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Shopify - >>> Here's How Much Investing $1,000 In The 2015 Shopify IPO Would Be Worth Today
Benzinga
Wayne Duggan
May 21, 2020
https://finance.yahoo.com/news/heres-much-investing-1-000-213019334.html
Investors who owned stocks in the past five years generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return over that stretch is 53.8%. On this day five years ago, Shopify Inc (NYSE: SHOP) held its IPO, and IPO investors have made a killing ever since.
Shopify’s Big Debut
E-commerce solutions giant Shopify was founded in 2004 and made the move to go public 11 years later. It priced its IPO at $17 per share on May 21, 2015. Shopify had initially targeted the $12 to $14 range, but robust demand pushed the price up to $17 and allowed Shopify to raise $131 million by selling 7.7 million shares. At the time of its IPO, the company was valued at $1.27 billion.
After selling IPO shares at $17, Shopify shares hit the ground running, soaring up to $42.13 during the frenzy surrounding its IPO. However, the stock soon ran out of steam due in part to concerns over the stock’s IPO lockup expiration.
Shopify shares dropped to their all-time low of $18.48 in early 2016 before beginning a multi-year ramp on the strength of impressive growth and bullish headlines.
Amazon Effect
One of the biggest headlines came in January 2017 when Shopify announced a new integration with Amazon.com, Inc. (NASDAQ: AMZN) that would allow merchants to sell on Amazon’s platform via their Shopify stores. Shopify shares initially jumped nearly 10% following the news.
Shopify stock hit $100 in 2017, $200 in early 2019, $500 in early 2020 and was one of the few stocks that hasn’t been derailed by the COVID-19 outbreak. In fact, Shopify hit its all-time high of $778 on Thursday, the five-year anniversary of its IPO.
2020 And Beyond
Five years later, Shopify IPO investors that have held onto their stakes undoubtedly see the stock as one of the best investments of their lives.
In fact, $1,000 worth of Shopify IPO stock in 2015 would only be worth about $45,764 today.
Looking ahead, analysts expect Shopify to finally cool down a bit in 2020. The average price target among the 27 analysts covering the stock is $725 suggesting 6.4% downside from current levels.
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Amazon Prime Air Seen Surging Fivefold to 200 Jets, Rivaling UPS
Bloomberg
By Spencer Soper
May 22, 2020
Kentucky air hub could emerge as key to more national service
Amazon now offers service to small a number of destinations
https://www.bloomberg.com/news/articles/2020-05-22/amazon-prime-air-will-grow-to-200-planes-rival-ups-study-says?srnd=premium
Amazon.com Inc.’s Prime Air fleet will grow to about 200 planes -- up from 42 now -- in the next seven or eight years, creating an air cargo service that could rival United Parcel Service Inc., according to a study.
“At a time when many other airlines are downsizing due to the pandemic, Amazon’s push for faster and cheaper at-home delivery is moving ahead on an ambitious timetable,” said the report issued Friday by DePaul University’s Chaddick Institute of Metropolitan Development. “Amazon Air’s robust expansion makes it one of the biggest stories in the air cargo industry in years.”
Amazon unveiled the air cargo service in 2016, prompting speculation that it would ultimately create an overnight delivery network to rival delivery partners UPS and FedEx Corp.
Prime Air operates out of smaller regional airports close to its warehouses around the country, helping Amazon quickly move inventory to accommodate one- and two-day delivery. For that reason, some analysts have dismissed Amazon as a potential competitor to UPS and FedEx since it can only offer limited service to a small number of destinations and seems designed to handle Amazon packages.
Key to its ability to take on the entrenched players, the report says, is Amazon’s new $1.5 billion facility near Cincinnati that will accommodate up to 100 planes and as many as 200 flights each day. Amazon’s lack of a central hub has kept it from competing in the overnight delivery services offered by UPS and FedEx, which have more planes flying to more destinations.
“The massive investment being made in a large hub at Cincinnati/Northern Kentucky International Airport, however, could change everything,” the report says. “This hub appears to be the linchpin to Amazon’s efforts to develop a comprehensive array of domestic delivery services.”
A separate report released Monday noted Amazon’s lack of a central hub in concluding it was not a competitive threat to FedEx, which has a hub in Memphis, or UPS, which has one in Louisville. FedEx’s network can offer 9,000 daily flight connections, UPS’ 5,500 and Amazon Air just 363, according to the report from Bernstein.
“The viability of a commercial overnight offering from Amazon remains very limited,” Bernstein analyst David Vernon wrote. “Offering a low cost on shipping to a small number of markets every so often will never be a serious competitive threat.”
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>>> E-commerce ETFs rally sharply as bricks-and-mortar underwhelms
May 19, 2020
By Andrea Riquier
https://www.marketwatch.com/story/e-commerce-etfs-rally-sharply-as-bricks-and-mortar-underwhelms-2020-05-19?siteid=yhoof2&yptr=yahoo
E-commerce focused exchange-traded funds jumped Tuesday as a fresh round of updates from big retailers confirmed more consumer activity was moving online. The ProShares Online Retail ETF (ONLN), -1.22% rose nearly 2% midday, while the Amplify Online Retail ETF (IBUY), -0.51% and Global X's E-Commerce ETF (EBIZ), -0.33% were both up 1.3%. The ProShares fund, which was enjoying its biggest daily move in about three weeks, has as its biggest holding shares of Amazon.com Inc. AMZN, -2.05%, while EBIZ has its biggest position in Shopify Inc SHOP, +3.13% and IBUY's biggest holding is Revolve Group Inc. RVLV, +0.45%. On Tuesday morning, Walmart Inc. WMT, -0.36% said U.S. same-store sales rose 10%, but online commerce surged 74% as Americans hunker down at home to wait out the coronavirus pandemic. Separately, Pier 1 Imports Inc PIRRQ, -17.64% said it would file for bankruptcy protection.
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>>> Online Retail ETF Becomes King of its Category
ETF Trends
January 15, 2020
https://finance.yahoo.com/news/online-retail-etf-becomes-king-154901016.html
The Amplify Online Retail ETF (IBUY) is the first ETF dedicated to booming e-commerce space, but that's not the only superlative tied to this fund. These days, IBUY is the largest retail ETF of any stripe, having recently surpassed the SPDR S&P Retail ETF (XRT) for supremacy in this category.
As of Jan. 13, XRT, the oldest retail ETF; had $205 million in assets under management while IBUY's asset tally was close to $249 million, according to ETFdb data.
“In October for the first time, assets in the biggest online retail exchange-traded fund topped those of the largest broad retail ETF,” reports Andrea Riquier for MarketWatch. “That fund, the SPDR S&P Retail ETF, made up of companies that do most of their business in the physical, not online, world. As of Thursday, XRT, referring to its ticker symbol, had $236 million in assets, compared with $249 million in the e-commerce-focused fund, the Amplify Online Retail ETF.”
IBUY has been a popular thematic play that targets global companies that generate at least 70% of revenue from online or virtual sales. As the market environment shifts and changes, investors may also have the opportunity to capitalize on the growth potential of the e-commerce segment.
Going Inside IBUY
Recently, several brick-and-mortar retailers reported disappointing holiday sales, but overall sales were strong thanks to e-commerce.
Breaking down the retail segment, e-commerce sales this year made up 14.6% of the total, or up 18.8% for the same period last year, according to Mastercard’s recent data based on retail sales from November 1 through Christmas Eve. Overall holiday retail sales, excluding autos, increased by 3.4%.
This year, online sales are projected to surpass $4 trillion, with the biggest players in the field largely expected to capture a major share of the growing pie. For example, Amazon is estimated to account for half of all online sales by 2023. Although IBUY is younger than XRT, the former has consistently outperformed the latter.
“XRT has been around since 2006, while IBUY launched in 2016. Over the past 12 months, XRT has returned 3.1%, according to FactSet, while IBUY gained 20.1%,” according to MarketWatch.
IBUY has an international counterpart, the Amplify International Online Retail ETF (XBUY) . XBUY is an index-based ETF that takes on foreign companies or those outside the U.S. that are expected to benefit from the increased adoption of e-commerce around the world.
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>>> Debt-Laden Merchants Face Reckoning Amid Retail Apocalypse
Bloomberg
By Eliza Ronalds-Hannon
December 23, 2019
https://www.bloomberg.com/news/articles/2019-12-23/stores-that-stocked-up-on-debt-face-a-harsh-holiday-reckoning
Department stores fall out of favor with shoppers and lenders
Countdown is on for Forever 21’s plan to keep doors open
Retailers are strapping in for the final days of their traditional do-or-die holiday shopping period. For some, that could be meant literally, as creditors and vendors decide which ones are still worth supporting in a field plagued by fewer shoppers, more online competition and too much debt.
Some of the most familiar names -- Forever 21 Inc., Barneys New York Inc. and Payless Inc.-- have already collapsed into bankruptcy or liquidated this year. In 2019 alone, Coresight Research estimates, retailers have shut more than 9,300 stores. Among the survivors, fates have diverged, according to the restructuring experts at FTI Consulting Inc.
“The retail sector is becoming more segmented between winners and losers,” Christa Hart, a senior managing director in FTI’s retail and consumer practice, said in an interview. “The ‘average’ has disappeared.”
At Risk
Merchants could use a strong finish after last year’s holiday season, when retailers wound up with their worst sales drop for December since 2008, according to U.S. Census Bureau data analyzed by FTI. This holiday season “will be disproportionately great for the strong players and disproportionately weak for the other ones,” Hart said.
Some of the most vulnerable are the traditional department-store chains. Moody’s Investors Service predicted in a November report that by the end of 2019, those retailers will have seen their operating income fall by more than 15%. This, despite heavy investing to improve inventory efficiency and to build their online capabilities.
Department store sales have been declining for decades
“It’s not 1985 anymore,” said Perry Mandarino, head of restructuring and co-head of investment banking at B. Riley FBR Inc. “People don’t need a one-stop shop where they can get everything from vacuum cleaners to jewelry.”
Here are some retailers being closely watched by credit investors and lenders.
J.C Penney
Debt outstanding: About $4.2 billion
J.C. Penney Co. backed out of its appliance business earlier this year as one of the initiatives of new Chief Executive Officer Jill Soltau. She’s trying to design a strategy that will revive a chain suffering from slow-moving inventory and outdated merchandise.
Same-store sales, a key retail metric, dropped 9.3% last quarter. Foot traffic is falling and comparable sales have slid for five straight quarters.
Department stores should be focused on deepening their offerings in one particular area, such as appliances, FTI’s Hart said. “Sadly, many of these department stores took out their hardline and home businesses in favor of apparel, and now they are feeling the results of those decisions,” she said.
S&P Global Ratings cut J.C. Penney to CCC in August, noting that while the company doesn’t plan to file for bankruptcy, “we think an out-of-court restructuring is increasingly likely.” The following month, Bloomberg reported the chain is preparing for talks with its creditors on possible transactions to ease its debt burden.
A representative for the Plano, Texas-based retailer declined to comment.
Neiman Marcus
Debt Outstanding: About $5.7 billion
Neiman Marcus Group Inc. engineered an out-of-court note exchange in June that bought it more time to ease its high leverage.
But the luxury retailer still has about $700 million due by 2023, adjusted earnings continue to decline, and some of its bonds sell for a third of face value. Even the new debt issued during the exchange, which started trading at 97 cents, has already traded down to around half of its face value.
Credit raters take a dim view of Neiman Marcus. S&P said in June that the exchange didn’t make the debt load any less onerous and that there’s “continued risk of a restructuring or default over the next 12 months.”
The company is still mulling what to do with its successful European e-commerce business MyTheresa, and that may be its ticket back from the brink. It hired Lazard Ltd. in May to help it pursue a sale that could fetch more than $560 million.
A representative for the Dallas-based retailer declined to comment.
Belk Inc.
Debt outstanding: About $2.4 billion
Owned by Sycamore Partners LLC, this mid-priced chain concentrated in the southern U.S. typefies the pressures facing department stores, as shoppers seek out specialized outlets or take their household shopping online.
Belk is better off than some its peers, with a B2 rating from Moody’s. The credit rater cited a loyal customer base, better merchandising, good liquidity and stable cash flow in a June report. Another strength: About half its stores aren’t in malls, which are plagued by waning foot traffic.
Still, investors are shying from Belk’s term loan, which was quoted recently 71 cents on the dollar even after the company pushed its maturity out to 2025.
“Discount retailers are going to do better” than their higher-end peers in 2020, Mandarino said. “But they have to tailor their merchandise well. A lot of people have short attention spans, so you really have to cater to what your core buyer wants.”
A representative for New York-based Sycamore Partners declined to comment.
Forever 21
Debt Outstanding: About $350 million, excluding trade debt
Among all big retailers, Forever 21 Inc. may be the one whose survival is most at risk.
The trendy fashion chain went bankrupt in September, citing the cash-guzzling impact of an ambitious international expansion. Sales continue to lag, and revenue has been below expectations, Bloomberg reported in December. Inventory bottlenecks also threaten to curtail sales during the crucial holiday season, people familiar with the chain’s operations have said, making would-be rescuers hesitate to lend more money.
The company needs a new loan to finance its exit from bankruptcy, but prospective lenders are concerned about the weak results as well as the ongoing influence of husband-and-wife founders Do Won and Jin Sook Chang, who ran the company during its successful years as well as during its descent into insolvency.
