Holdings and Retail Review: Saks, Loblaw, Tesco, Renewable Energy Corp., Vestas, BG Group, Macquarie

by: Global Investing Editor

The retailing sector is taking the lead in making adjustments for the current financial crisis. Because selling goods is such a hand-to-mouth business, often financed by manufacturers of whatever is being sold, the storekeepers are quick to react to a crisis.

Belgium's Delhaize Le Lion, a powerful supermarket chain, has simply stopped selling products from Unilever pending a price cut from the Anglo-Dutch firm, according to today's Wall Street Journal.

Saks (NYSE:SKS), a department store, opted to cut luxury goods prices as much as 70% in a surprise move on Black Friday last year (the day after Thanksgiving) because its inventories were too high. No one was told lest its competitors match the cuts, and its suppliers have been left holding the bag.

The Israeli chocolate company, Strauss, has opened shops peddling chocolate and bars offering chocolate drinks in a half dozen cities. These are franchises and there are two in New York City reader to undercut Godiva for cheap Valentine's Day thrills. Max Brenner the Bald Man is the label and a=n opening is now planned for Philadelphia.

Canada's Loblaw's (OTCPK:LBLCF) is fighting off Wal-Mart (NYSE:WMT) by offering typically Canadian goods under its Joe Fresh Style label, which is proving particularly successful in children's clothing. Typically Canadian would include hockey skates, triple insulated hats, and lots of bright colors for winter clothes for short cold days. Now it is adding cosmetics for their mothers.

And then there is Tesco (OTCPK:TSCDY) whose launch of Fresh Direct small shops is a challenge to the weekly supermarket shopping trip trend on the U.S. west coast. What I am trying to do with these examples is figure out how to apply them in the newsletter business I am in.

Austro-environmentalist Max Deml sent us his doorstop volume on Solaraktien Studie for 2009, published by Oeko-Invest. About Norway's Renewable Energy Corp. (OTCPK:RNWEF) which we switched to last autumn, he writes of RNWEF.PK:

"The 11 year old firm listed in 2006 and rose 20% on its first day of trading after being 15x oversubscribed. Its leading shareholders own 76% of the stock, among them Orkla (sold). REC os the wpr;d's leading supplier of multi-crystal silicon wafers used by major solar customers like Gamesa (Spain), BP, or India's Moser Baer (in the CD/DVD business).

"This 'take-and-pay' business enables the company to plan its prices and volumes. It invested in a new plant in Heroya (Spain) where the world's largest solar wafer plant with 650 mW/yr capacity and a potential sales level of NOK 5 bn. It has cut back on its investment in the U.S. at Moses Lake, WA, however.

"2008 9-mo sales hit NOK 5.8 mn and profits 1.952 mn. The company's CEO Erik Thoresn in angling REC toward lower wafer sales prices around 2 euros per Watt in 2010 and lower in later years. REC has lost 80% from its NOK 306 high at the end of 2007. It trades 13 to 30% below its IPO price."

Vivian adds: it sells for 140% more than it did at its IPO and it trades at a P/E of 5. Max's volume costs eruos 38.5 and is in German. Vivian translated his remarks.

Reporting today, Vestas Wind Systems (OTCPK:VWDRY) topped estimates by about 50% with net coming in at euros 316 mn ($410 mn), double prior year's Q4. The maker of windmills is winning orders from its existing clients who are the largest companies in the business, able to finance their own purchases. It will probably also gain from production cuts by less financially stable rivals. Its backlog rise in Q4 was euros 400 mn to euros 5.26 bn at the end of the year. This is now Denmark's third largest firm by market value.

BG Group (OTCQX:BRGYY) is likely to again be topped by a rival in buying a coal bed methane gas company in Australia, now that Arrow has offered 12% over the BRGYY.PK bid of yesterday for Pure Energy Resources. I am not sure that BG isn't being a spoiler. Arrow is a Shell related company.

Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund (NYSE:MFD) declared its regular quarterly distribution of 15 cents per share, payable February 27 to shareholders of record as of February 20. The ex-dividend date is expected to be February 18. This distribution represents a decrease from the previous quarterly distribution of $0.425/sh, a drop of nearly 65%. .

Disclosure: The Global Investing editor, aka Vivian Lewis, owns 300 shares of RNEWF.PK; 200 shares of VWDRY.PK, 100 shares of BRGYY.PK and 450 shares of MFD.