Wednesday, December 11, 2013
6:34 PMCN Rail's Mongeau: Moving dangerous goods by rail "integral to our way of life"
- Canadian National Railway (CNI) chief Claude Mongeau says he appreciates concerns about moving dangerous goods by rail through urban areas in the wake of last summer's Lac-Mégantic disaster, but he says it would be impractical to reroute the shipments because many of the goods are integral to the way we live.
- While much of the focus has been on the movement of crude oil, even more dangerous and flammable goods are moved every day - styrene to make shoes and rubber, polypropylenes that make eyeglasses and other plastics, chlorine to purify water, propane for home use.
- Despite a string of recent derailments, the CEO says CNI has one of the best safety records among large North American rails.
- "The dangerous goods we move are worth $25B... and we move them very safely," Mongeau says.
6:31 PMColdwate Creek -10.8% AH after Q3 report; plans further store closures
- Coldwater Creek (CWTR) shares reverse gains and are now down 10.8% AH following a mixed Q3 in which the retailer continued its struggle in a "highly competitive" retail environment.
- The company closed 1 retail store, 1 factory store, and 1 spa in Q3, ending with 343, 36, and 7 respectively. Coldwater expects to close up to 10 more retail stores by the end of the fiscal year.
- CEO Jill Dean observed: "In response to the disappointing performance of our fall merchandise, we took swift action early in the third quarter to adjust our holiday assortment, and we experienced a meaningful improvement in full-priced selling as holiday product flowed into stores starting in mid-October. During the quarter we also implemented a cost reduction program, which is expected to generate $20-$25 million in expense savings next year."
- As of Nov. 2, cash totaled $6.8M, down from $31.3M in Oct. 2012, while inventory decreased 5.6% Y/Y (and 1.6% Y/Y per square foot) to $152.7M. The company burned $23M in operating cash in the past 3 quarters.
5:53 PMOld Dominion, Brunswick replacing Arch Coal, Regis in S&P 400
- Old Dominion (ODFL) and Brunswick (BC) will be replacing Arch Coal (ACI) and Regis (RGS) in the S&P MidCap 400 following the Dec. 20 close. The latter companies will take the positions held by the former ones in the S&P SmallCap 600.
- Also: Teradyne, which is getting kicked out of the S&P 500 to make room for Facebook, will replace Scholastic (SCHL) in the S&P 400. Scholastic, in turn, will replace Lincoln Educational (LINC) in the S&P 600.
- ODFL +0.7% AH. ACI +0.9%.
5:24 PMFacebook, Alliance Data, Mohawk joining S&P 500
- Better a week late than never. Facebook (FB) will be joining the S&P 500 following the Dec. 20 close, and will also be added to the S&P 100. The social networking giant is replacing test equipment vendor Teradyne (TER).
- Alliance Data Systems (ADS) and Mohawk Industries (MHK) are also joining the S&P 500 following the Dec. 20 close. They're replacing Abercrombie & Fitch (ANF) and JDS Uniphase (JDSU).
- FB +3.9% AH. MHK +2.4%. ANF -0.8%. JDSU -0.6%.
4:27 PMVera Bradley -3.1% AH, now halted; issues less-than-flowery Q4 guidance
- New Vera Bradley (VRA) CEO Robert Wallstrom is having a tough go after the women's apparel maker beat expectations in Q3 but issued dour Q4 guidance. He noted: "based on recent trends, we are lowering our fourth quarter outlook ... Although we face a persistently challenging retail environment, we are working diligently to make improvements in our organization that will enable us to stabilize the business and generate more consistent sales and earnings growth over the long term."
- Direct segment revenue grew 7.1% to $68.9M, driven by an 18% jump in sales at company stores (with 20 full-price and 4 outlet locations opened in the past year). Indirect revenue plunged 17.3% Y/Y to $61.2M due to "cautious ordering." E-commerce revenue declined 7.8%.
- Comps declined 6.5% Y/Y "due to lower traffic and underperformance of the product offering."
- Gross margin fell to 55.3% due to sales of lower-margin products and increased promotional activity, a 270 bp decline from Q3 2012.
- Management expects Q4 revenue of $145M-$150M (-9.3% Y/Y at the midpoint), a far cry from analyst expectations of $159.1M, and EPS of $0.44-$0.47, vs. analyst expectations of $0.56. Gross margin is expected to decline 340-380 bp Y/Y.
- Shares are halted until 4:35pm ET, but 24.6K shares went off AH down 3.1% from the close.
- Conference call at 4:30pm ET, PR
4:00 PMHilton IPO price reported to be $20
- The buzz on the street is that Hilton Worldwide (HLT) will price its IPO at $20 per share.