A budget that Forever 21 filed with the bankruptcy court Nov. 16 cut its forecast for total sales in November to about $191 million, down 20% from what it predicted the month before.
A representative for Los Angeles-based Forever 21 declined to comment.
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>>> For the Worst-Performing Industry of 2019, the Only Way Out Is to Shrink
Bloomberg
By Jordyn Holman
December 30, 2019
https://www.bloomberg.com/news/articles/2019-12-30/for-worst-performing-industry-of-2019-only-way-out-is-to-shrink
Department stores, apparel chains are closing more locations
Clothing retailers look to bounce back from dismal 2019
After a bruising year, U.S. department stores and apparel retailers will seek to bounce back in 2020 by closing more locations, shrinking their shops and adding more experiences to attract customers -- like old-fashioned tailoring and trendy in-store cafes.
This year, it was clear that both categories lost ground as consumers continued their steady migration to Amazon.com Inc. and other competitors. While traditional retailers like Macy’s Inc. and Gap Inc. have invested in e-commerce and a better in-store experience, it’s in doubt whether that will be enough to restore their former stature.
Department stores were the worst sector on the S&P 500 this year, and Macy’s and Gap, along with Kohl’s Corp., L Brands Inc. and Nordstrom Inc., were among the poorest-performing individual stocks in the index. Revenue has flattened for many companies, with department stores and apparel chains losing market share to online and discount retailers like Ross Stores Inc. and TJX Cos., which owns Marshalls and T.J. Maxx.
A number of retailers ranked among the S&P 500's worst performers this year
Meanwhile the retail apocalypse has dragged on. More than 7,600 stores closed this year through October, a record for that point in the year, according to Credit Suisse. And the outlook for 2020 doesn’t look any brighter, the firm said. The sector’s woes are particularly troubling given the strength of the American consumer: If these retailers can’t capture growth amid higher spending, the outlook could get darker if an economic slowdown materializes.
See Also: Debt-Laden Merchants Face Reckoning Amid Retail Apocalypse (1)
According to analysts, these will be the most important trends to follow next year:
Closing Shop
David Swartz, an analyst for Morningstar Investment Service, said department stores have to scale down their store fleets. Macy’s, for example, doesn’t need hundreds of large stores -- especially in lower-tier malls that are at risk of closing. J.C. Penney Co. faces the same challenge, he said.
Macy’s has about 640 namesake stores and has been gradually closing locations since 2016. J.C. Penney has about 850 stores in the U.S., and it closed a handful of them this year.
“The chains like those two that have large numbers of very large stores are going to have to make decisions soon before their margins erode even more than they already have,” he said. “I think we’re going to see some major changes next year.”
The sector hasn’t sat well with investors. The S&P 500 department stores index is set to drop close to 30% this year, the biggest decline among all S&P 500 industry indices.
Gap, meanwhile, plans to shut about 230 stores as it overhauls its footprint and focuses more its Old Navy and Athleta brands. Preppy apparel retailer Abercrombie & Fitch Co. is also closing flagship stores.
Even if stores don’t close, they may shrink, according to Sucharita Kodali, an analyst at Forrester Research. As shoppers buy more online, there’s less need for massive selling spaces. Lord & Taylor, for instance, is reviewing the size of its locations and plans to debut new, more compact formats.
Giving Experiences
For the department stores looking to reduce inventory, creating a memorable experience is key to drawing in shoppers. Part of this is reorganizing the apparel spaces.
“If they look like a Ross, people will just go to Ross,” Swartz said. “The clothes are not so different so they have to provide a different kind of experience.”
More chains might follow the Nordstrom Local model, where the focus is tailoring, returns and helping customers find a specific look, rather than selling items. Restaurants could take more prominence, said Gabriella Santaniello, founder of retail consulting firm A Line Partners. Neiman Marcus and Nordstrom have repositioned their bars and cafes to be situated closer to the merchandising area, thus “blurring the lines in retail,” she said.
Kohl’s, meanwhile, has been taking Amazon returns -- a bid to draw in consumers who might stay for a while and pick up other items.
What’s Old Is New
Resale will also push retailers in new directions. The second-hand apparel market is expected to grow to $32 billion in 2020, according to GlobalData research for online thrift store ThredUp. That’s up from $28 billion in 2019.
“We’re going to continue the resale trend,” Santaniello said. “It’s legitimately working its way into the way we shop for a lot of products. Retailers are just going to have to accommodate.”
Apparel companies may be forced to improve their selection -- or join the resellers, she said. Expect more chains to form partnerships like the ones J.C. Penney and Macy’s announced in August with ThredUp.
Losing Credit
Retailers, particularly department stores, could also experience a sharper decline in income from store credit cards as a result of new accounting regulations, according to Morgan Stanley. Credit income is the profit share retailers receive from their partner financial institutions.
Current expected credit losses, or CECL, goes into effect on Jan. 1. Department stores will be impacted by this change more than the market realizes, Morgan Stanley said in a note to clients, because their reliance on credit income has ramped up as operating income continues to erode.
“We expect Macy’s could see the greatest potential hit from any decline in credit income,” Morgan Stanley said. Target, on the other hand, is most sheltered.
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>>> Amazon Is Its Own Biggest Mailman, Shipping 3.5 Billion Parcels
Bloomberg
By Matt Day
December 19, 2019
https://www.bloomberg.com/news/articles/2019-12-19/amazon-is-its-own-biggest-mailman-delivering-3-5-billion-orders?srnd=premium
Amazon delivers “aproximately half” of global orders itself
Contractors, gig economy drivers handle most U.S. deliveries
As Amazon.com Inc. works to speed orders to customer doorsteps before Christmas, the e-commerce giant is touting an accomplishment that would have seemed absurd just a few years ago: Amazon is now its own biggest carrier.
In the U.S., delivery contractors and on-demand workers now account for a majority of deliveries to customers, an Amazon spokeswoman said. Globally, “approximately half” of Amazon deliveries are completed by Amazon Logistics, the network the company built in recent years to handle a surge in deliveries that United Parcel Service Inc., FedEx Corp. and the U.S. Postal Service were unprepared to handle.
In a press release on Thursday touting the scale of Amazon’s network, Dave Clark, the increasingly influential executive who oversees Amazon’s logistics organization, said Amazon was on pace to deliver 3.5 billion of its own packages to customers this year. That exceeded some analyst estimates. Morgan Stanley earlier this month estimated that Amazon shipped some 2.5 billion of its own packages a year.
Amazon has stocked its warehouses for decades, but once relied exclusively on the likes of UPS and FedEx to take packages from those facilities to a customer’s doorstep -- the so-called last mile. The Seattle company began to expand its capacity to move packages on its own following a disastrous 2013 holiday season, when rough weather and logistical bottlenecks led to missed deliveries and angry shoppers.
Clark says Amazon now contracts with more than 800 delivery service partners, who employ a combined 75,000 drivers in the U.S. They take packages from some 150 delivery stations located in major U.S. metropolitan areas.
That buildout has been marred by controversy, including reports of deaths and injuries as contract drivers speed through neighborhoods around the country.
Clark on Thursday was keen to tout Amazon’s safety record, saying last-mile deliveries had traveled more than 800 million miles this year and beat a safety benchmark from the National Highway Traffic Safety Administration. He didn’t provide data.
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>>> Amazon Cuts Off FedEx Ground for Prime Holiday Shipments
Bloomberg
By Spencer Soper and Thomas Black
December 16, 2019
https://investorshub.advfn.com/secure/post_new.aspx?board_id=25503
Move highlights e-commerce giant’s power in shipping market
Logistics expert says FedEx struggles to meet seasonal demand
Amazon.com Inc. says third-party merchants can no longer use FedEx Corp.’s ground delivery network this holiday season because it’s too slow -- highlighting the e-commerce giant’s growing power over how products get to shoppers.
Amazon sent a message to sellers Sunday night instructing them of the change, according to notifications reviewed by Bloomberg. Some Amazon sellers complained about receiving the change less than two weeks before Christmas when holiday spending is peaking. Their alternatives include United Parcel Service Inc.’s ground service.
“It’s insane for them to do this on such short notice,” said Molson Hart, whose company Viahart sells toys on Amazon. “Unless we raise prices, we’re going to lose money on every order we are forced to route away from FedEx.”
FedEx, in an emailed statement, said Amazon’s “decision affects a very small number of shippers, it limits the options for those small businesses on some of the highest demand shipping days in history and may compromise their ability to meet customer demands and manage their businesses.”
Still, logistics expert John Haber said the company has struggled to deal with seasonal demand and has been handing off some of the load to the U.S. Postal Service.
Couriers are under extra pressure because there are six fewer days this holiday shopping season, and package volume is forecast to grow.
Amazon’s ban on third-party shippers using FedEx follows a dispute between the two companies, which failed to renew a delivery contract.
“There’s a lot of bad blood between the two organizations,” said Haber, who runs Spend Management Experts, an Atlanta consulting firm. He said the feud will benefit UPS, which will have more bargaining power with Amazon.
FedEx shares fell about 1% in New York. UPS was up slightly.
More than half of all products sold on Amazon come from third-party merchants who pay Amazon commissions on each sale. Many of those merchants also pay Amazon for logistics services like warehousing and delivery, which puts Amazon in competition with FedEx. Merchants have complained to antitrust regulators that the company uses its e-commerce dominance to push them to use its logistics services.
Some merchants say that using Amazon warehouses and trucks is faster and cheaper than doing the work themselves. But Amazon increases storage fees in its warehouses during peak holiday shopping months and some merchants prefer to oversee deliveries on their own to avoid these charges.
Until now, sellers could use FedEx’s ground service during the season to meet Amazon’s pledge to deliver millions of products in one or two days. They can still use FedEx’s express service for Prime packages, but that’s a costly option.
Amazon examines its delivery providers’ performance each year to determine order cut-off times for the holidays.
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>>> Berkshire Takes on Short Sellers With Bet on Furniture Retailer
Bloomberg
By Jarrell Dillard, Katherine Chiglinsky, and Anisha Sircar
November 23, 2019
https://www.bloomberg.com/news/articles/2019-11-23/berkshire-takes-on-short-sellers-with-bet-on-furniture-retailer?srnd=premium
RH is the most shorted stock among home-furnishing retailers
The shares have gained more than 500% since the start of 2017
Home furnishings are displayed in a Restoration Hardware Holdings Inc. store in New York, U.S..
Berkshire Hathaway Inc.’s new wager on furniture retailer RH has Warren Buffett’s company in a place it rarely finds itself: invested in a heavily shorted stock.
RH is the most popular short in the home-furnishing retail sector with 37% of the shares available to trade on loan to bears, according to data from financial analytics firm S3 Partners. The disclosure last week that Berkshire bought 1.2 million shares in the third quarter sent RH soaring to a fresh record. The rally hasn’t shaken the faith of short sellers, who profit when the price of a stock falls. Short interest in RH has barely changed since Berkshire revealed its purchase.
The retailer formerly known as Restoration Hardware has a couple of traits that undoubtedly appealed to Berkshire. For one, Buffett likes to stick to areas he knows best when selecting stocks. Berkshire counts at least four furniture retailers among its portfolio of companies, including Nebraska Furniture Mart which has a sprawling 80-acre campus in Buffett’s hometown of Omaha, Nebraska.
“They have a certain limited circle of competence and within that circle of competence is furniture stores,” said David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business.
Berkshire’s Bet
RH, known for luxe decor like sofas that can cost more than $5,000, also has an appetite to repurchase its own stock. The billionaire investor and his business partner, Charlie Munger, “rejoice” when managers buy back stock and boost Berkshire’s stake, Buffett said in his annual shareholder letter this year. Since 2017, RH has repurchased about 60% of its previously outstanding stock, it said in September.
The relatively small size of Berkshire’s stake in RH, which totaled $206 million at the end of the third quarter compared to Berkshire’s $56 billion bet on Apple Inc., likely indicates it was made by one of Buffett’s two investing deputies, Todd Combs or Ted Weschler, according to Kass. Berkshire didn’t respond to messages seeking comment on which investment manager purchased the stake.
Whoever made the RH bet likely perceived the stock as under-priced at the time of purchase, even if it was high on an absolute basis, according to Kass. And Berkshire hasn’t shied away from buying stocks at relatively high levels. One of the deputies has spent the past year snapping up Amazon.com Inc. shares, which now trade around $1,745 and more than 80 times estimated profits.
“Maybe they saw a certain growth opportunity here that other analysts are missing,” said Kass. “Much of their investment career is to try to find those rare under-priced opportunities where they expect to outperform the market.”
Bear Case
Short sellers are no doubt attracted to the rapid advance of RH shares. The Tracy, California-based company has gained more than six-fold since 2017 as Chief Executive Officer Gary Friedman managed to re-ignite revenue growth by drawing more customers to its brick-and-mortar stores at a time when consumer purchases are increasingly being made online.
The retailer's shares have gained more than 500% since 2017
That strategy is probably at the heart of the RH short thesis as Friedman has “gone against the grain with building big stores,” said John Baugh, an analyst at Stifel Nicolaus & Co., who has a buy rating on the stock.
