Tuesday, December 10, 2013
5:13 PMUrban Outfitters +3.6% AH, Q4 to date comps "mid single-digit positive"| Comment!
4:57 PMCanadian National Rail -1% AH on updated 2013 outlook, 2014 guidance
- Canadian National Railway (CNI) -1% AH after updating its 2013 financial outlook and issues guidance for 2014, seeing 2013 EPS of C$3.05-C$3.10 vs. C$3.10 consensus estimate.
- CNI says it aims to deliver double-digit EPS growth in 2014 over the mid-point of its updated 2013 guidance vs.C$3.52 consensus, and 2014 free cash flow before dividends of C$1.6B-$1.7B; plans 2014 capex of ~C$2.1B vs. an expected C$2B in 2013.
4:51 PMDiscovery reportedly mulling bid for Scripps
- Variety reports Discovery's (DISCA) board discussed a possible bid for Scripps (SNI) at a Tuesday meeting.
- The magazine points out Scripps, which owns the Food Network, HGTV, and the Travel Channel, would mesh well with Discovery's own stable of "lifestyle-driven" channels. A merger would also give Discovery more leverage and bundling opportunities in talks with pay-TV providers.
- Scripps remains controlled by 24 descendants of founder E.W. Scripps. The heirs currently face restrictions on their ability to liquidate their holdings via public markets.
- SNI +9.6% AH. DISCA nearly unchanged for now.
4:39 PMSmith & Wesson +5.8% AH; FQ2 report, FQ3 guidance clean out expectations
- Smith & Wesson (SWHC) shares jump 5.8% after the company cleaned out expectations in FQ2 and issued higher-than-expected FQ3 guidance.
- Net sales of $139.3M were up 2% Y/Y; excluding Walther products (under a distribution agreement that ended in April), revenue grew 9.2% Y/Y, driven by a 27.4% Y/Y spike in handgun sales.
- Gross margin represented a 510bp expansion to 41.6%, building on the trend in FQ1. The company cited favorable product mix, absorption, and manufacturing efficiencies, as well as absence of lower-margin Walther sales.
- Opex jumped to 20.9% of sales, or $29.2M, from 16% of sales, or $21.8M, in FQ2 2012; excluding one-time ERP system expenses, opex would have come in at 18.2% of sales, or $25.3M.
- Income from continuing operations was $17.1M ($0.28/share) vs. $16.4M ($0.24/share) in Q2 2012.
- Management sees revenue in FQ3 of $140M-$145M (well above analyst consensus of $137.4M) and EPS of $0.28-$0.30 (vs. $0.27). It reiterates FY2014 guidance for sales of $610M-$620M (vs. $617M) and EPS of $1.30-$1.35 (vs. $1.32).
- Conference call at 5pm ET, PR
3:07 PMReport: Sycamore Partners closing in on bid for The Jones Group
- Sycamore Partners is lining up financing in order to make a run at The Jones Group (JNY +1.3%), according to Dealreporter.
- The report hasn't gone unnoticed by investors as shares have reversed a loss to move safely into positive territory.
2:48 PMAnalysts and investors approve of streamlining at Outerwall
- The analysts are coming out of the woodwork after Outerwall (OUTR +4.1%) pulls out all the stops in an attempt to turn around its business. The company ended some ill-fated experiments with coffee, food, and photo kiosks on top of announcing a healthy round of cost cutting.
- Wedbush backs its Outperform rating and took its price target up to $82.
- B Riley increases its price target to $103
- Investors of Outerwall should probably send a Christmas card to Jana Partners which was presumably behind some of the streamlining at the ambitious company.
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| 4 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!
9:06 AMCoca-Cola and Green Mountain Coffee Roasters: Friends not enemies?
- A comment from Coca-Cola (KO) CEO Muhtar Kent yesterday at a beverage conference in NYC looks like a positive development for Green Mountain Coffee Roasters (GMCR), notes KeyBanc.
- Kent said single-serve dispensers are an "opportunity" not a threat to Coca-Cola's business.
- A partnership between GMCR and KO could heat up the "cold" side of the single serve business.
8:31 AMNew CEO at Walmart International
- Wal-Mart (WMT) taps David Cheesewright to be the company's president and CEO of Walmart International.
- The exec has been currently running the Europe, Middle East, and Africa part of the international business. He will assume his duties on February 1, 2014 which is the same day Doug McMillon officially takes over as Wal-Mart CEO.
8:26 AMMore on AutoZone's FQ1
- AutoZone (AZO) reports domestic same store sales rose 0.9% during FQ1
- The retailer's gross margin rate increased 10 bps to 51.9% as it realized lower acquisition costs during the period.
- What to watch: Execs are likely to catch some questions on the 9% Y/Y increase in inventory during the company's earnings call. (webcast)
- AZO unchanged in premarket trading.
8:19 AMRetail watch: Store traffic not improving as consumers eye late online pickups
- The shopping lull right after the Black Friday/Cyber Monday period could be even more pronounced this year than usual, according to channel checks.
- Consumers mired in deal fatigue and a blast of wintry weather across a good portion of the U.S. has kept store traffic below expectations.
- It's not good news for a retail sector stuck with inventory it needs to move in the midst of a highly-promotional atmosphere.
