of individual Facebook user data.” The chairman of a UK parliamentary committee announced Tuesday he was requesting that Facebook Chief Executive Officer Mark Zuckerberg, who has remained silent for days, appear before the panel to supplement prior testimony by the company’s executives.
Republican lawmakers, who normally resist regulation of private business, started coming down on the company as early as Sunday, with Senator Jeff Flake of Arizona calling the privacy violations “significant” and Senator Marco Rubio of Florida saying he was “disturbed” by many things about the company.
(NEW YORK) — The Weinstein Co. filed for bankruptcy protection on Monday with a buyout offer in hand from a private equity firm, the latest twist in its efforts to survive the sexual misconduct scandal that brought down co-founder Harvey Weinstein, shook Hollywood and triggered a movement that spread out to convulse other industries.
The company also announced that it was releasing any victims of or witnesses to Weinstein’s alleged misconduct from non-disclosure agreements preventing them from speaking out. That step had long been sought by New York Attorney General Eric Schneiderman, who filed lawsuit against the company last month on behalf of its employees.
“Since October, it has been reported that Harvey Weinstein used non-disclosure agreements as a secret weapon to silence his accusers. Effective immediately, those ‘agreements’ end,” the company said in a statement. “No one should be afraid to speak out or coerced to stay quiet.”
In a statement, Schneiderman praised the decision as “a watershed moment for efforts to address the corrosive effects of sexual misconduct in the workplace.”
The movie and TV studio becomes the first high-profile company to be forced into bankruptcy in the nationwide outcry over workplace sexual misconduct. Dozens of prominent men in entertainment, media, finance, politics and other realms have seen their careers derailed, but no other company has seen its very survival as tightly intertwined with the fate of one man as the Weinstein Co.
Some 80 women, including prominent actresses, have accused Harvey Weinstein of misconduct ranging from rape to harassment. Weinstein, who was fired as his company’s CEO in October, has denied any allegations of non-consensual sex.
The Weinstein Co. said it has entered into a “stalking horse” agreement with an affiliate of Dallas-based Lantern Capital Partners, meaning the equity firm has agreed to buy the company, subject to approval by the U.S. Bankruptcy Court in Delaware.
Lantern had been among a group of investors that had been in talks for months to buy the company outside of bankruptcy. That deal was complicated when Schneiderman filed his lawsuit, citing concerns that the sale would benefit executives accused of enabling Weinstein’s alleged misconduct and provide insufficient guarantees of compensation for his accusers. Talks to revive the sale finally fell apart two weeks ago when the group of buyers said they had discovered undisclosed liabilities.
The Weinstein Co. said it chose Lantern as a potential buyer because the firm was committed to keeping on the studio’s employees as a going concern.
“While we had hoped to reach a sale out of court, the Board is pleased to have a plan for maximizing the value of its assets, preserving as many jobs as possible and pursuing justice for any victims,” said Bob Weinstein, who co-founded the company with his brother Harvey in 2005 and remains chairman of the board of directors.
Lantern co-founders Andy Mitchell and Milos Brajovic said they were committed to “following through on our promise to reposition the business as a pre-eminent content provider, while cultivating a positive presence in the industry.”
Under bankruptcy protection, civil lawsuits filed by Weinstein’s accusers will be halted and no new legal claims can be brought against the company. Secured creditors would get priority for payment over the women suing the company.
Schneiderman’s lawsuit will not be halted by the bankruptcy filing because it was filed by a law enforcement agency. Schneiderman said his investigation would continue and that his office would engage with the Weinstein Co. and Lantern to ensure “that victims are compensated, employees are protected moving forward, and perpetrators and enablers of abuse are not unjustly enriched.”
Other bidders also could emerge during the bankruptcy process, particularly those interested in the company’s lucrative 277-film library, which includes award-winning films from big-name directors like Quentin Tarantino and horror releases from its Dimension label. Free of liabilities, the company’s assets could increase in value in a bankruptcy.
In more fallout over the scandal, New York’s governor directed the state attorney general to review a decision by the Manhattan district attorney’s office not to prosecute a 2015 case involving an Italian model who said Weinstein groped her.
The bankruptcy process will bring the company’s finances into public view, including the extent of its debt. The buyers who pulled out of the sale earlier this month said they discovered up to $64 million in undisclosed liabilities, including $27 million in residuals and profit participation. Those liabilities came on top of $225 million in debt, which the buyers had said they would be prepared to take on as part of a $500 million acquisition deal.