Baugh thinks RH’s push to become more of a destination is the right move, one that will continue to drive traffic with high-end furniture that people feel the need to see in person and touch. While 9 of the 22 analysts tracked by Bloomberg that cover RH have buy ratings, the majority are neutral.
Anthony Chukumba, a Loop Capital Markets analyst, downgraded the stock to hold from buy on Thursday on concerns about valuation. He sees the upside potential and downside risks as fairly balanced at current levels. Still, Chukumba remains positive on RH’s fundamental performance, which he said has been aided by the introduction of a customer membership program.
Hennessy Investment Funds, which owns more than $18 million in RH shares, expects Friedman’s strategy to continue to improve financial results.
RH’s “earnings trajectory has been very good,” said portfolio manager Ryan Kelley. “I think they still have a lot more they can do to fortify their position.”
For Berkshire, so far the bet has been a good one, assuming it hasn’t sold the stock. Even if Berkshire bought at the highest point in the third quarter, RH shares have gained 13% since then.
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>>> Copart, Inc (CPRT). provides online auctions and vehicle remarketing services. It offers a range of services for processing and selling vehicles over the Internet through its Virtual Bidding Third Generation Internet auction-style sales technology to vehicle sellers, insurance companies, banks and finance companies, charities, and fleet operators and dealers, as well as for individual owners. The company's services include online seller access, salvage estimation, estimating, end-of-life vehicle processing, virtual insured exchange, transportation, vehicle inspection stations, on-demand reporting, title processing and procurement, loan payoff, flexible vehicle processing programs, buy it now, member network, sales process, and dealer services. Its services also comprise services to sell vehicles through CashForCars.com; and U-Pull-It service that allows buyer to remove valuable parts, and sell the remaining parts and car body. The company sells its products principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, and exporters, as well as to the general public. As of September 4, 2019, it operated through approximately 200 locations in 11 countries. Copart, Inc. was founded in 1982 and is headquartered in Dallas, Texas. <<<
>>> Home Depot stock is still a good investment despite rare misstep: analysts
by Brian SozziEditor
November 19, 2019
https://finance.yahoo.com/news/home-depot-stock-is-still-a-good-investment-despite-rare-misstep-analysts-174731584.html
Wall Street is still in love with Home Depot (HD) as an investment.
But suffice it to say, Tuesday’s trading session for the king of home improvement could be filed under the abnormal column.
Home Depot shares fell about 5% in afternoon trading as third quarter same-store sales rose 3.6%, below analyst forecasts for 4.6% growth. U.S. same-store sales increased 3.8% versus projections for 5.4% improvement. It’s a rare quarterly sales shortfall for Home Depot — and so is the market’s reaction on earnings day.
Earnings came in a penny ahead of estimates at $2.53 a share.
Executives blamed the delayed impact of investments in business — focused on faster delivery of online orders, store remodels and offering new services to contractors — for the sales shortfall.
The company cut its full-year same-store sales outlook to 3.5% growth from 4% previously. It reiterated its full year earnings guidance of about $10.03 a share.
Wall Street by and large came out quickly to defend Home Depot’s stock, long a top play for many strategists. Some have reasoned Home Depot will continue to benefit from favorable dynamics in the housing market, ranging from low interest rates spurring remodeling activity to a pick up in building activity in 2020.
“The macro nature of their business is in better shape,” Gradient Investments portfolio manager Jeremy Bryan said on Yahoo Finance’s The First Trade. Gradient owns Home Depot shares.
To Bryan’s point, U.S. housing starts rebounded in October and housing permits rose to a more than 12-year high, the U.S. Commerce Department said Tuesday.
Others remain bullish on Home Depot’s longer term execution and how it’s doing well in the age of digital shopping.
“We expect some weakness in HD today, given the underwhelming results and likely downward estimate revisions. That said, with HD viewed as among the highest-quality names and with some macro tailwinds, we think the downside damage to the stock could be mitigated,” Nomura Instinet analyst Michael Baker wrote in a note to clients.
Baker’s bullishness was echoed by Jefferies analyst Jonathan Matuszewski.
“3Q comp sales were light, though operating margins in-line with expectations. We believe shares down in the pre-market create a buying opportunity, as we interpret lighter 2H results to be more tied to timing of returns on strategic investments vs. a softer macro picture. These results don't change our view of a favorable industry backdrop with ongoing home improvement center share gains across most categories,” Matuszewski said.
But make no mistake: if Home Depot doesn’t deliver in the fourth quarter, those defending its stock may not be so inclined to do so again.
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Berkshire buys shares - >>> RH, together with its subsidiaries, operates as a retailer in the home furnishings. It offers products in various categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, tableware, and child and teen furnishings. The company provides its products through its retail galleries; and Source Books, a series of catalogs, as well as online through rh.com, restorationhardware.com, rhbabyandchild.com, rhteen.com, and rhmodern.com, as well as waterworks.com. As of February 2, 2019, it operated a total of 83 retail galleries consisting of 20 design galleries, 43 legacy Galleries, 2 RH Modern Galleries, and 6 RH Baby & Child Galleries throughout the United States and Canada; and 15 Waterworks showrooms in the United States and in the United kingdom, as well as operated 39 outlet stores throughout the United States and Canada. The company was formerly known as Restoration Hardware Holdings, Inc. and changed its name to RH in January 2017. RH was founded in 1979 and is headquartered in Corte Madera, California. The company was formerly known as Restoration Hardware Holdings, Inc. and changed its name to RH in January 2017. RH was founded in 1979 and is headquartered in Corte Madera, California. <<<
Amplify Online Retail ETF (IBUY) holdings -
Stamps.com (STMP) - 7%
Copart (CPRT) - 4%
PetMed Express (PETS) - 4%
Carvana Company (CVNA) - 4%
Expedia Group (EXPE) - 4%
Booking Holdings (BKNG) - 4%
IAC/Interactive Corp (IAC) - 4%
Ebay (EBAY) - 3%
Paypal Holdings (PYPL) - 3%
Amazon.com (AMZN) - 3%
>>> Tiffany & Co. (TIF), through its subsidiaries, designs, manufactures, and retails jewelry and other items in the Americas, the Asia-Pacific, Japan, Europe, and internationally. The company offers jewelry collections, engagement rings, and wedding bands. It also sells watches, home and accessories products, eyewear, and fragrances; and wholesales diamonds and earnings. The company sells its products through retail, Internet and catalog, business-to-business, and wholesale distribution channels. As of January 31, 2019, it operated 124 stores in the Americas, 90 stores in the Asia-Pacific, 55 stores in Japan, 47 stores in Europe, and 5 stores in the United Arab Emirates. Tiffany & Co. was founded in 1837 and is headquartered in New York, New York. <<<
>>> Tiffany Falls as Sales Slump Amid Decline in Tourism Spending
Bloomberg
By Kim Bhasin
June 4, 2019
https://www.bloomberg.com/news/articles/2019-06-04/tiffany-slumps-as-jewelry-maker-s-sales-fall-more-than-expected?srnd=premium
Tiffany & Co. reported first-quarter sales that fell short of projections, while warning that tariffs will rise on the jewelry it sends to China from the U.S. Shares fell in early trading.
Comparable sales, a key retail metric, fell 2% worldwide on a constant currency basis, missing the average of analysts’ estimates for 1.2% drop from Consensus Metrix. The company’s gross margin also shrank and also fell short of estimates.
Key Insights
Growing tensions between the U.S. and China have taken a toll on the jewelry maker. Over the holidays, Tiffany said it was hurt by a drop in spending by Chinese tourists, an important customer group. The company warned that this situation has persisted, with “dramatically lower worldwide spending attributed to foreign tourists.”
This situation could be exacerbated going forward by a warning that China issued on Tuesday about travel in the U.S. The country’s Ministry of Culture and Tourism cited recent “frequent” shootings, robbery and theft in the U.S., according to Xinhua News Agency. That’s likely to further reduce Chinese travel abroad -- and the purchases they make there.
Sales to local customers improved however, led by China, according to Chief Executive Officer Alessandro Bogliolo, who predicted Tiffany “is positioned for improving trends in the second half of 2019.”
While Asia was a bright spot, with flat same-store sales there outpacing estimates for a drop, most other region performed worse than expected. In the Americas, a comparable sales decline of 4% was almost almost twice as big as estimated.
The company sees earnings coming under pressure in the second half, in part because of tariffs rising to 25% on the jewelry the company sends to China from the U.S. The company has also quietly gone on a hiring spree in the past two years, and is increasing its retail square footage and relocating 15 stores.
Market Reaction
Tiffany shares fell 2.7% to $88.49 in pre-market trading, paring a steeper earlier decline.
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>>> 12 retailers at risk of bankruptcy in 2018
Six have already filed for bankruptcy in 2018, pointing to more struggles ahead. With data from CreditRiskMonitor, we looked at companies that may be vulnerable.
By Ben Unglesbee
April 25, 2018
https://www.retaildive.com/news/12-retailers-at-risk-of-bankruptcy-in-2018/522071/
High consumer confidence, a healthy overall economy and a banner 2017 holiday season helped change the mood around retail going into the new year. But there are still dark spots in the industry.
And where it's still dark, it still looks as dark as 2017 — a year that beat out the recession era for retail bankruptcies. Many of the same problems remain for department stores and specialty retailers: traffic has declined at B- and C-class malls, Amazon and e-commerce's share of the pie is quickly growing, off-pricers and discounters have squeezed middle-tier names, and consumers are spending more on experiences over stuff.
And not least of all, there is still billions of dollars in debt out there coming due in the near future, much of it left over from a rash of leveraged buyouts of retailers by private equity firms in the past decade. The debt puts balance sheets under stress and the interest payments leave less money to invest in the business — a sure recipe for a death spiral.
Already this year there have been six major retail bankruptcies, including that of Bon-Ton Stores, the first major department store in years to liquidate. Most executives expect retail bankruptcies in 2018 to increase or keep pace with last year, according to a study from consulting firm BDO. S&P analysts have also noted that retail defaults could increase this year, as could liquidations. Moody's analysts said last week that retail defaults in the first quarter of this year hit an all-time high, though the ratings agency expects that defaults likely peaked in March.
With all that in mind, we're looking closely at who is still vulnerable. In putting together a list of retailers that could go bankrupt, we relied on data provided to Retail Dive by CreditRiskMonitor, a service dedicated specifically to predicting the risk of companies with publicly traded stock or bonds going bankrupt.
CreditRiskMonitor estimates the risk of a company going bankrupt within 12 months based on several streams of data, including financial ratios, bond ratings, a commonly used credit analysis model (the "Merton" model) and aggregated data patterns from its own subscribers, which include credit professionals and major corporations.
The service uses that data to assign a proprietary rating, called a "FRISK" score, that weighs the probability of bankruptcy. A FRISK score of one indicates a 9.99% to 50 % chance of bankruptcy within 12 months, and a score of two corresponds with a 4% to 9.99% chance of bankruptcy. (The scores continue to 10, which indicates risk near zero.)
The following was culled from lists of retailers with FRISK scores of one or two in the first quarter 2018 provided by CreditRiskMonitor executives.
J. Crew
FRISK score: 1
J. Crew underwent a massive expansion and tried to go upscale as consumers were changing their tastes and spending habits. The result: Declining sales, the departure of a longtime CEO and a $2 billion debt problem. Last June, J. Crew announced it had some relief in the form of a debt exchange.
Net losses for 2017 (which included a benefit for income taxes of $105.5 million) widened to $125 million from $23.5 million last year. In the fourth quarter, sales at the retailer's flagship brand fell 4%, but the Madewell unit lifted the entire company, with sales growth of 32%.
Neiman Marcus
FRISK score : 1
Neiman Marcus top-line sales in fiscal 2017 (which ended in July) fell around 5%, to $4.7 billion, compared to 2016. That's a tough hand for a retailer weighed down by a $4.8 billion debt pile, but the retailer has performed better in recent quarters. In the period that included the holiday season, Neiman increased its top-line sales, comps and posted a needed positive profit.
To boost profit and sales, the company has cut jobs and developed a "Digital First" strategy to engage customers more deeply. So far, it appears to be paying off.
Last June, acquisition talks broke down with Hudson's Bay, reportedly on concerns about the retailer's debt. Neiman Marcus, held by a group of private equity firms, had also earlier floated plans for an IPO that never materialized.
There's been executive turnover as well. In January, CEO Karen Katz, who had served in the chief executive spot since 2010, stepped down and was succeeded by Ralph Lauren executive Geoffroy van Raemdonck. Last year, the retailer also lost then-CFO Donald Grimes after little more than a year on the job. He has since been replaced by Adam Orvos, who took over from interim CFO Dale Stapleton. The company has seen additional turnover in its CMO and CIO spots.
A spokesperson for Neiman noted in an email to Retail Dive that the retailer had total liquidity of about $842 million at the end of Q2 (which ended late January), giving the company "the flexibility to strategically invest in our businesses." Neiman’s next major debt maturity isn't due until 2020, and it's long-term debt does not fully mature until 2021, the spokesperson said, adding, "We will continue to proactively manage our liquidity and capital structure."
Sears Holdings
FRISK score: 1
Sears Holdings' sales have been declining for nearly a decade. Years of cost cuts, store closures, asset sales and layoffs have, in most prior quarters, done little beyond slowing the loss of money. As media and analyst coverage have become increasingly gloomy, the retailer has lashed out at the media and publicly feuded with suppliers. It broke off ties with a major appliance maker in Whirlpool.
