Today - Tuesday, December 10, 2013
2:27 PMIndia car industry limps along
- Car sales in India for November moved down 8.2% Y/Y as demand in the nation continues to weaken.
- The Society of Indian Automobile Manufacturers doesn't expect a significant turnaround until a new government is in place which can put in measures to support the industry.
- Automakers active in India: Maruti Suzuki (SZKMF), Tata Motors (TTM), Renault (RNSDF), BMW (BAMXY), Volkswagen (VLKAY), Toyota (TM), Hyundai (HYMLF).
2:09 PMGM's master plan continues to unfurl
- The dizzying week for General Motors (GM -0.8%) after its announcement of a fresh CEO, global cutbacks (South Korea, Australia, Chevrolet in Europe), and imminent exit by the Treasury Department as an investor gets even more interesting as it reveals one of the biggest goals of all for the company.
- The automaker plans to make a serious push in Indonesia where Japanese automakers (NSANY, TM, HMC, MZDAY, SZKMY, FUJHY) outsell it by a huge margin and its market share is just a shade over 1%.
- In a clever move, GM has been watching what works for rivals in Indonesia before deciding which segment to jump into and who to partner with in the country of 247M people.
1:56 PMAnalysis: A lot to like with PVH
- Brean Capital backs PVH (PVH +3.4%) following the retailer's worse-than-forecast guidance for FQ4.
- The investment firm acknowledges some short-term pain and takes FY14 - and FY15 EPS estimates lower - but calls the business model of PVH one of the strongest in the apparel industry.
- Solid balance sheet management by PVH and the global potential for the Tommy Hilfiger and Calvin Kein brands makes shares attractive, says Brean.
- Shares of PVH have turned around last night's AH loss into a tidy gain.
1:48 PMHeard during Time Warner's talk at a media conference
- Time Warner (TWX +1.7%) CEO Jeffrey Bewkes gives a frank assessment of how he thinks the Pay-TV industry should involve during his keynote address at a media conference.
- The exec thinks cable/satellite operators need to promote video on demand services similar to how Comcast and Verizon do or they will risk tech companies stealing customers with MVPD options. Bewkes notes Time Warner is open to working with online TV providers as they pop up.
- Q4 for TWX is slated to be a revenue boon with Gravity and The Hobbit: The Desolation of Smaug released during the period and TV entertainment revenue strong.
- The spinoff of Time Inc. should occur in Q2 of 2014.
- UBS Global Media and Communications Conference webcast
1:31 PMLower wheat prices could filter down to some bottom lines
- Wheat prices could fall as world reserves are forecast to exceed previous expectations.
- Global inventories before the start of the 2014 harvests in the Northern Hemisphere will be 2.4% higher than a year ago.
- Wheat futures for delivery next spring touched their lowest level since June 2012 earlier today.
- Related stocks: General Mills GIS, PepsiCo PEP, Campbell Soup CPB, Post Holdings POST, ConAgra CAG, Ralcorp RAH, Flower Foods FLO, and J.M. Smucker SJM could see a minor impact from sustained lower wheat prices. The pricing of the commodity also spills over to affect the costs for companies farther removed from the food industry - including Buffalo Wild Wings (BWLD) and Anheuser-Busch InBev (BUD).
- Related ETF: WEAT
1:09 PMLumber Liquidators shares crash on guidance update, Piper defends
- Shares of Lumber Liquidators (LL -12.9%) are on a downward tear after a light guidance update, which investors may perceive as giving credence to short allegations that have been aimed at the company regarding the sourcing of its products and the effect on margins.
- Piper Jaffray analyst Peter Keith is out defending the retailer and reiterates an Overweight rating and PT of $135. He notes, "We are recommending investors buy shares of LL this morning on weakness caused by the company's updated guidance last night. We believe most investors are focused on the lower than anticipated GM for Q4, which can be explained primarily by a shift to solid hardwood sales which carry a lower GM but contribute to higher gross profit dollar growth given the products' high ticket nature."
- Keith adds that LL's initial 2014 outlook is above consensus on a sales basis, with the company "setting up for a beat and raise cadence."
12:45 PMLithia Motors bets on more Subaru growth
- Lithia Motors (LAD +0.8%) announces it bought a Subaru (FUJHY) store in Walnut Creek, California which has the potential to be one of the largest Subaru sellers in the nation.
- The company now owns five Subaru stores as it backs the automaker to keep its remarkable resurgence in the U.S. moving forward (266K sales in the U.S. in 2011 vs. 384K YTD in 2013).
12:34 PMStarbucks blows off some steam
- Starbucks (SBUX -3.1%) dips to its lowest level since mid-October as sentiment sours a bit on a Wall Street favorite (19 Buy/Overweight ratings vs. 0 Sells).
- ITG forecasts same-store sales for the Americas region in FQ1 will be 5%-6% to miss the consensus estimate of analysts for a 6.6% gain.
- An overall slight deceleration in sales momentum is also noted by the research firm.
- The dip in SBUX shares brings into play the thesis by SA contributor Stock Traders Daily that the stock is set up for a technical breakdown.
11:34 AMPepsiCo names top exec in India
- PepsiCo (PEP -0.4%) names D Shivakumar as its top exec in India after the position stood unfulfilled since June.
