Saturday, May 23, 2015
- Fiat Chrysler Automobiles (NYSE:FCAU) CEO Sergio Marchionne made a direct approach to General Motors (NYSE:GM) about a merger last March, according to the New York Times.
- An e-mail from the CEO pitched the strategic advantages of a combination of the two auto heavyweights, but was rebuffed by GM.
- In the last month, Marchionne made a highly entertaining trip to Silicon Valley and has been backing the company's 25-page thesis titled "Confessions of a Capital Junkie in which it highlights the benefits of automobile industry consolidation.
- Previously: Fiat Chrysler Automobiles peers through the looking glass (April 30)
- Previously: Sergio Marchionne goes to Silicon Valley (May 11)
Friday, May 22, 2015
- Justice Department investigators have identified criminal wrongdoing in General Motors' GM failure to disclose a defective ignition switch and are negotiating what is expected to be a record penalty, NY Times reports.
- A final settlement number is still being negotiated but is expected to exceed the $1.2B paid last year by Toyota for concealing unintended acceleration problems in its vehicles, according to the report, which also says a settlement could be reached this summer.
- Philip Morris International (NYSE:PM) and British American Tobacco (NYSEMKT:BTI) are suing the British government over new rules starting next May that would require cigarettes to be sold in plain packages.
- The tobacco industry is alarmed over a growing international move toward laws mandating that colorfully branded cigarette boxes be replaced with drab, uniform packages displaying prominent health warnings.
- Separately, a U.S. appeals court today issued a split ruling on what kinds of statements tobacco companies must make in product warnings after a judge found them in violation of federal law nearly a decade ago.
- Defendants included Altria (NYSE:MO), Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO), which have battled with the Justice Department and public health advocates over the exact wording of the warning statements; today's ruling could further delay the date when any such warnings appear in public.
- ITT Educational Services (ESI +3.8%) issues a statement regarding what it calls the "piling on" by the media and regulators.
- The company notes that there hasn't been any finding of fact to support the mountain of allegations against it.
- The SEC filed fraud charges against ITT Educational Services earlier this month.
- ESI -73.99% YTD.
2:45 PM| Comment!
2:08 PM| 2 Comments
- Ross Stores (NASDAQ:ROST) announced during its earnings call that it will increase its minimum wage scale to $9 per hour.
- The boost in wages was included in 2015 EPS guidance issued by the company yesterday.
- "We expect wage rates are going to move up over the next few years," said management.
- Ross Stores earnings call transcript
- Shareholders at Pinnacle Entertainment (PNK +0.3%) voted down seven proposals made by the powerful hotel and restaurant workers union this week at the company's annual meeting.
- The labor group was looking to increase shareholder rights before Pinnacle splits off its real estate assets into a separate company.
- SEC Form 8-K
- Bernstein thinks Procter & Gamble (PG -0.3%) should split into two or three large companies - instead of sticking with the current plan of shedding smaller unprofitable business lines in a piecemeal fashion.
- The analysts at the investment firm call P&G an inflexible and slow-moving behemoth that no longer can outperform based on scale alone.
- Shares of Procter & Gamble are -12.0% YTD.
- The Children's Place (PLCE -1.2%) agrees to add two board members recommended by activist investors Macellum Advisors and Barington Capital Group.
- Former Macy's CEO Robert Mettler will join the board immediately, while the second addition will be named later.
- Under the terms of the agreement, the company will also cough up $500K to Macellum and Barington for "out-of-pocket" expenses.
- The confident tone from management at Aeropostale (ARO -14%) on the upcoming back-to-school season isn't helping sentiment on the retailer.
- "We expect that the back-to-school period will represent a time when all of our efforts over the last nine months to change the trajectory of our business should come to fruition," said CEO Julian Eiger on yesterday's earnings call.
- Investors are selling off Aeropostale as the weak Q1 earnings report and Q2 guidance shows cost-cutting and a reduction in store count haven't been quite enough to turn around profitability.
- Investment firms Jeffries, Janney Montgomery Scott, Telsey Advisory Group, Mizuho, and FBR Capital have all dropped their price targets today on ARO.
- Aeropostale earnings call transcript
- Previously: Aeropostale misses by $0.01, misses on revenue (May. 21 2015)
- Previously: Comps limp along at Aeropostale in Q1 (May. 21 2015)
- Nike's (NKE +0.1%) first women's store in Europe opened today in London.
- Execs with the company say they want the store to expand into a "fitness hub" for customers with a social aspect to it.
- Nike also has two women's-only stores in California and one in Shanghai.
- The women's-only initiative from Nike could be a long-term challenger to Athleta (NYSE:GPS) and Lululemon (LULU +1.2%).
10:05 AM| Comment!
- RBC Capital lifts its price target on Outperform-rated Netflix (NFLX +0.1%) to $700 from $600 in a new note to clients on the streamer.
- Netflix is also making news on the content side with an announcement it will air A Very Murray Christmas in December.
- The show stars Bill Murray and includes a host of other well-known actors.
- The company is also testing a new user interface with some subscribers. A broad roll-out of the click-based platform is expected in the middle part of June.
- Foot Locker (NYSE:FL) dislcoses during its earnings conference call that Q2 same-store sales are up a double-digit rate.
- The pace is higher than the consensus expectation of analysts.
- Shares of Foot Locker are +0.7% today after running up a 4.4% gain this week ahead of the report.
- Foot Locker earnings call webcast
- Previously: Foot Locker beats by $0.06, beats on revenue
- Previously: Strong comp and margin gains for Foot Locker in Q1
9:28 AM| Comment!
- Expedia (NASDAQ:EXPE) announces it sold a 62.4% stake in eLong (NASDAQ:LONG) for $671M.
- The eLong business has been an ongoing drag on profits for Expedia.
- One of the buyers in the group is Ctrip.com (NASDAQ:CTRP).
- As part of the sale agreement, Expedia and Ctrip.com agreed to cooperate in certain geographic markets.
- LONG +36.4% premarket to $28.17.
- The avian flu outbreak in the U.S. has led to the deaths of close to 39M birds and disrupted both the egg and poultry industries.
- A higher concentration of chickens on fewer commercial farms has increased the impact of a single case of the virus at a location.
- Consumers are expected to bear the brunt of higher egg prices, while egg producers such as Cal-Maine Foods (NASDAQ:CALM) operating outside the area of the outbreak will see a benefit from the jump in market prices.
- Related stocks: PPC, SYY, HRL, TSN, SAFM.
- Ann (NYSE:ANN) reports comparable-store sales fell 1.5% in Q1.
- The company says sales were weak in February before improving in March and April.
- Comp growth by brand: Ann Taylor -2.6%, Ann Taylor Factory -14.5%, LOFT -0.7%, LOFT Outlet -0.2%.
- Gross margin rate -110 bps to 52.3%.
- SG&A expense rate -140 bps to 47.5%.
- Total inventory per square foot +3% Y/Y.
- Store count +2 Y/Y to 1,034.
- Ann was acquired by Ascena Retail (NASDAQ:ASNA) last week.
- Previously: ANN beats by $0.04, misses on revenue
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