To date, Sears has avoided bankruptcy in part with the help of its CEO Eddie Lampert's hedge fund, which has loaned hundreds of millions of dollars (with interest) to the department store retailer. It also sold off owned property, piecemeal at times, and it could sell its Kenmore brand and home services units to Lampert's fund, after he propositioned the company he runs about a prospective deal.
In the fourth quarter, Seats posted a badly needed profit — though it's comparable sales dropped an alarming 15%. It has also bought turnaround time and freed up cash through a distressed debt exchange.
99 Cents Only
FRISK score: 1
99 Cents Only Stores operate in a low-margin space that's only gotten more competitive as Dollar General, Dollar Tree, Walmart and others battle for market share. The 35-year-old chain was bought out in 2012 by private equity firm Ares Management as well as the Canadian pension fund and a private family.
In February, the retailer named a new CEO and projected strong sales improvements. The company has indeed posted positive same-store sales growth for several quarters going. Yet 99 Cents Only is still losing money. In December, it reported a third quarter net loss of $27.1. That came on top of a $33.6 million in the second quarter and an $8.8 million loss in the first quarter. In December, the retailer announced it had completed a distressed debt exchange that S&P analysts said improved the company's liquidity "somewhat."
GNC
FRISK score: 1
GNC is a leader in a growing and competitive supplement space, an area that has come under scrutiny from public health officials and state attorneys general. Financial and operational issues have plagued it recent years. GNC's top-line revenue in 2017 fell 3.4% year over year to about $2.5 billion. Same-store sales at the supplement retailer's domestic company-owned stores fell slightly and declined 2.4% at franchise locations.
In late 2016, GNC briefly shuttered all its stores in an ambitious rebranding that came after then-CEO Robert Moran found "a badly broken business model in need of change" in the retailer he'd taken over. The arrival of Moran, followed the abrupt resignation of previous CEO Michael Archbold last summer. And Moran himself was replaced in September by former Rite Aid CEO Ken Martindale.
Fitch in February upgraded the company's debt out of junk territory after it worked with lenders to extend maturities. At the time, the analysts noted that changes to the company's pricing and a new loyalty program made them more optimistic about the retailer's operating trajectory. Also in February, the company disclosed that a Chinese pharma company agreed to buy a 40% stake in GNC and run a joint venture with the retailer to manufacture, market, sell and distribute GNC-branded products in China. The deal is expected to close in the second half of 2018.
Fred's
FRISK score: 1
Fred's Pharmacy traces its roots back more than 70 years. With around 600 stores, the drug store aimed to grow bigger by pursuing nearly 1,000 stores that were up for grabs as Walgreens was trying to get a deal with Rite Aid past anti-monopoly enforcers. But the deal fell through after Walgreens, facing pushback from the Federal Trade Commission, nixed its initial deal with Rite Aid.
This spring the retailer said it was focused on executing its "Plan B," and in April Fred's postponed an upcoming earnings release as it pondered the sale of its specialty pharmacy business, according to the Memphis Business Journal. In January, the company's CFO resigned, and the next month the retailer appointed a former media executive in the chief finance spot.
Fred's reported in December that its top-line sales dropped 4.5% year over year in the third quarter, to $493.6 million, and comparable store sales fell 0.8%. The retailer's net loss for the quarter widened to $51.8 million. Its loss by the end of October was $117.8 million, a more than 167% expansion over the prior-year period's loss.
Destination Maternity
FRISK score: 2
Destination Maternity bills itself as the largest designer and retailer of maternity apparel, with more than 1,000 locations. Its CEO left last year, during a quarter when top-line sales fell by more than 7% and shortly after it brought on Berkeley Research Group to help in its turnaround efforts. Since then, the company is already on its second interim CEO.
In fiscal 2017, Destination Maternity's sales fell 6.3% year over year to $406.2 million, which the company attributed to the wind down of a relationship with Kohl's, the net closure of 28 retail stores and a comparable sales decline of 1.5%. It posted a net loss of $21.6 million, a significant narrowing compared to the prior year's loss of $32.8 million. Comps in the fourth quarter rose 5.2%, and e-commerce comps were up 40% as the company relaunched its websites.
Ascena Retail
FRISK score: 2
Ascena operated at a $1.3 billion loss in its fiscal 2017 (which ended in July), and the retailer posted a net loss of $1 billion, after posting an $11.9 million loss in 2016 and a $236.8 million loss the year before that. The retailer went into the holiday season in need of "some holiday cheer," in the view of Moody's analysts, but instead it reported in March that top-line sales fell year over year again in the quarter, and comparable sales fell 2% across its units, with comps falling 8% at Ann Taylor and 1% at Loft.
In January, Ascena brought in a new chief for Dress Barn after poor performances in the unit. Ascena as a whole plans to close 250 locations, or 25% of its stores, by the end of 2019.
Stein Mart
FRISK score: 2
Stein Mart is fighting on multiple fronts — improving merchandise, clearing out inventory, cutting costs and testing services like ship from store. There's some evidence that it's making progress. In Q3 2017, the retailer's store sales stabilized and digital sales grew by 47% in October, executives said in November. The retailer also announced a new loyalty scheme early last year.
In the fourth quarter, the company shrunk its loss to a size about 10% of the prior year's Q4, though it posted a $23.4 million net loss for the year, compared to net income of $401,000 in 2016. Comparable sales fell 6.2% in 2017.
Founded in 1902 as a single store in Mississippi, Stein Mart, with around 300 stores, faces an uphill battle. In January, the company said it had hired advisors and was looking at "strategic alternatives" to improve performance. Helping its liquidity, the retailer closed on a $50 million term loan in March, which could be increased.
J.C. Penney
FRISK score: 2
J. C. Penney has been under pressure for some time, as the department store sector bleeds. It closed out the year with a shakeup in its executive offices, letting go of longtime chief merchant John Tighe in an effort to streamline merchandising operations. Earlier in the year, the company attempted a dramatic apparel reset, sweeping away much of its women's inventory. (Women's apparel accounts for 22% of the retailer's sales.)
Already in 2018, the retailer has axed more than 1,000 jobs and closed a distribution center. Store closures last year led to a 0.3% drop in top-line sales in 2017, and Penney's comps barely budged. Net income for the year was $116 million.
While the retailer has by and large performed better than Sears and Neiman Marcus, it carries a total debt load of about $4.2 billion, which aside from being a financial risk, limits J.C. Penney's ability to adapt to changes in the sector.
Office Depot
FRISK score: 2
Office Depot CEO Gerry Smith told analysts in February that 2018 would be a year of transition. That means, in part, shifting the company's emphasis from retail sales to business services after federal antitrust enforces blocked a merger with rival Staples. Smith called the turnaround efforts a "multi-year journey" that is already beginning to show some "favorable trends."
But Office Depot's sales fell 7%, to $10.2 billion, in 2017. With an 11% year-over-year decline, company's retail sales fell by even more. As it invests in B2B operations, the company last fall acquired IT services firm CompuCom.
Office Depot carries about $1.3 billion in long-term debt and nearly $4 billion in total obligations.
Vitamin Shoppe
FRISK score: 2
Vitamin Shoppe has been elevating its e-commerce penetration and has introduced a new subscription service. But it, like GNC, has suffered from mall traffic declines and competition in the supplement industry. Top-line sales fell 8.5% last year to about $1.2 billion, comps fell 7%, and the company posted a net loss of more than $252 million. In the fourth quarter, comps fell 4.6%, and the retailer widened its net loss to $17.6 million.
Vitamin Shoppe hopes it can turn around its business with a multi-pronged plan that includes category expansion, in-store "health enthusiasts" and "grass roots" events, delivery services and improvements to its loyalty program and omnichannel capabilities. For 2018, the retailer still expects negative comps in the low or middle single digits.
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>>> More trouble for malls: A new wave of closures from Gap, Victoria's Secret and others
11-30-18
CNBC
https://www.msn.com/en-us/money/topstocks/more-trouble-for-malls-a-new-wave-of-closures-from-gap-victorias-secret-and-others/ar-BBQgr3j?li=BBnb7Kz&ocid=mailsignout
Mall and shopping center owners across the U.S. are preparing to be hit by more store closures, following a brutal year that included department store chains like Bon-Ton and Sears going bankrupt, Toys R Us liquidating and even Walmart shutting dozens of its club stores.
Now, a slew of specialty retailers like Gap and L Brands are getting serious about downsizing, which will leave more vacant storefronts within malls until landlords are able to replace tenants.
And if retailers are not shutting stores, the focus is on negotiating with landlords over how to cut rent and other expenses. Real estate analysts say it's the retailers, not the mall and shopping center owners, that still have the upper hand in most negotiations today.
"Our early read on 2019 is more of the same ... with both malls and [shopping centers] facing another year of tepid earnings growth and store closure-related headwinds," Mizuho analyst Haendel St. Juste said.
Related video: Malls compete for shoppers from e-commerce ahead of holidays
The CEO of clothing retailer Express, David Kornberg, told analysts Thursday morning the company is "benefiting from reduced occupancy costs, which are expected to continue based on recent lease negotiations."
Express has 60 percent of its leases up for renewal over the next three years, and will be in a position to argue for slashed rents because of that, he said. Express currently has more than 600 stores, including outlets, across the U.S. and Puerto Rico.
The comments come after Gap earlier this month warned it could shut hundreds of stores for its namesake brand "quickly" and "aggressively."
"There are hundreds of other stores that likely don't fit our vision for the future of Gap brand specialty store, whether in terms of profitability, customer experience, traffic trends," CEO Art Peck said.
Then, L Brands CFO Stuart Burgdoerfer told analysts earlier in November the company is going to "take a hard look" at its real estate "over the next several months." He said L Brands hasn't had much flexibility to shut stores of late, without incurring a penalty, as leases in the U.S. typically last for 10 years, and can be 15 years in the U.K. But he hinted the company hopes to take a more aggressive stance, moving forward.
"We're doing some more purposed testing for Victoria's [Secret] around closing some stores that may not be as obvious financially, but really observing the sales transfer effects," Burgdoerfer said. Victoria's Secret has been viewed as dragging down Bath & Body Works, which is also owned by L Brands and is seeing improved sales trends for its lotions and candles as its stores are being remodeled.
Bucking the trend, Abercrombie & Fitch said Thursday morning it plans to close fewer stores this year than it previously anticipated, based on a regained momentum of its apparel business. It's now planning to shut just 40 locations in malls, compared with a prior target of 60. But it also still has 60 percent of its leases expiring by 2020, giving the company more flexibility in the coming months to ink better deals with property owners. Abercrombie currently has more than 850 stores globally, including those under the Hollister banner.
"I would say, we retain a lot of flexibility with our leases ... based on lease expiration," CEO Fran Horowitz told CNBC. "We work with our landlords. We negotiate with them."
All things considered, U.S. mall owners like Simon, Macerich, Taubman, Seritage, Brookfield and Unibail-Rodamco-Westfield must look for new ways to fill these gaps, as there aren't many retailers today opening new stores at the same size and scale as before the Great Recession.
Some are turning to co-working spaces, apartment complexes and health facilities to replace department stores. Others are building spaces that house multiple e-commerce brands on a rotating basis. There's a wave of digital brands like Casper, Warby Parker and Untuckit opening bricks-and-mortar locations.
"We continue to believe that we're still in the earlier stages of the reshaping of the retail landscape and facing a challenging backdrop marked by defensive landlords/weak pricing power, more anticipated store closures, and selective capital," St. Juste said.
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TJX Companies - >>> 7 Best Stocks to Buy as You Recalibrate Your Compass
by Josh Enomoto
InvestorPlace
November 2, 2018
https://finance.yahoo.com/news/7-best-stocks-buy-recalibrate-164509126.html
Throughout mankind’s history, and even to this day, Polaris, or the north star provides a crucial frame of reference. Polaris is situated directly atop the earth’s axis, staying put while other stars dance around it. Similarly, companies levered toward secular and stable businesses represent the best stocks to buy during market downturns.
While the vast majority of publicly traded securities have absorbed substantial pain last month, they all share a common negative catalyst: fear of the unknown. For most organizations, that fear is China and the real possibility of a protracted trade war. In other cases, it’s the upcoming midterm elections and the questions they will raise.
But the best stocks to buy at this present time have gone against the grain. Whether they’re holding onto their market value, or have experienced profitability, some organizations haven’t let distractions derail them.
Typically, this is because their industry demand isn’t vulnerable to geopolitical whims. A customer might skimp on a flat-screen TV, but they can’t say the same about their medication. Or, a company’s products are aligned with future business trends that extracurricular distractions simply don’t matter.
Admittedly, it’s difficult to concentrate on your portfolio during a bearish phase. But “north star” investments do exist, and they’re more plentiful than you might think. Here are seven of the best stocks to buy in these troubled waters:
Walgreens Boots Alliance (WBA)
One of the best stocks to buy amid a market crash is a company that’s levered toward an indispensable industry. A prime example is Walgreens Boots Alliance (NASDAQ:WBA). As a retail pharmaceutical company with both domestic and international exposure, WBA stock offers fundamental protection against cyclical volatility.
