MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Thursday, May 23
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11:02 AM Dish Network (DISH -1.4%) warns the Committee on Foreign Investment review of the proposed SoftBank (SFTBF.PK)-Sprint (S +0.1%) transaction highlights the serious national security risks the deal could pose. In particular, the company points to the potential use of Chinese-manufactured equipment on a foreign-controlled Clearwire network. Comment!
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10:52 AM Electric vehicle roundup: 1) The tiny plug-in car market segment will have two entrants with lease options at $199 per month - the Chevrolet Spark (GM -1.3%) and the Nissan Leaf (NSANY.OB) - as the automakers appear willing to take some losses to keep the segment alive and kicking. 2) In China, an EV rental project in Beijing draws solid interest. Electric vehicles in the city are already popular for short commutes with over 2.7K electric taxis slated for service by the end of the year. 3) An Elon Musk interview on Bloomberg TV dissects the Tesal Motors (TSLA +1.8%) DOE loan payoff in great detail. He also says he thinks the automaker has enough capital to avoid future capital raises. (audio) 4 Comments
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10:35 AM Art meets Finance: Lions Gate (LGF +2.4%) trades higher as enthusiasm builds for the company's prospects after a strong performance at the Cannes Film Festival. The crown jewel for the studio this year will be the release of The Hunger Games: Catching Fire next November and in a nice little twist of cross-selling the movie's teaser trailer displays the LGF stock symbol at the closing. (trailer) Comment!
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10:10 AM Target (TGT -0.1%) appears to have a few aces up its sleeve as continues its rollout in Canada. The retailer has been conservative with food offerings, but has tipped off that is likely to change. It is also ahead of its expected pace of REDcard penetration which sets up nicely for repeat shopping trends. Also, execs are quick to note that expenses are heavy on the front side as the company is overly-cautious in order to make sure store openings go smoothly. (CC transcript) Comment!
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10:10 AM Perry Ellis (PERY -3.3%) slides after the company misses on the top line in Q1. Management reaffirms its FY14 outlook for revenue growth of 3-5% and for adjusted EPS of $1.50-1.60, but cuts guidance slightly for GAAP earnings to $1.58-1.68 versus a previous range of $1.60-1.70. (PR) Comment!
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10:02 AM Children's Place (PLCE +6.7%) posts strong gains after beating on both the top and bottom line. From the report: CEO Jane Elfers says — in what is now a familiar refrain from retailers this quarter — that the company "had a difficult start [before] April sales improved significantly." Comps growth was negative (-5.5%) as was sales growth (-3.5%). $56.2M remains under the company's share repurchase program. PLCE also raises its EPS guidance for FY13 to $3.05-3.20 against consensus of $3. (PR) Comment!
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9:52 AM Rue21 (RUE +22.7%) trades just a shade under its buyout offer of $42 as the potential for competing bids keeps interest high. Of its retail peers, Zumiez (ZUMZ +0.7%) seems to be getting the biggest lift from the M&A buzz in the sector. Comment!
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9:48 AM Green Mountain Coffee Roasters (GMCR -7.3%) slumps again in early trading to briefly dip below $70. The report from the options pit is that action has intensified over the stock. Somewhere in the GMCR equation, the forecast for higher coffee commodity prices also needs to be factored in. 1 Comment
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9:37 AM Shares of Melco Crown (MPEL -4.5%) take a lashing in early trading on concerns growth in China will sputter. Citigroup's favorite gaming sector name trades at roughly 9X 2014 EBITDA estimates. Comment!
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9:22 AM Shares of Dollar Tree (DLTR) move 2.5% higher premarket as the retailer's "impressive" Q1 results brings in buyers. Margins improved slightly during the quarter and the company seemed to navigate around some of the tax refund and weather ripples that hit Wal-Mart and Target. Comment!
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9:15 AM SABMiller (SBMRY.PK) CEO Alan Clarke says most of the brewer's markets are growing, although North America remains sluggish. In Q1, revenue for SABMiller grew 10% to $34.5B while profit came in at $3.27B. The company notes MillerCoors sales were weak but higher-margin Tenth & Blake craft beer sold well. Latin America is a concern as growth slowed to 3% from a 9% pace a year ago. Comment!
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8:57 AM More on GameStop (GME): The retailer says comparable store sales fell 6.7% Y/Y during Q1 with new hardware sales down 30.6% and pre-owned sales slipping 7.5%. Looking for channels for future growth? During Q1, mobile sales grew 290% to $46.8M and digital sales rose 47.3%. FY13 EPS is pegged at $2.90-$3.15 vs. $2.75-$3.15 previous and the company's outlook for comparable store sales is improved slightly. GME +1.5% premarket. (PR) 1 Comment
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8:54 AM More on Stein Mart's (SMRT) Q1: Net income, revenue, and comps post 35.6%, 3.8%, and 1.2% gains respectively. Comps rose 8% in April as the retailer closed out the quarter on a positive note. Lower markdowns contributed to higher gross profit and SG&A as a percentage of sales fell. Inventories were higher by ~$16M Y/Y "to support higher sales." (PR) Comment!