- The narrowed window for holiday shopping due to the apparent consumer respite could boost e-commerce activity. Watch the usual suspects: AMZN, EBAY, FDX, UPS.
- Related ETFs: XLP, XLY, VDC, XRT, VCR, RTH, PBJ, RETL, PEJ, IYK, FXG, IYC, SCC, FXD, RHS, UCC, PMR, UGE, RCD, PSL, PSCC, SZK, FDIS, FSTA, PSCD, PEZ
8:05 AMOuterwall pulling out all the stops
- Outerwall (OUTR) announces a series of operating and capital structure changes which could impact the direction of its business.
- Three venture concepts will be wound down in Q1 of 2014 as the company narrows its focus more toward ecoATM and Redbox.
- A team of execs will fill the role of Redbox president as Ann Saunders steps aside.
- The credit facility will be tapped for an additional $350M of which some of the funds will go toward share buybacks.
- The company also plans to find $22M in annual cost savings through workforce reductions.
7:56 AMAnalysis: WhiteWave Foods on right track with acquisition strategy
- Stifel Nicolaus weighs in on Buy-rated WhiteWave Foods (WWAV) after the company snapped up Earthbound Farms for a cool $600M.
- The investment firm sees $0.07 EPS accretion by 2014 from the merger with most of the synergies from the slightly disparate business coming from the back office.
- WhiteWave will continue on a path of "disciplined" acquisitions to boost top-line growth, says Stifel.
7:48 AMVolkswagen reports 3% rise in global sales for November| Comment!
7:40 AMFifth & Pacific sells Lucky
- Fifth & Pacific (FNP) announces it struck an agreement to sell Lucky Brand Jeans to P-E firm Leonard Green for $225M.
- The deal price reps a multiple of 7X trailing 12 months EBITDA for the brand.
- The retailer divested its Juicy Couture business in October and a sale of Lucky Brand has been widely expected.
7:18 AMLululemon higher after settling on new CEO
- Shares of Lululemon (LULU) gain in premarket trading after the retailer finally names a new CEO.
- The quick analyst take on the new hire is that the company has a no-nonsense exec that can rapidly guide a retailer viewed as foundering a bit.
- The loss of Chip Wilson as the Chairman could also be a case of addition by subtraction due to the distraction of his critique of customers' bodies.
- LULU +2.9% premarket.
7:11 AMPositive read on China auto demand| 1 Comment
7:09 AMNokia's Indian tax bill could reach $3.4B
- Nokia's (NOK) tax bill in India could hit $3.4B, a government official says, far higher than the $340M that has been at the center of a dispute so far.
- India has frozen Nokia assets in the country to ensure the company has enough money to pay the smaller bill, although the firm has gone to court to defend itself.
- Nokia needs access to the assets by Thursday so that it can complete the sale of its handset unit to Microsoft (MSFT), and it has set aside $350M for the purpose.
7:03 AMAnn backed by SunTrust to outperform
- Suntrust Robinson Humphrey reiterates a Buy rating after meeting with management from Ann (ANN) yesterday.
- The retailer appears to be clicking this holiday season with an on-trend assortment and a successful promotional strategy.
- A relatively clean inventory position indicates execs managed the weak traffic flow in malls during Black Friday well.
- A key point: SunTrust thinks Q4 margin guidance from Ann might end up being light as e-commerce contributes and promotions ease.
6:56 AMThe IATA forecasts strong growth in passenger demand
- The IATA forecasts airlines will see the total number of passengers served rise by 31% to 3.91B by 2017.
- The biggest increase in demand will be in the Middle East and Asia-Pacific regions.
- The U.S. will still have the largest domestic market by 2017, but China will narrow the gap as capacity increases significantly.
- Related stocks: AAL, UAL, DAL, RYAAY, CPCAY, SINGY, CEA, ZNH, CPA, GOL, LFL, DLAKF, AIDIF, QUBSF, JBLU, RJET, SAVE, ALK, HA, AIRYY, MLYAF, AFLYY.
4:19 AMGM continues to vacillate over Aussie ops
- GM (GM) hasn't yet decided whether to end production in Australia after 2016, the carmaker said today as it kept up the pressure on the country's government to provide more aid to the industry.
- The comments are in contrast to a report on Sunday that said that GM planned to halt manufacturing in Australia, where the company has been hit by the strong Aussie dollar.
- The government isn't best pleased and has repeatedly called on GM to clarify its plans.
- The fear is that if GM follows Ford in stopping production in Australia, Toyota also will, which could lead to the collapse of a sector that supports over 40,000 workers and 150 supplier companies.
3:17 AMLululemon appoints CEO; founder to step down as Chairman
- Lululemon Athletica (LULU) has named Laurent Potdevin as CEO to replace Christine Day, who said in June that she would leave the clothing retailer once it found a successor for her.
- Potdevin was most recently President of TOMS Shoes, while he has also worked at Burton Snowboards and LVMH.
- In addition, founder Dennis "Chip" Wilson is resigning as Chairman and is being replaced by Michael Casey, a former executive at Starbucks and the lead director on Lululemon's board.
- Wilson's departure comes after he caused a storm last month by saying that Lululemon's products were wrong for certain body shapes. (PR)