Sometimes, though, theory and reality don’t often align. Fortunately for WBA stock, this is a case where the fundamentals are well represented in the markets. Indeed, shares of Walgreens Boots Alliance have greatly exceeded benchmark indices. For October, WBA gained 9.5%, while during the second half of the year, shares are up nearly 35%.
While the company has already enjoyed outstanding performances, WBA stock still has more upside potential. Its most recent earnings report for the fourth quarter impressed the markets, producing strong earnings and sales growth. Plus, consumers are unlikely to skimp out on the company’s essential products, irrespective of economic conditions.
CME Group (CME)
At first glance, CME Group (NASDAQ:CME) doesn’t immediately strike you as one of the best stocks to buy right now. Anything to do with the broader markets and investment services seems like an opportunity to deleverage. However, a quick look at CME stock suggests otherwise.
CME Group has simply proven to be one of the best stocks during this market fallout. In October, while the Dow Jones Industrial Average crumbled, CME stock gained nearly 7%. Going back to the July open, shares have jumped almost 13%.
I’m sure most investors are still hesitant on buying into CME stock. We’ve heard time and again that millennials are not investing in the stock market. If that’s the case, why risk exposure to a company that operates futures and options exchanges?
For one thing, these “exotic” instruments represent a necessary component of the broader markets. Second, CME Group has demonstrated surprising flexibility for such a staid organization. This is perfectly demonstrated with the company’s foray into bitcoin.
I’ve heard that bitcoin has some popularity among millennials, which is why you should give CME stock a second look.
Coca-Cola (KO)
I’m not saying anything new when I say that Coca-Cola (NYSE:KO) has frustrated long-term shareholders. While no one expects KO stock to be a superior growth engine, investors do like to see returns. Unfortunately, Coca-Cola shares, at their current price, haven’t moved much for two-and-a-half years.
That might change in the current environment. For the month of October, KO stock almost hit 4%. No, that’s not going to transform the iconic beverage-maker into a high-powered tech company. But have you seen tech firms lately? By not dying, KO puts itself among the best stocks to buy.
Better yet, the positive sentiment surrounding the company isn’t based on whimsical emotions. Earlier this summer, Coca-Cola pulled off a surprising Q2 earnings beat. It followed that up with another comprehensive top-and-bottom beat in Q3. That promptly pushed KO stock higher.
I still see reasons for believing in Coca-Cola. First, the company specializes in selling cheap, and increasingly relevant consumer staples. Second, KO stock features a fairly generous 3.3% dividend yield, a huge bonus at this juncture.
American Tower (AMT)
Another name that some investors may find surprising is American Tower (NYSE:AMT). In recent weeks, shares of smartphone-component manufacturers have suffered tremendously volatility. But for AMT stock — where the underlying company specializes in cell phone towers — it has experienced the opposite effect.
During the October selloff when most publicly traded firms were suffering catastrophic losses, AMT ended the month up nearly 7%. That stat is more impressive when you consider that shares dropped more than 3% on Halloween. For the year-to-date, American Tower has gained 9%.
Although AMT stock lacks the pizzazz that typically belongs on a list of best stocks, its underlying industry is indispensable. As we move further into the world of 5G wireless networks, American Tower’s enviable real-estate portfolio levers significant value.
And while it’s true that AMT’s cell towers are suited for 4G, 5G cells must still communicate with larger towers. Further, American Tower has a strong international presence, and not all countries will adopt 5G simultaneously.
Starbucks (SBUX)
For whatever reason, several notable firms have suffered a backlash from racially motivated incidents. The most recent example is Papa John’s (NASDAQ:PZZA) notorious incident involving founder John Schnatter.
Although not quite as controversial, Starbucks (NASDAQ:SBUX) generated negative headlines for racially discriminating against specific customers.
That aside, both Papa John’s and SBUX stock have something interesting in common: they have climbed back from their post-discrimination woes.
Since hitting bottom near June end, SBUX stock has skyrocketed nearly 22%. Last month, Starbucks was one of the few investments that didn’t roll over, gaining a little over 2%. Frankly, I find this shocking considering how divisive our political rhetoric has become.
Nevertheless, it’s clear that the American people are more forgiving than I thought. That puts SBUX stock in a good position during these uncertain times. The company delivered an overall strong earnings report, albeit with some weaknesses in foot traffic.
But the bottom line for me is that nothing — not even racial controversy — can take down the Starbucks brand. This is an awkward but still viable reason to consider SBUX stock.
Disney (DIS)
With all that’s happened over the past few weeks, and with a heavily contested midterm elections coming up, I’ve completely forgotten about Disney (NYSE:DIS). Yet perhaps that’s for a good reason. Sometimes, flying under the radar is the key to success.
While I wouldn’t call DIS stock a superb October investment, it was one of the few Dow 30 companies to keep the bears at bay. Yes, Disney shares lost 2% last month, but I consider that a victory against the bigger picture. The underlying index dropped almost 6% during the same timeframe.
But with DIS stock, I’m not so much interested in analyzing stats than I am assessing its potential. Indeed, I think Disney is ideally positioned, and even more so if broader bearishness continues.
As I explained my thoughts on AMC Entertainment (NYSE:AMC) in another article, people seek escapism during troubled times. AMC benefits because it presents value-packed entertainment. In a similar fashion, Disney offers that same escapism but through multiple avenues. Thanks to its vast entertainment empire, I see DIS stock moving higher from here.
TJ Companies (TJX)
A quick look at Amazon’s (NASDAQ:AMZN) price chart reveals that the retail markets haven’t found a complete respite. Nevertheless, TJX Companies (NYSE:TJX) could end up being one of the best stocks to come out of this sector.
For one thing, TJX stock has avoided the severe volatility impacting so many other competitors. For October, shares have dropped a little bit less than 3%, which is really nothing. The benchmark exchange-traded fund SPDR S&P Retail ETF (NYSEARCA:XRT) has fallen 6.5% during the same timeline.
Another factor that boosts TJX stock is the underlying company’s business. TJX specializes in off-season, discounted fashion and home goods. During an economic upheaval, everyday low pricing drives foot traffic into stores. Even during an economic upswing, very few people are going to turn down a good deal.
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Amazon - >>> 3 Growth Stocks to Buy and Hold for the Next 50 Years
by Neha Chamaria, Chris Neiger, and Maxx Chatsko
Motley Fool
November 21, 2018
https://finance.yahoo.com/news/3-growth-stocks-buy-hold-213500910.html
Growth stocks outperform the market because they're able to grow revenues at a faster pace than the industry average year after year. How long can such growth last, though? The answer could surprise you.
There are some great companies out there that can potentially grow bigger and better for not just years, but decades, thanks to a strong footing and innovative approach to growth in an industry with a huge addressable market. They're the kind of growth stocks you'd want to buy and hold for as many as 50 years. Here are three that our Motley Fool contributors have identified: NextEra Energy Partners (NYSE: NEP), Visa (NYSE: V), and Amazon (NASDAQ: AMZN).
Read along to learn what makes these stocks such terrific long-term buys.
A fast-growing, high-yielding renewable energy stock
Maxx Chatsko (NextEra Energy Partners): It's easy to be pessimistic when it comes to humanity's response to climate change, but that has a lot to do with pessimistic headlines. The trajectories of renewable energy technologies -- which are exponential, not linear -- suggest humanity could actually end up crushing long-term clean energy and climate goals. And it's all supported by cold, hard data.
Onshore wind power is set to replace hydropower as the top renewable energy source in the United States in 2018 -- one year ahead of the most ambitious estimate... from 2017. Current trends indicate wind and solar could combine to generate 25% to 30% of total U.S. electricity by 2030. That doesn't even include an estimated 24,000 megawatts of offshore wind power currently in the nation's pipeline or the very real possibility that nearly all of the country's coal-fired power plants might be retired by 2040.
That's great news for companies with leading positions in renewable energy and ambitious plans to plow full steam ahead into the future. NextEra Energy Partners is one such business. It owns 4,700 megawatts of wind and solar to go along with 4 billion cubic feet per day of natural gas pipeline capacity in South Texas. In other words, it's all over the future of energy in America -- and it's only getting started.
The company's close association with NextEra Energy, which expects to grow its renewable energy asset backlog to 40,000 megawatts by 2020, provides easy access to great growth assets. The pair just completed a transaction that added $1.275 billion in wind and solar assets to the portfolio of NextEra Energy Partners. That provides enough firepower to grow the dividend (currently yielding 3.8%) at least 12% per year through 2023.
That's a big reason why management thinks it can deliver total returns of around 16% per year between now and then. That means an investment of $1,000 today would grow to $2,100 by 2023 -- if management delivers. While it could fall short in the next five years for any number of reasons, investors have to like the chances for growth in the next 50 years.
Fintech is the next big thing to profit from
Neha Chamaria (Visa): As the world goes digital, a company that's investing in the next wave of digital payments should have a bright future. That's why I believe in Visa, a company whose branded cards you're probably already using, thanks to your bank, which probably issued them.
As cashless modes of payment and e-commerce gather steam, more banks will scramble to issue debit, credit, and prepaid cards. With nearly 3.3 billion cards in circulation across the globe, Visa is a top choice for merchants and banks alike. For Visa, every additional card issued on its payments-processing network adds value to its business. Visa earns transaction and volume fees every time someone swipes its card to make a purchase.
Emerging markets are a hotbed of opportunities for Visa, and the company is going all out to exploit them. For example, Visa recently renewed its relationship with India's leading private and public sector banks, even as it bought a stake in Billdesk, one of the nation's largest online-payment gateways. The Indian government's aggressive cashless drive makes the nation one of the largest potential markets for Visa. Likewise in Latin America, Visa recently struck deals with a leading travel agency and card issuer.
Visa also is tapping new technologies and trends such as mobile payments. Examples include Visa Checkout, which allows users to make payments through Visa with a single-click option on integrated digital wallets, and the company's collaboration with tech giant IBM to use the latter's Internet of Things platform to embed payments into devices and home appliances.
Each of these moves is futuristic, which, when combined with Visa's network effect moat and a high-margin business, makes it a compelling stock to own for decades to come.
Amazon just can't stop winning
Chris Neiger (Amazon): If you look at Amazon's stock price over the past six months, you'll notice it's relatively flat. But don't let the steep share-price drop that happened in October fool you -- this company's best days still are ahead of it.
I think Amazon is a stock to buy and hold for the next five decades because of its ability to enter new markets and dominate them. For example, there's no question that Amazon is an e-commerce powerhouse, with about 49% of all online sales in the U.S. happening on the company's platform. That's impressive, but how does Amazon plan on keeping its competitive advantage? By keeping customers tied to its platform by selling Prime memberships that offer free two-day shipping, video- and music-streaming services, and more.
That's not just a service -- it's a way to get users hooked on using Amazon for more of their retail needs, and the data shows they spend more on Amazon's site once they become members. The great news is that in 2019, more than half of American households will have Prime membership.
While retail brings in most of Amazon's revenue, the company also has invested heavily in its Amazon Web Services (AWS) cloud-computing platform, as well. This gives the company a completely different business than retail to benefit from -- and with better margins -- and provides the company with a bigger chance of having staying power for decades to come. AWS is the No. 1 public cloud-computing company, far outpacing its No. 2 rival Microsoft, and the market is expected to grow to $302 billion by 2021.
If all of that wasn't enough to help give Amazon staying power, the company just recently became the third-largest digital ad platform in the U.S. That's notable because in the next few years, Amazon's advertising operating income could surpass Amazon's AWS operating income and become an even more significant part of the company's overall business.
Amazon is one of those rare companies that can evaluate a new market and enter it, then beat nearly every competitor in that space -- and then go and do the same thing a few years later in a completely different area. For that reason, I think Amazon is a great buy-and-hold stock for the next 50 years.
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>>> Sears bankruptcy isn't surprising when looking at these numbers
Yahoo Finance
by Brian Sozzi
Yahoo Finance
October 10, 2018
https://finance.yahoo.com/news/sears-bankruptcy-isnt-surprising-looking-numbers-122104695.html
Many folks across the country will awake Wednesday to news of a looming potential bankruptcy filing by Sears Holdings (SHLD) and be shocked.
Don’t let nostalgia of grabbing that first credit card at Sears 25 years ago or snagging a great blue light special at Kmart in 1989 get in the way of understanding the reality. That reality: Sears and Kmart have been zombie retailers going on over 10 years.
The cash-strained Sears has hired advisory firm M-III Partners to prepare a bankruptcy filing that could arrive as soon as this week, according to a report in The Wall Street Journal. Sears is still looking at other restructuring options as CEO Eddie Lampert seeks to avert a messy overhaul in bankruptcy court, the Journal says.
But with a $134 million debt repayment on Oct. 15, a bankruptcy filing for Sears may be the only feasible outcome to keep the lights on another year. Sears burned through $1 billion in cash during the first six months of the year. The company had a mere $193 million in cash on its balance sheet ahead of the critical holiday shopping season, when having enough cash is vital to placing reorders with vendors.
Sears and M-III Partners didn’t immediately return Yahoo Finance’s request for comment. Shares of Sears crashed more than 31% in early trading on Wednesday on the news.
Goodbye to Sears?
The signs of a bankruptcy that could see more Sears and Kmart locations shuttered have increased in recent months. Controlling shareholder Lampert penned a note to Sears’ board in August saying the company needed to “alleviate its liquidity challenges.” Lampert’s solution, in part, was to buy Sears’ appliance brand Kenmore to raise cash.