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8:45 AM More on Rue21 (RUE): An initial 40-day "go-shop" period process will start today during which the retailer can try to reel in another bid. A low termination fee of ~$10M makes this a feasible option. If Apax Partners lands Rue21 it will have its work cut out for it after the company reported a tough comparable store sales decline of 4.6% for Q1. (PR) Comment!
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8:18 AM Jefferies thinks Limited Brands (LTD) still looks an underperformer after it dissected the retailer's Q1 results. Analyst Randal Konik calls out the slowing same-store sales growth trends for the company and notes it will run up against some tough margin comparables later in the year. Comment!
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8:14 AM More on Ralph Lauren's (RL) Q1: An efficient quarter from the retailer but a tad light on revenue. The company says strong retail segment growth was offset in part by unfavorable currency swings and a dip in sales for its wholesale segment. Operating expenses as a percentage of sales were flat Y/Y and 50 bps lower M/M. Consolidated comparable store sales rose 3% during the period. The FY14 outlook includes a 4% to 7% forecast for revenue growth and capex spending of $350M-$450M. RL -3.8% premarket. (PR) Comment!
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8:11 AM BASF (BASFY.PK) and Monsanto (MON) plan to commercially launch a drought-tolerant variety of genetically modified corn in the U.S. next year, a senior BASF official says. The two companies have a revenue sharing arrangement, with 60% of revenue going to MON and the rest to BASF. Comment!
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8:06 AM Macau-sensitive stocks could swing lower as a subpar reading on China PMI casts doubts on the strength of the economy in the nation. Any type of sustained slowdown in China would rattle the sector with double-digit gaming revenue from Macau baked into valuations. On watch: MGM, MPEL, WYNN, LVS. Comment!
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8:01 AM Limited Brands (LTD) (now going by L Brands) could trade higher when it opens after raising its full-year EPS guidance to $2.95-$3.15 from $2.92-$3.12 on top of a minor EPS beat with its Q1 report. The retailer saw steady sales gains across its brands during the last quarter while expenses and inventory only rose moderately. Comment!
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7:47 AM More on Dollar Tree's (DLTR) Q1: Comparable store sales rose 2.1% during the period and operating margin improved by 70 bps. A net 92 stores were opened during Q1. For Q2, the retailer expects sales of $1.81B to $1.86B and EPS of $0.52-$0.57, higher than prior guidance but a bit short of Street estimates. DLTR +1.3% premarket. (PR) Comment!
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7:26 AM Slow down there Tesla Motors (TSLA). A blog post from Chrysler (FIATY.PK) says the EV automaker is "unmistakably incorrect" in its statement on being the only U.S. automaker to have fully repaid its government loans, noting Chrysler paid off U.S. and Canadian government loans ahead of schedule. On Tesla, Chrysler asks if it's a short memory or a short-circuit that led to the disputed claim? 23 Comments
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7:18 AM Coinstar (CSTR) CFO Galen Smith says the company will see better results in the second half of the year as it benefits from a strong slate of summer movies. Box office total in the U.S. have slumped so far this year with a relatively weak slate of films partially to blame. Execs with Coinstar presented yesterday at the B. Riley & Co. Investor Conference. (webcast) Comment!
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7:02 AM European regulators accept the concessions made by United Continental (UAL), Lufthansa (DLAKY.PK), and Air Canada (AIDIF.PK) on their existing agreement to share transatlantic routes. The carriers will give up airport slots in Frankfurt and New York City as part of the negotiated arrangement to open up competition. Comment!
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6:56 AM General Motors (GM) says the Chevrolet Spark EV will have a starting price of $27,495 when it goes on sale in California and Oregon next month which will make it one of the budget leaders in the category. The model's price falls to $19,995 after factoring in the a $7,500 federal tax credit. Comment!
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6:52 AM More on Signet Jewelers' (SIG) FQ1: Same-store sales rose 6.4% Y/Y, led by a 10.2% gain by Kay in the U.S. E-commerce sales in the U.S. division increased 48% to $25.6M. Average transaction prices rose during the quarter. The retailer expects to open 70 to 80 new Kay and Jared stores in FY14. (PR) Comment!
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6:47 AM More on Hormel Foods' (HRL) Q1: Volume was up 4% during the quarter. Revenue gains were led by a 49% Y/Y increase in Grocery Products, while Refrigerated Foods and Jennie-O Turkey Store sales both fell back. Segment operating profit slipped 2%, partially due to higher grain costs and weaker commodity turkey prices. The company backs its full year EPS guidance of $1.93-$2.03. (PR) Comment!
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