The Weinstein Co. already had been struggling financially before the scandal erupted in October with a news stories in The New York Times and The NewYorker. Harvey and Bob Weinstein started the company after leaving Miramax, the company they founded in 1979 and which became a powerhouse in ’90s indie film with hits like Pulp Fiction. After finding success with Oscar winners The Artist and The King’s Speech the Weinstein Co.’s output and relevance diminished in recent years. The company let go 50 employees in 2016 and continuously shuffled release dates while short of cash.
Last year, the studio sold distribution rights for the movie Paddington 2 to Warner Bros. for more than $30 million.
Facebook Inc. shares posted their steepest drop since 2015 as U.S. and European officials demanded answers to reports that a political advertising firm retained information on millions of the social network’s users without their consent.
Politicians on both sides of the Atlantic are calling on Chief Executive Officer Mark Zuckerberg to appear before lawmakers to explain how U.K.-based Cambridge Analytica, the data-analysis firm that helped Donald Trump win the U.S. presidency, was able to harvest the personal information.
Facebook has already testified about how its platform was used by Russian propagandists ahead of the 2016 election, but the company never put Zuckerberg himself in the spotlight with government leaders. The pressure may also foreshadow tougher regulation for the social network.
U.S. Senators Amy Klobuchar, a Democrat from Minnesota and John Kennedy, a Republican from Louisiana, have called on the chairman of the Judiciary Committee to bring in technology company CEOs, including from Twitter Inc. and Alphabet Inc.’s Google, for public questioning.
In a letter Monday to Senator Chuck Grassley, a Republican from Iowa, Klobuchar and Kennedy said they have “serious concern regarding recent reports that data from millions of American was misused in order to influence voters.”
“The lack of oversight on how data is stored and how political advertisements are sold raises concerns about the integrity of American elections as well as privacy rights,” the senators wrote. A hearing with the CEOs would allow the committee to learn “what is being done to protect Americans’ data and limit abuse of the platforms, as well as to assess what measures should be taken before the next elections.”
Facebook on Friday said that a professor used Facebook’s log-in tools to get people to sign up for what he claimed was a personality-analysis app he had designed for academic purposes. To take the quiz, 270,000 people gave the app permission to access data via Facebook on themselves and their friends, exposing a network of 50 million people, according to the New York Times. That kind of access was allowed per Facebook’s rules at the time. Afterward, the professor violated Facebook’s terms when he passed along that data to Cambridge Analytica.
Facebook fell as much as 8.1 percent to $170.06 on Monday in New York, wiping out all of the year’s gains so far. That marked the biggest intraday drop since August 2015.
Zuckerberg’s Fortune Falls $3.8 Billion Over Data Exploitation
Facebook found out about the breach in 2015, shut down the professor’s access and asked Cambridge Analytica to certify that it had deleted the user data. Yet the social network on Friday suspended Cambridge from its system, explaining that it had learned the information wasn’t erased. Cambridge, originally funded by conservative political donor Robert Mercer, on Saturday denied that it still had access to the user data, and said it was working with Facebook on a solution.
A researcher who worked with the professor on the app is now currently an employee at Facebook, which is reviewing whether he knew about the data leak.
The denials and internal inquiries did little to ease the criticism. Damian Collins, a British lawmaker, said Sunday that Zuckerberg or another senior executive should appear in front of his committee because previous witnesses have avoided difficult questions, creating “a false reassurance that Facebook’s stated policies are always robust and effectively policed.’’ He added in an interview on British radio Monday that Zuckerberg should “stop hiding behind his Facebook page and actually come out and answer questions about his company.”
The next few weeks represent a critical time for Facebook to reassure users and regulators about its content standards and platform security, to prevent rules that could impact its main advertising business, according to Daniel Ives, an analyst at GBH Insights.
“Changes to their business model around advertising and news feeds/content could be in store over the next 12 to 18 months,” Ives wrote in a note to investors.
Facebook, meanwhile, has sought to explain that the mishandling of user data was out of its hands and doesn’t constitute a “breach” – a definition that would require the company to alert users about whether their information was taken, per U.S. Federal Trade Commission rules.
Menlo Park, California-based Facebook no longer allows app developers to ask for access to data on users’ friends. But the improper handling of the data raises systemic questions about how much companies can be trusted to protect personal information, said Nuala O’Connor, president and CEO of the Center for Democracy & Technology.
“While the misuse of data is not new, what we now see is how seemingly insignificant information about individuals can be used to decide what information they see and influence viewpoints in profound ways,” O’Connor said in a statement. “Communications technologies have become an essential part of our daily lives, but if we are unable to have control of our data, these technologies control us. For our democracy to thrive, this cannot continue.”