In late September, Lampert proposed that Sears sell more assets as it “must act immediately to have sufficient runway to continue its transformation.” Meanwhile, earlier this week Sears added veteran restructuring expert Alan Carr to its board of directors.
Red flags galore.
So how did Sears put itself in a position where holiday 2018 may be its last? Here’s a breakdown, with numbers that highlight how the once-storied retailer lost considerable market share to rivals Amazon, Home Depot and Macy’s.
Sears has not generated cash from its operations in 13 of the past 20 quarters.
Sears has posted eight years of net losses.
Free cash flow, the cash that is left after spending on capital expenditures, has been negative for eight straight years.
Sears gross profit margin peaked at 28.7% in 2006. In the most recent quarter, it came in at 20.8%.
The company has produced negative same-store sales at Sears and Kmart for 15 straight quarters.
Sears’ store base has gone from 2,030 locations at the end of 2006 to 506 currently.
Kmart’s store base has gone from 1,388 locations at the end of 2006 to 366 currently.
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>>> Sales tax showdown: FAQ on the Supreme Court case that could shape the future of online shopping
by Nat Levy & Monica Nickelsburg
April 16, 2018
https://www.geekwire.com/2018/sales-tax-showdown-faq-supreme-court-case-shape-future-online-shopping/
The U.S. Supreme Court is set to hear its first state sales tax case in more than 25 years this week and the verdict could have sweeping implications for e-commerce companies, like Amazon, and customers across the country.
The case, South Dakota v. Wayfair could finally clarify how online retailers are expected to collect sales tax in states where they have customers but may or may not have a “physical presence.”
In the past, the Supreme Court limited states’ power to collect sales tax to companies with a “physical presence” in that state but those decisions were issued before the online retail revolution. Limiting state taxing authority in that way made sense when the majority of sales were done by brick-and-mortar retailers.
Today, a company can make thousands of sales across the country while maintaining a physical presence in just one city. Local governments could have collected up to $13 billion in additional sales tax in 2017 if they had the authority to tax remote retailers, according to Bloomberg.
On April 17, the Supreme Court will review these standards given our new retail reality. The court’s decision is expected this summer.
What is this case about?
South Dakota passed a law in 2016 requiring online retailers to collect sales tax when they sell goods to the state’s residents. The state’s lawsuit under the legislation targets three online retailers: Wayfair, Overstock.com, and Newegg. Amazon hasn’t joined the lawsuit or filed a friend of the court brief, as other internet sellers have. But Amazon is no doubt watching the case closely, as one of the biggest e-commerce companies in the world. Amazon initially did not collect taxes on many out-of-state sales but now collects it in all states with a sales tax.
South Dakota v. Wayfair questions a decades-old standard that states can only force a business to collect sales tax if they have some kind of presence there, whether that be a store, office, distribution center or other significant connection to the state. This case could upend the long-standing ruling, instead installing a minimum sales threshold in a state as the defacto benchmark for collecting sales tax there.
How did we get here?
Quill Corp. v. North Dakota was the last major Supreme Court decision on this topic, and it came down in 1992, several years before Amazon, the world’s leading online retailer, was founded. It affirmed a ruling made in 1967. Since then, times have changed.
“The law South Dakota passed said that the standard developed by the Supreme Court in 1967 and then affirmed in 1992 is no longer valid because the way that you and I shop and the way that our merchants market to us is completely different than it was in 1967, when this issue was first resolved,” said Scott Peterson, vice president of U.S. Tax Policy and Government Relations at Avalara, a Seattle-based company that helps businesses collect sales taxes and comply with regulations.
Federal legislation to decide sales tax issues has repeatedly stalled, so it’s been up to the courts to sort everything out.
As highlighted by SCOTUS Blog, Justice Anthony Kennedy wrote as part of a 2015 decision in a different case related to sales tax collection: “There is a powerful case to be made that a retailer doing extensive business within a state has a sufficiently ‘substantial nexus’ to justify imposing some minor tax-collection duty, even if that business is done through mail or the internet. This argument has grown stronger, and the cause more urgent, with time.” This case — Direct Marking Association v. Brohl — marked the first time a state organization had won a case like this and opened up the floodgates for legislatures to pass new sales tax collection laws, Peterson said.
A year later, South Dakota passed the law at the center of this case, requiring retailers to collect sales tax once they’ve cleared a bar of $100,000 in sales or more than 200 transactions.
What are the key arguments?
Overturning a previous Supreme Court decision requires “special justifications.” South Dakota believes its arguments meet that requirement because technology has transformed retail and made it easy to do substantial business in a state without having any kind of physical presence.
“In large part, that is because the internet now makes it possible for out-of-state sellers to reach consumers with engaging, interactive virtual storefronts in our homes or on our smartphones at any hour of the day,” South Dakota wrote in its brief. “Economists have demonstrated that this pervasive access has turned the physical stores of other retailers into virtual showrooms for remote sellers, whose tax advantage now leads to far more diversion of buyers than was ever true for catalog mailers.”
The online retailers take issue with South Dakota’s law and claim the state deliberately tried to get on a “fast track” to the Supreme Court. In its brief, the retailers argue that this is a legislative issue, not a legal one. A ruling in favor of South Dakota would blow up any chance of simplified federal legislation for sales tax collection, the retailers argue.
“If Quill is overruled, the states will have no incentive to seek compromise federal legislation,” according to the retailers’ brief. “Freed of Commerce Clause restraint on their taxing authority, states will oppose any congressionally-mandated restrictions on their cross-border taxing power.”
What are the possible outcomes?
If the court rules in favor of South Dakota, it sets a new precedent for sales tax collection. A ruling for the retailers maintains the status quo, upholding the court’s previous decisions.
Don’t I already pay sales tax on online purchases?
In some cases yes, in others no. It depends on what state you’re in and whether the company you’re buying from has a presence there. Large retailers with big physical footprints already collect sales tax in most states.
What does this mean for consumers, small businesses and big online retailers like Amazon?
For shoppers, the potential outcomes are simple. If South Dakota wins, it basically marks the end of sales tax-free shopping online, according to Avalara’s Peterson.
“Within just a very short time — three or four years — every state will have all these laws and every merchant will effectively be collecting everywhere,” Peterson said. “Consumers won’t be able to shop tax free anymore.”
Even if the Supreme Court rules in favor of the retailers, tax-free shopping is likely on the way out in the near future, Peterson argues, thanks to a variety of laws passed by legislatures to compel businesses to collect sales taxes and allow states to do it themselves if retailers don’t.
Small businesses could be hit the hardest by this ruling. Should a change happen, they will be burdened by having to put systems in place to collect sales tax, Peterson said. Lack of a federal standard means they’d have to look at sales state-by-state and likely purchase software to help with that, adding additional cost. Amazon already collects sales tax in every state, and Peterson said most big online retailers have set up systems that could easily expand to cover all states.
“The potential for severe economic disruption is great,” the retailers wrote in their brief. “Small businesses seeking access to a national market, not the massive multi-channel retailers that already report sales tax across the country, will be harmed most by the new compliance burdens, new barriers to entry, and new obstacles to growth.”
What does the makeup of the Supreme Court say about the likely outcome?
Justices Kennedy and Clarence Thomas are the only two remaining from the court that decided in 1992 to uphold the “physical presence” standard for state sales tax, though Kennedy later called for a re-examination of that ruling.
Before joining the Supreme Court, Justice Neil Gorsuch questioned the 1992 decision and cautioned justices about blindly following precedent, according to the Tax Foundation. Justice Ruth Bader Ginsburg tends to side with states in tax-related matters while Justice Samuel Alito is more likely to side with business.
Taken altogether, the Tax Foundation expects at least five justices to uphold South Dakota’s law. Read the full cheat sheet here.
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>>> V.F. Corporation (VFC) is engaged in the design, production, procurement, marketing and distribution of branded lifestyle apparel, footwear and related products. The Company's segments include Outdoor & Action Sports, Jeanswear, Imagewear and Sportswear. Its Outdoor & Action Sports Coalition is a group of authentic outdoor and activity-based lifestyle brands. Its product offerings include apparel, footwear, equipment, backpacks, luggage and accessories. Its Imagewear coalition consists of the Image business. Its Wrangler brand offers denim, apparel, accessories and footwear through mass merchants, specialty stores and department stores in the United States, VF-operated stores and online at www.wrangler.com. The Sportswear coalition consists of the Nautica and Kipling brand businesses in North America (the Kipling brand outside of North America is managed by the Outdoor & Action Sports coalition).<<<
>>> Jeff Bezos Sells $1.1 Billion Amazon Shares With Stock at Record
Tom Metcalf
Bloomberg
November 03, 2017
https://finance.yahoo.com/news/jeff-bezos-sells-1-1-224857796.html
Jeff Bezos Sells $1.1 Billion Amazon Shares With Stock at Record
Jeff Bezos, chief executive officer of Amazon.com Inc. and founder of Blue Origin LLC, smiles during the 32nd Space Symposium in Colorado Springs, Colorado, U.S., on Tuesday, April 12, 2016. Commercial space exploration can advance at the fast pace of Internet commerce only if the cost is reduced through advances in reusable rockets, Bezos said.
Jeff Bezos sold a million Amazon.com Inc. shares this week for $1.1 billion, according to a U.S. securities filing on Friday. The sale represented 1.3 percent of his holding and leaves Bezos with a 16.4 percent stake in the retailer.
The world’s richest man said in April he would sell $1 billion a year in Amazon stock to fund Blue Origin LLC, the rocket company fueling his dream of sending people into space. He had already sold another batch of a million shares in May.
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>>> Is all the talk of the death of the mall overdone?
By Ciara Linnane
June 8, 2017
http://www.marketwatch.com/story/is-all-the-talk-of-the-death-of-the-mall-overdone-2017-06-05?siteid=bigcharts&dist=bigcharts
Consumers still enjoy shopping as a leisure activity, and many online sales are connected with a store visit, says Fitch
Talk of the demise of the shopping mall may be overdone, according to Fitch Ratings, which on Monday took a neutral stance on retail REITS, or real estate investment trusts, the entities that own and manage malls and rent space to tenants.
Mall REITs are popular with investors for their attractive dividend yields. But the sector has come under pressure this year amid a wave of closure announcements from department store chains, sporting retailers and teen clothing retailers, among others. The retail sector is going through a period of severe retrenchment as it responds to the challenge from Amazon.com Inc. AMZN, -0.38% as well as changing consumer behavior and spending habits.
In case you missed it: From a risk-of-bankruptcy standpoint, the retail business is the new oil and gas
But Fitch is upbeat that bricks-and-mortar stores will continue to exist and attract shoppers, despite the inroads made by Amazon into just about every category. The ratings agency expects that about 70% of retail sales will still take place in a physical store in 2020, down from 80% today.
“Consumers by and large still enjoy shopping as a leisure activity, plus a significant portion of online sales are connected with a store visit,” Fitch Managing Director Steven Marks wrote in the first issue of the agency’s new Equity REIT Handbook.
Read: Weaker shopping malls leave mortgage-backed securities vulnerable
Some mall REITS, particularly class B, will struggle to grow rents as they lose tenants, he said. But Fitch is overall neutral on the sector, a position that is considerably less bearish than others.
Outside of retail, REITS in the office and industrial space have healthier fundamentals and can expect to perform better, said Marks. A softening of demand for space is not expected to pressure rents, while jobs growth should buoy tech employment-oriented markets.
Separately, Canaccord published a bullish note on prison REITs Monday, saying the pro-private, tough-on-crime policies of the current administration along with plans to reform immigration policy will benefit that sector. In February, Attorney General Jeff Sessions said he was reversing former President Barack Obama’s plan to phase out private prisons, arguing that it had hurt the government’s ability to meet the future needs of the federal prison system.
Obama had argued that private prisons are less safe than government-run ones.
“We believe the administration’s pursuit of additional ICE beds, in addition to capacity constraints and/or state reforms pushing for alternative corrections, create a material external growth opportunity,” said Canaccord analyst Michael Kodesch. “Furthermore, we see low risk to contract renewals in this environment across the board, with the continued exception that we are cautiously watching CoreCivic’s California out-of- state populations. “
Kodesch has a buy rating on prison REITS Core-Civic Inc. CXW, +0.50% and Geo Group Inc. GEO, +0.77% Core-Civic was trading down 1.1%, while GEO was down 0.4%.
Among mall REITs, AvalonBay Communities Inc. AVB, +0.33% was up 1.2% and Equity Residential EQR, +0.12% was up 0.6%, while Vornado Realty Trust VNO, -0.47% was up 0.1%.
Among the decliners, Taubman Centers Inc. TCO, -0.92% was down 1.2%, Public Storage PSA, -0.06% was down 1% and Prologis Inc. PLD, -0.17% fell 0.6%.
The AMG Managers CenterSquare Real Estate Fund MRESX, -0.54% , which has about $361 million in assets and a four-star ranking from Morningstar, was up 1% and has gained 0.6% in 2017, while the S&P SPX, +0.51% as gained about 9%.