- The expected range for the hotel operator's public launch was $18 to $21.
- The IPO is expected to be the 2nd largest of the year amid reports of hot demand.
- At Blackstone (BX) it will be the cause for the popping of corks. The Hilton IPO is expected to reap paper profits of $8B to mark the 2nd biggest P-E payday of all-time.
3:47 PMHome Depot: We have same-day delivery too
- Home Depot (HD +0.4%) tells investors and analysts attending a conference that it's spending $300M in supply chain and tech improvements aimed at boosting online sales.
- Another goal of the program is to give the company some limited options for same-day delivery to customers and professional contractors.
- An exec with Home Depot thinks 100K items could be in the pool of products available for same-day delivery.
- Sensibly, the company won't be using drones to deliver buzz saws and dry wall.
- Earlier: Amazon launches same-day delivery in San Fran.
- Home Depot Investor and Analyst Conference webcast
3:33 PMRuby Tuesday lower amid confusion over Goldman role
- Ruby Tuesday (RT -6.2%) goes to the pains to release a statement making it clear it did not originate the rumor that Goldman Sachs has been retained to help the restaurant operator explore strategic options.
- Shares are down sharply off the development, although some analysts see the denial as a non-denial. After all, execs just said they didn't leak the news, they didn't confirm that the Goldman boys weren't in the house.
3:25 PMNew Twitter-Comcast 'SeeIt' button draws interest of media players
- An initiative started last month by Comcast (CMCSA -1%) to utilize a "See It" button on Twitter to help users watch a show or buy tickets via its Fandago property appears to be catching on.
- The service could see a major expansion as early as Q1 that allows Twitter users who tweet "SEEIt" to have an automatic button embedded in their message that can send users directly to a show online or through video on demand. In some cases, the SEEIt button will act as a remote control for users' set top boxes.
- The SEEIt service is seen as a way to boost ratings metrics and potentially advertising rates for shows which light up social media.
- Signing up for the Twitter-Comcast service: Disney (DIS), Discovery Communications (DISCA), Fox Networks (FOXA), Cablevision (CVC), Charter (CHTR), Time Warner Cable (TWC).
2:53 PMDunkin' Donuts tries new concepts as it expands
- Dunkin' Donuts (DNKN) continues to explore new real estate concepts as it stays on a track to double its store count over 20 years.
- A new restaurant in Virginia will have a "drive-thru" window. Other strategies include free-standing restaurants, end-caps, and in-line sites.
- The brand appears to be strong as it heads into new territories in the West. Experian reports 11% of all respondents say they go to the donut and coffee chain.
2:25 PMPhilip Morris makes a move in Russia
- Philip Morris International (PM +0.4%) and Japan's Tobacco International announce that they will each acquire stakes in Russian cigarette distributor Megapolis.
- Megapolis claims a 70% market share in the Russian tobacco market. The nation is more fertile ground for tobacco companies with 40% of the adult population identifying themselves as smokers.
- Both deals are expected to close in 2014 and involve investments of around $750M.
1:55 PMNetflix outperforms following Citi PT hike
- Citi's Mark May, who started coverage on Netflix (NFLX +0.9%) with a Neutral in July, has raised his PT to $390 from $355, albeit while maintaining his original rating.
- May declares Netflix "the largest and most innovative company in the Internet TV sector," and is lifting his broadband penetration and Netflix subscriber forecasts for the streaming giant's international markets.
- He now expects Netflix's international sub base to post a 39% CAGR from 2013-2016, up from a prior 31%, and is modeling 15% growth for later years. May also continues to expect a $1/month U.S. price hike in 2016.
- Shares are trading higher on a down day for the Nasdaq. They're up 296% YTD.
1:37 PMRetail shopping traffic poor last week: ShopperTrak
- Brick-and-mortar retail sales fell 2.9% Y/Y for the week following Black Friday, according to ShopperTrak.
- The mark is less than impressive with the compact holiday shopping season supposed to make the comparable to last year a bit easier. Even worse, the consumer research firm reports a 21.6% drop in retail shopper traffic for the week of December 2 to December 8.
- Though post-Cyber Monday letdown, wintry weather, and an early Hanukkah played a factor in the poor retail sales week - forward momentum appears lacking with only two weeks left before Christmas.
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1:20 PMGM wins case over medical benefits for old Delphi subsidiary
- General Motors (GM -0.3%) doesn't owe $450M in medical benefits for Delphi Automotive retirees which it contracted for before it filed for bankruptcy, according to a new ruling.
- Though GM won the case, the judge did hint that the automaker might have a "moral obligation" to make good on the payment.