- Shivakumar had a long run at Nokia and his appointment has been well-received by analysts.
- The company has previously announced plans to double capacity in India as it looks to bring more of its well-known brands to the region.
11:15 AMFifth & Pacific has a luxurious plan for Kate Spade
- Fifth & Pacific (FNP +1.8%) has some pretty big ideas now that it can focus most of its attention on Kate Spade.
- CEO William Mccomb says the brand can become the next Coach as it branches out into more products.
- A play into luxury makes sense right now with high-end spending holding up amid a retail holiday season, but it's also tough turf to break into, note analysts.
11:06 AMWendy's marches to its own drummer
- Wendy's (WEN +2.6%) shoots higher a day after McDonald's reported further sluggishness in the U.S.
- This year, the restaurant chain successfully upgraded its menu toward premium items without disrupting the loyalty of value-oriented customers. It's a barbell strategy that has kept same-store sales humming along.
- YTD snapshot: WEN +56% vs. MCD +8%.
10:44 AMStarbucks slides after ITG chimes in| 2 Comments
10:33 AMLululemon up and down as investors digest new direction
- Shares of Lululemon (LULU +0.2%) are having a very bouncy day off the news the retailer found a new CEO.
- The entrance of Lauren Potdevin to the top job at Lululemon is being overshadowed a bit by the exit of founder Chip Wilson who created a stinging backlash and potential overhang with his disparaging comments on the size of women's bodies.
- Looking forward, Credit Suisse say the experience of Potdevin at Toms is a positive for the lifestyle brand.
- Lululemon trades 14% off its YTD high, but some traders think the CEO hole was keeping the stock range-bound. Positive pricing checks on the retailer's holiday mix and a vibrant online business supports the case that margins are holding up.
10:16 AMWinter storm throws wildcard at airliners
- A winter storm spread across the Northeast is creating a ripple effect of airline flight cancellations.
- FlightAware.com reports 1,369 cancellations today after over 2,200 were scrapped yesterday.
- The carriers most impacted by the weather are American Airlines Group (AAL), United Continental (UAL), and Republic Airways (RJET).
- Typically, airlines lose less than 25% of the revenue from canceled flights with factors such as the percentage of business travelers and the length of the suspension of service coming into play. In some cases, if the weather matrix is handled adroitly - a carrier can be close to break-even off the development.
10:03 AMNew era to start at GM
- Mary Barra will take over for General Motors (GM +0.1%) on January 15 as the automaker continues a strong metamorphosis from its bailout era.
- The timetable for the exit of CEO Dan Akerson's was pushed up due to the medical condition of his wife, according to GM.
- Reaction in Detroit: Barra was one of the odds-on favorites to land the top job at GM and she will become the first woman to head a major automaker. Her successful run in developing vehicles for global markets and her deep GM roots make her a solid choice, say a number of auto industry analysts.
9:54 AMInvestors snooze Fifth & Pacific's asset sale| Comment!
9:49 AMMore nuggets from Disney's talk at a media conference
- Disney's (DIS +0.4%) presentation at a media conference in NYC focused on global opportunities as theme parks, TV networks, and movies all reach deeper into developing markets
- Rapid expansion of Disney's theme park in Shanghai is on tap even after it opens. The park is within 3 hours of +300M people making it a logical target for investment. The tone from CFO Jay Rasulo is extremely confident that the park will be very successful and add to Disney's top-line growth.
- Monetizing mobile is still a work in progress as measurement techniques are refined.
- The bidding for NBA rights for ABC and ESPN is the last piece of the sports puzzle for Disney with other sports wrapped up. Rasulo seems to expect heated competition from other sports networks.
- On the impact of Aereo: The upstart tech concern doesn't factor into Disney's strategy.
- Previous on Disney conference
- UBS Global Media and Communications Conference webcast
9:41 AMLumber Liquidators lower after guidance update
- Lumber Liquidators (LL -8%) increases guidance for FY13 EPS to $2.72-$2.75, a mark which falls just short of the consensus estimate of analysts of $2.76.
- The company gives an initial estimate for full year 2014 of sales of $1.15B to $1.20B on comparable store sale growth in the high single to low-double digit range.
9:29 AMNuggets from Disney's presentation at a media conference
- Data mining and tech initiatives are a big focus at Disney (DIS), according to CFO Jay Rasulo. Though the company is still in the "early days" of realizing the revenue potential of features like the MagicBands at theme parks the potential of catering marketing to consumer behavior is enormous.
- On M&A: Nothing on the scale of Lucasfilm or Marvel is being looked at, but it's safe to say that an increase in Disney's buyback plan doesn't mean M&A still isn't on the front burner.
- Virtual MPVD (online TV) is coming. Disney will be willing to license its content. This development is key with ESPN a lynchpin of getting consumers to cut the cord with traditional Pay-TV options.
- The Marvel strategy is to deliver the treasure trove of content throughout the Disney ecosystem. The deal with Netflix is a natural due to the new distribution channel it gives Disney.
- The emergence of rival sports networks from Fox, CBS, and NBC hasn't disrupted programming costs or advertising rates to a large degree, says Rasulo. Ratings have also held up.
- UBS Global Media and Communications Conference webcast
9:26 AMClear Channel buys some time with debt coming due| Comment!