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Thanks for the INFO
Trend1, Here are the top 10 holdings for the XRT Retail ETF, per Yahoo Finance. Many dogs on the list, but I think it's essentially an index fund -
Groupon Inc GRPN. 1.41%
Sears Holdings Corp SHLD. 1.40%
Whole Foods Market Inc WFM. 1.32%
Nutrisystem Inc NTRI. 1.27%
GNC Holdings Inc GNC. 1.27%
Etsy Inc ETSY. 1.25%
Guess? Inc GES. 1.23%
Wayfair Inc Class A W. 1.23%
Staples Inc SPLS. 1.22%
Murphy USA Inc MUSA. 1.21%
https://finance.yahoo.com/quote/XRT/holdings?p=XRT
>>> Fund Summary
The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index derived from the retail segment of a U.S. total market composite index. In seeking to track the performance of the S&P Retail Select Industry Index (the "index"), the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index represents the retail segment of the S&P Total Market Index ("S&P TMI"). The fund is non-diversified. <<<
>>> Home Retailers Are Getting Crushed After Sears Partners With Amazon
Jayson Derrick
Benzinga
July 20, 2017
https://www.benzinga.com/analyst-ratings/analyst-color/17/07/9801495/home-retailers-are-getting-crushed-after-sears-partners-
Sears Holdings Corp (NASDAQ: SHLD)'s announcement on Thursday it will start selling its Kenmore appliances on Amazon.com, Inc. (NASDAQ: AMZN) is having ripple effects across the entire home retailing sector.
For example, Home Depot Inc (NYSE: HD)'s stock was trading lower by more than 4 percent while Lowe's Companies, Inc. (NYSE: LOW) was lower by more than 6 percent.
If anything, Sears' agreement with Amazon is the "reality of life," Josh Brown, CEO of Ritholtz Wealth Management said during Thursday's CNBC "Halftime Report" segment. Sears, like every other retailer on Amazon's platform, is just selling its products to consumers who want to buy online. At the end of the day, Sears could have built out its own online platform to avoid a middle-man like Amazon, but for whatever reason, it didn't or couldn't.
Jim Lebenthal of HPM Partners and also a contributor to "Halftime Report" added to the conversation that the rise of e-commerce over the years is indisputable, but at the same time, the in-store experience will "never go to zero." In the home retail space, Home Depot most certainly isn't going away after Sears' announcement and a more than 4 percent hit to the stock "isn't right."
Jim Cramer has previously touted the Amazon proof nature of companies like Home Depot and Lowe's as few consumers will buy pieces of lumbar and other heavy products online. But now it remains to be seen if his position will change following Sears' announcement.
In fact, Home Depot's online website happens to be "amazing" and can directly connect consumers with sales peoples, Cramer previously said.
Mario Gabelli's Take
Mario Gabelli, CEO of Gabelli Asset Management Company, was a guest on the "Halftime Report" segment and had two points to make regarding Sears' announcement.
1.Home Depot will do just fine, especially at a time management has pledged to spend billions upon billions of dollars buying back its own stock, Gabelli noted. This alone implies that even if Home Depot's earnings on a dollar amount remain flat, the math implies it will be more attractive on a per share basis.
2.Also important to note, there may be a point in the future where regulators will come down on Amazon for "being too disruptive and entering too many markets."
At time of publication, Sears was up 14.06 percent at $9.90.
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>>> These dividend stocks are down a lot, but there’s plenty of cash flow to raise payouts
By Philip van Doorn
June 23, 2017
http://www.marketwatch.com/story/these-dividend-stocks-are-down-a-lot-but-theres-plenty-of-cash-flow-to-raise-payouts-2017-06-21?siteid=bigcharts&dist=bigcharts
Here are some possible bargains for income-seeking investors willing to consider contrarian plays
Shares of Kohl’s are down 27% this year, but the stock has a dividend yield above 6% and plenty of excess free cash flow to support a higher payout.
The S&P 500 index is up 9% so far in 2017, but there are losers in any market. And that’s where you might find long-term bargains, along with the expected batch of companies facing painful secular declines.
Two groups of companies that are particularly out of favor are brick-and-mortar retailers and real estate investment trusts that own malls or shopping centers. The reason for these groups’ pain is obvious: Amazon.com Inc. AMZN, +0.24% continues to dominate the rapidly growing online retail industry and grab business from traditional retailers.
But some of these plays still have attractive dividend yields and plenty of free cash flow to support higher payouts. A company’s free cash flow is its remaining cash flow after planned capital expenditures. We can calculate a “free cash flow yield” by looking at the last 12 months’ free cash flow per share and dividing it by the current share price. If the free cash flow yield exceeds the dividend yield, a company has “headroom” to raise dividends, or buy back stock, or make acquisitions or other expansions of their businesses, all of which can boost stock prices over the long term.
For REITs, we used funds from operations (FFO) instead of free cash flow, because FFO is generally considered the best way to measure a REIT’s ability to pay dividends. FFO adds depreciation and amortization back to earnings, while subtracting gains from the sale of assets.
Among the S&P 500 SPX, +0.16% 76 stocks were down at least 10% this year through June 20. Among these 76, a dozen have dividend yields above 3.5% and free cash flow headroom.
Here’s the list, sorted by dividend yield:
Company Ticker Industry Dividend yield Free cash flow yield - past 12 reported months ‘Headroom’ Price change - 2017 through June 20
Macy’s Inc. M, +0.81% Department Stores 6.83% 21.63% 14.80% -38%
Kimco Realty Corp. KIM, +0.78% Real Estate Investment Trusts 6.14% 7.44% 1.31% -30%
Kohl’s Corp. KSS, +2.01% Department Stores 6.11% 20.24% 14.13% -27%
Oneok Inc. OKE, +2.93% Oil and Gas Pipellines 5.18% 8.85% 3.67% -17%
Macerich Co. MAC, +0.51% Real Estate Investment Trusts 4.93% 7.12% 2.19% -19%
Target Corp. TGT, +0.26% Discount Stores 4.87% 16.78% 11.91% -30%
L Brands Inc. LB, +1.15% Apparel/ Footwear Retail 4.58% 6.95% 2.37% -20%
Simon Property Group Inc. SPG, -0.14% Real Estate Investment Trusts 4.28% 6.67% 2.39% -11%
Qualcomm Inc. QCOM, +0.78% Telecom. Equipment 4.01% 6.60% 2.59% -13%
People’s United Financial Corp. PBCT, +0.06% Savings Banks 3.95% 6.05% 2.10% -10%
Western Union Co. WU, +2.08% Data Processing Services 3.69% 9.32% 5.62% -13%
Regency Centers Corp. REG, +1.31% Real Estate Investment Trusts 3.55% 5.66% 2.11% -13%
Source: FactSet
All four REITs on the list own shopping centers and/or malls.
You can click on the tickers for additional information, including news, price-to-earnings ratios, estimates and ratings.
As with any “first screen” of stocks, the list is meant to spur further discussion as you consider whether any of these companies might be worth considering as an investment, especially if you crave dividend income.
It’s obvious that many of these companies are out of favor, as they face major challenges to their business models. But that doesn’t mean none will survive or even thrive over the long term.
If you see any names of interest here, your next step, as always, should be to do your own research, preferably with the assistance of your broker or investment adviser, to form your own opinions about the companies’ long-term prospects.
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>>> I’m in Awe of How Fast Brick-and-Mortar Retail is Melting Down
by Wolf Richter
Apr 24, 2017
http://wolfstreet.com/2017/04/24/brick-and-mortar-retail-bankruptcies-2017/
As so many times, Private Equity firms are in the thick of it.
Mall traffic is sagging. Department store sales have been in decline since 2001. Most retailers are loaded up with debt. Many have been losing money. Now they’re running out of options. Store closings numbered in the thousands last year. This year they promise to get much worse. “Zombie malls” have become reality, their vast parking lots rented to car dealers to store their excess vehicle inventory.
But ecommerce sales are booming, including online sales by some brick-and-mortar retailers, such as Walmart and Macy’s:
Over-indebted retailers are notoriously difficult to restructure and many end up being liquidated. Unsecured creditors, such as suppliers and junior bond holders, are often left out in the cold. Even secured creditors can end up holding the bag.
April so far is huge for brick-and-mortar meltdown:
April 21 – Bebe Stores, a fashion retailer, announced, after four years of losses, that it would close all its 180 stores by the end of May and liquidate all merchandise and fixtures in the stores. It might also file for bankruptcy to get out of the store leases. It will only sell online.
Barely a month earlier, Bebe said it had hired a financial adviser to look at “strategic alternatives” and a real estate adviser “to assist with options related to its lease holdings,” at which point its shares plunged.
April 19 – Neiman Marcus, the luxury retailer with 42 stores around the country and two Bergdorf Goodman stores in Manhattan, announced that, in order to preserve cash, it would not pay interest on a bond issue in cash, but “in kind.” The payment-in-kind (PIK) option had been written into the bond covenant. At the time, creditors didn’t care. Now they’ll get the coupon on these $600 million in 8.75% notes for the next six months in form of more bonds of uncertain value. The already beaten-down notes traded at 56.7 cents on the dollar.
On March 3, sources told Reuters that Neiman Marcus has hired investment bank Lazard Ltd to help restructuring its nearly $5 billion in debt though it was, these sources insisted, in no immediate risk of bankruptcy.
The company was acquired by private equity firms in a leveraged buyout before the Financial Crisis and is now owned by Ares Management and the Canada Pension Plan Investment Board. They were going to dump it into the public’s lap, but the IPO was scrapped when the problems could no longer be hidden.
April 17 – Marsh Supermarkets was preparing to file for Bankruptcy, sources told the Wall Street Journal. Three weeks earlier, it stopped paying rent on six Indianapolis stores. Here too, there’s a private equity angle. Sun Capital Partners acquired Marsh in 2006 for $88 million in cash and the assumption of $237 million in debt. At the time it had 120 stores. Ten years of asset stripping later, the chain is down to 67 stores and going bankrupt.
April 11 – Arhaus, a furniture retailer that designs its own furniture and contracts out manufacturing, with 67 stores in 25 states, has appointed a “chief restructuring officer, two sources close to the situation said,” according to Debtwire. “This complements the co-advisory roles of Piper Jaffray and Candlewood Partners to explore a refinancing.”
In early March, Arhaus announced that CEO Adrian Mitchell, after just 13 months on the job, would be replaced by co-founder and Chairman John Reed. In 2014, private equity firm Freeman Spogli made a minority investment.
April 4 – Rue21, a teen apparel chain with over 1,000 stores, missed principal and interest payments on its debt and is preparing to file for bankruptcy as soon as this month, said “people familiar with the matter,” according to Debtwire.
Once again, there is a private equity angle: the company was acquired by PE firm Apax in 2013 for about $1 billion. Back in September 2013, problems were already piling up when JPMorgan, Bank of America, and Goldman Sachs had trouble selling the junk debt they pledged to sell to fund the buyout.
April 4 – Payless Inc., the discount shoe retailer with almost 22,000 employees and over 4,000 stores in 30 countries, filed for Chapter 11 bankruptcy. It plans to slash its debt in half. It said its restructuring plan has the support of creditors holding two-thirds of its first-lien and second-lien term debt. It said it would immediately shutter about 400 stores in the US and Puerto Rico. CEO W. Paul Jones blamed “the continued challenges of the retail environment, which will only intensify.”
Here too, a PE angle: Payless was acquired by PE firms Golden Gate Capital and Blum Capital Partners in 2012 when publicly traded Collective Brands was broken up.
And this is the March meltdown:
On March 20, Sears, the big whale that everyone is waiting for to wash up on the beach, came closer to washing up on the beach by acknowledging that it will likely wash up on the beach, when it said in its annual report that it had “substantial doubt” about its ability to keep operating as a “going concern.” It lost over $10 billion in recent years.
When will Sears finally file for bankruptcy? Not before the second half of 2017. That was our verdict in December, and we’re sticking to it. If it files before July 8, 2017, it might run afoul of the bankruptcy code’s two-year look-back period governing “fraudulent conveyance,” concerning what happened to Sears’ real estate.
On March 11, Gordmans Stores, with over 100 locations in 22 states, filed for Chapter 11 bankruptcy with plans to liquidate its inventory and assets. By the end of March, Stage Stores jumped in and offered to buy at least 50 of the stores.
Gordman’s is another PE firm asset-stripping special. It was acquired by PE firm Sun Capital in 2008 at the end of the leveraged buyout boom for an undisclosed price. In 2010, Sun Capital sold 30% of this shares in an IPO. Gordman’s got nothing. In 2012, Sun Capital sold more shares, slashing its ownership to 50%. In 2013, Sun Capital forced Gordman’s to issue a $70 million special dividend, of which Sun Capital got half. Of that dividend, $25 million came from cash holdings; $45 million was borrowed money. In total, Sun Capital obtained $140 million, likely exceeding the purchase price by good margin. And the party may not be over yet.
On March 10, Gander Mountain, after a failed expansion drive, filed for Chapter 11 bankruptcy. It will shutter 32 of its 160 stores. It had been taken private in 2010 by Gratco, a holding company controlled by Gander Chairman and CEO David Pratt, and Holiday Station stores, a gas-station retail operation.
On March 8, RadioShack, owned since 2015 by General Wireless, filed for bankruptcy for the second time. It will close about 200 stores and evaluate options on the remaining 1,300.
On March 6, hhgregg, an appliance and electronics retailer, filed for bankruptcy, after announcing a few days earlier that it would close 88 of its 220 stores, shutter three distribution centers, and shed 1,500 jobs.
