Wonders will never cease.
I thought I was dreaming yesterday when I heard that Nike Inc. (NKE) had brought Colin Kaepernick aboard as the latest face in the company's "Just Do It" campaign, but this was no dream. It may turn into a nightmare for Nike.
There are plenty who believe the younger generation will respond well to this move, but I'm not so sure. They likely don't remember Kaepernick as a once-promising quarterback who had some great games but whose skills eroded to the point that he could not find a job in the NFL; rather, they may view him as a rebel. I'm not so sure that will move enough shoes to compensate for business that Nike might lose, but I am an old guy and evidently not part of the demographic. We'll see how that plays out.
Elsewhere, recent restaurant acquisition target Zoe's Kitchen (ZOES) continues to trade above the $12.75 takeout price of potential acquirer Cava. Shares did give back 2% on Tuesday, but still trade at 5% above Cava's offer. I still believe the offer undervalues ZOES. Apparently PW Partners, which holds a 6.4% stake in the company, does as well and put its money where its mouth is.
PW Partners filed a Form 13D the day after the potential deal was announced in which it stated its belief that the proposed transaction "undervalues the issuer." Interestingly, PW Partners, which had acquired more than 800,000 shares -- or 4% of the company -- from July 16 to Aug. 14 added another 313,000 shares the day after the potential deal was announced. Indeed, PW Partners paid an average of $12.83 per share for that additional 1.6% stake in Zoe's, which is slightly above the $12.75 Cava offered. There has been no additional news about ZOES, it is unclear whether a higher bid will emerge for the company, and the clock is ticking.
Last but not least, Vera Bradley (VRA) , which has been on the comeback trail, put up some good second-quarter numbers this morning. Vera Bradley posted second-quarter earnings of 26 cents a share, handily beating the 16-cent consensus, and narrowly exceeded the $113 million revenue estimate by $500,000. The company ended the quarter with nearly $145 million, or $4 per share, in cash and investments and no debt. Vera Bradley bought back 250,000 shares during the quarter at an average price of $14.24 and still has about $10 million remaining in share purchase authorization.
Vera Bradley shares pulled back 2.5% yesterday after the company warned that potential China tariffs would be detrimental to its recovery. The markets was shrugging that warning this morning on the earnings news. I still believe VRA has the makings of a takeover target; it's a solid brand name with lots of cash and no debt and a relatively small enterprise value.