On March 1: BCBG Max Azria filed for bankruptcy. The fashion retailer that once had more than 570 boutiques globally, including 175 in the US, started closing 120 of its stores in January.
The January and February meltdown:
•Michigan Sporting Goods Distributors said it will liquidate its 68 stores and lay off its 1,300 workers.
•Eastern Outfitters, the parent of Bob’s Stores and Eastern Mountain Sports, owned by PE firm Versa Capital, filed for bankruptcy.
•Wet Seal filed for the second time in recent years. The teen retailer closed all its stores.
•Limited stores, another victory for PE firm Sun Capital, shuttered all its 250 stores.
•American Apparel, a manufacturer with 110 retail stores, which had filed for bankruptcy for the second time last November, said that it had started to lay off 2,400 workers and that everything would be shut down. Only the brand name was acquired by a Canadian firm.
This thermometer for discretionary spending is the first to react when consumers hit their limits. Read… Restaurants in Worst Tailspin since 2009/2010
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>>> Retail Meltdown Demolishes Mall Investors
by Wolf Richter
May 9, 2017
http://wolfstreet.com/2017/05/09/retail-meltdown-demolishes-mall-reit-investors/
Even the biggest.
The closure of thousands of retail chain stores last year and this year, with many more to come – from big anchor tenants such as Macy’s to smaller stores such as Payless Shoes – and the bankruptcies and debt restructurings ricocheting through the industry are having an impact on retail malls. And mall investors – that may include your retirement account – are getting crushed.
The commercial real estate industry has been claiming that these shuttered retail spaces are being converted into restaurants or fitness centers or smaller shops or whatever. And zombie malls are leasing out their parking lots to car dealers to store their excess new vehicle inventory, and that everything is going to be fine.
But investors in publicly traded Real Estate Investment Trusts that were for years among the stars in the S&P 500 are voting with their feet.
It’s not that these REITs are doing all that badly on an operational basis. They’re hanging in there. But many of the announced store closings and bankruptcies haven’t worked their way through the pipeline.
Shares of these REITs all peaked together at the very end of July 2016 and have since then plunged in unison.
Kimco Realty Corp (KIM) says it’s “one of North America’s largest publicly traded owners and operators of open-air shopping centers,” with “interests” in 517 shopping centers with 84 million square feet of retail space in 34 states and Puerto Rico. Shares fell 2.6% to $19.42 on Monday and 13% over the past month. They’re down 40% from the peak of $32.23 at the end of July 2016:
Macerich (MAC), with 54 million square feet of retail space at 48 regional shopping centers, calls itself “one of the country’s leading owners, operators and developers of major retail real estate.” It disclosed that revenues in Q1 fell 3.5% year-over-year, and that mall portfolio occupancy edged down to 94.3%, from 95.1% a year earlier.
It’s starting to feel the pain, but it’s not the end of the world. But its shares dropped 2.5% on Monday and 8.3% over the past month. They’re down 36% from the peak at the end of July, 2016:
Simon Property Group (SPG), “the world largest publicly traded real estate company,” as it says, fell 1% to $162.84 on Monday and 7% over the past month. It’s down 29% since the peak at the end of July. And this despite a massive share buyback program, that included buying back 870,692 shares in Q1:
GGP, formerly General Growth Properties, is also trying to use share buybacks to prop up its share price. In Q1, it bought back 2.57 million shares for $59.6 million. Nevertheless, shares fell 12% over the past month to $22.19 as of Monday and are down 30% from the peak at the end of July:
Federal Realty Investment Trust (FRT) has 98 malls with a total of 23 million square feet of retail space in “major coastal markets.” It also has over 1,800 apartments. So you gotta get creative during tough times. In its Q1 earnings report, it said:
March 28, 2017 – Federal Realty announced its exclusive partnership with Freight Farms, a Boston-based company that retrofits shipping containers with vertical farming technology capable of growing acres’ worth of produce in a fraction of the space of traditional farms. The partnership empowers anyone to use this technology while repurposing Federal Realty’s unused parking spaces as a place to locally and sustainably produce food that benefits the shopping centers’ tenants, customers, and community.
Its shares fell 1.8% on Monday and 3% over the past month. They’re down 24% from the peak at the end of July 2016:
Regency Centers Corp (REG), with 429 shopping centers totaling 57.2 million square feet of retail space, focuses on “grocery-anchored retail centers located in the most attractive U.S. markets.” Its shares fell 1.9% to $61.49 on Monday and 8% over the past month. They’re down 28% from the peak at the end of July:
This is how the brick-and-mortar pain is translating into pain for mall-REIT investors. But why have share prices gotten crushed when, operationally, the REITs are still hanging in there and are paying fat dividends? That can best be answered by a look at the meteoric rise of those shares over the years leading up to July 2016.
Some of the share prices more than doubled over those years, as part of the commercial property bubble that got so huge that the Fed keeps publicly fretting about it, naming it as one of the reasons for raising interest rates, precisely to tamp down on the valuations. The Fed is worried that an implosion of these inflated commercial property values can take down the banks.
Mall REITs were part of this inflated commercial property universe, and they soared with it. That entire universe is now peaking. But separately, mall REITs are also caught up in the relentless brick-and-mortar retail meltdown, as online shopping is taking over. This is a structural shift that will continue to progress. Mall owners are already trying to find a way to “repurpose” their malls. But this isn’t going to be smooth.
As so many times, Private Equity firms are in the thick of it. Read… I’m in Awe of How Fast Brick-and-Mortar Retail is Melting Down
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>>> The TJX Companies, Inc. operates as an off-price apparel and home fashions retailer in the United States and internationally. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX International. The company sells family apparel, including footwear and accessories; home fashions, such as home basics, accent furniture, lamps, rugs, wall décor, decorative accessories, and giftware; seasonal items; jewelry; and other merchandise. It operates stores under the T.J. Maxx, Marshalls, HomeGoods, Winners, HomeSense, T.K. Maxx, and Sierra Trading Post names, as well as operates e-commerce sites tjmaxx.com, tkmaxx.com, and sierratradingpost.com. As of July 30, 2016, the company operated a total of 3,675 stores in nine countries, which included the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, as well as through three e-commerce sites. The TJX Companies, Inc. was founded in 1956 and is headquartered in Framingham, Massachusetts. <<<
>>> Casey's General Stores, Inc., together with its subsidiaries, operates convenience stores under the Casey?s General Store name in 14 Midwestern states, primarily Iowa, Missouri, and Illinois. The company?s stores offer a selection of food, including freshly prepared foods, such as pizza, donuts, and sandwiches; beverage and tobacco products; health and beauty aids; automotive products; and other nonfood items. Its stores also offer gasoline or diesel for sale on a self-service basis. In addition, the company operates a store primarily selling tobacco products. As of April 30, 2015, it operated approximately 1,878 stores. The company was founded in 1959 and is headquartered in Ankeny, Iowa <<<
>>> HSN, Inc. operates as an interactive multi-channel retailer in the United States. It operates through two segments, HSN and Cornerstone. The HSN segment offers jewelry, apparel and accessories, beauty and health, and home products, as well as household, home design, electronics, culinary, and other products through television home shopping programming broadcast on the HSN television networks, the HSN.com Website, mobile applications, and outlet stores. The Cornerstone segment provides home furnishings, including indoor/outdoor furniture, home décor, tabletops, textiles, and other home related goods under the Frontgate, Ballard Designs, Grandin Road, and Improvements brands; and apparels under the Garnet Hill, TravelSmith, and Chasing Fireflies brands. As of February 26, 2015, this segment operated 7 digital sales sites; distributed approximately 325 million catalogs; and operated 11 retail and outlet stores. The company markets and sells a range of third party and private label merchandise directly to consumers. HSN, Inc. was founded in 1981 and is headquartered in St. Petersburg, Florida. <<<
>>> Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise at the fixed price of $1.00. The company?s stores provide consumable merchandise, which includes candy and food, and health and beauty care products; and everyday consumables, such as paper and chemicals, and frozen and refrigerated food. Its stores also offer various merchandise that include toys, durable housewares, gifts, party goods, greeting cards, softlines, and other items; and seasonal goods consisting of Valentine's Day, Easter, Halloween, and Christmas merchandise. The company operates its stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Tree Canada, Dollar Giant, and Dollar Bills. It operates approximately 5,080 stores. The company was founded in 1986 and is based in Chesapeake, Virginia. <<<
>>> CVS Caremark Corporation, together with its subsidiaries, provides integrated pharmacy health care services in the United States. The company operates through Pharmacy Services and Retail Pharmacy segments. The Pharmacy Services segment offers pharmacy benefit management services, such as plan design and administration, formulary management, discounted drug purchase arrangements, Medicare Part D services, mail order and specialty pharmacy services, retail pharmacy network management services, prescription management systems, clinical services, disease management, and medical spend management services. It serves employers, insurance companies, unions, government employee groups, managed care organizations and other sponsors of health benefit plans, and individuals under the CVS Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS/pharmacy, RxAmerica, Accordant, SilverScript, and Novologix names. The Retail Pharmacy segment sells prescription drugs, over-the-counter drugs, beauty products and cosmetics, seasonal merchandise, greeting cards, and convenience foods, as well as provides photo finishing services. The company also offers infusion and enteral nutrition services. As of June 30, 2014, it operated 7,705 retail drugstores, 860 health care clinics, 17 onsite pharmacies, 24 retail specialty pharmacy stores, 11 specialty mail order pharmacies, 4 mail service dispensing pharmacies, and 84 branches, as well as 6 centers of excellence for infusion and enteral services. The company was founded in 1892 and is headquartered in Woonsocket, Rhode Island. <<<
>>> Michael Kors Wins Over Europe's Fashionistas
By Cotten Timberlake
May 01, 2014
http://www.businessweek.com/articles/2014-05-01/michael-kors-challenges-europes-luxury-brands?campaign_id=yhoo
Kors’s European sales during the 2013 holiday quarter: $140 million
Sophie Fiszman, a finance executive in Paris, used to buy only European fashion brands such as Louis Vuitton and Gucci. Now she shops at the Michael Kors (KORS) store on Paris’s posh Rue Saint-Honoré. She recently bought a blue python-print bag at the store and was pleased that she’d found a purse she liked for less than €300 ($412). “The price is very good for what you get,” says Fiszman, deputy chief executive officer of OFI Asset Management. “I like the new style they have.”
New York-based Michael Kors has found a niche as an accessible—in other words, less expensive—luxury brand with the look and feel of a higher-end label. By producing goods at lower prices and adding a dash of American novelty, the label appeals to cost-conscious European consumers who still want high style, says Allegra Perry, an analyst with Cantor Fitzgerald in London.
In the wake of the 2008 financial crisis, European brands have been promoting their exclusivity by opening fewer stores and pushing up prices. That’s created an opportunity for Kors to step in with more affordable merchandise, says Robert Burke, founder of a luxury consulting firm based in New York. Most Kors bags cost €300 to €1,000, compared with €1,000 to €2,000 for those of its biggest European rivals, according to Perry. “There are European consumers who might be able to afford any bag they want,” Burke says, “but they want something that is fashion-forward and that is also very American classic.”
Story: Michael Kors, With Surging Sales, Is Ready to Go After Men
That’s boosting Kors’s European sales, which more than doubled to $140.3 million during the 2013 holiday quarter, accounting for 14 percent of the company’s total revenue. Europe’s luxury goods industry grew just 2 percent last year, slowing from a 5 percent rate in 2012, according to Bain.
Kors has 76 European stores, selling handbags, watches, shoes, and apparel, and plans to add 36 this fiscal year. CEO John Idol says Europe can support 200 locations and generate revenue in excess of $1 billion. The stores, in Europe’s luxury retail strongholds, from New Bond Street in London to Via della Spiga in Milan, are doing well, he says, and the merchandise is selling out. Coach (COH), another more-affordable luxury brand and an archrival in the U.S., has also opened stores in Europe, though it has about a third as many as Kors.
Before the financial crisis, many luxury consumers were loyal to their favorite high-end European brand and wore it head to toe, says Lorna Hall, chief of retail and strategy for the London fashion forecasting firm WGSN. “They wouldn’t slum it,” she says. The recession and slow recovery have led many European consumers to embrace more-accessible luxury fashion, Hall says, and the Internet has fueled an internationalization of taste. The typical European consumer now wears a mix of high- and low-end labels, she says: “She is more open-minded. She might have a Michael Kors bag and Gucci loafers and a Zara (ITX:SM) top.”
Europe is the single biggest battleground for high-end brands—its residents and tourists buy 34 percent of the world’s luxury goods, according to Bain. Globally, the luxury goods industry generated about $300 billion in sales last year, Bain estimates. Kors appeals to the aspirational European customer, who’s hungry for new brands, as well as top-of-the-line shoppers, says consultant Burke. And tourists, including those from China, who had sought only French and Italian brands, now are buying Kors, he says.
Kors’s European blitz has helped elevate the brand from relative obscurity there two years ago. In February 2012, its European holiday-quarter sales amounted to barely $28 million; just 35 percent of respondents to a company survey were aware of the designer. That compared with 70 percent in the U.S., where celebrities wear the brand and it has wider distribution in Kors’s own boutiques and in department stores. Michael Kors gained fame for appearing as a judge on several seasons of the reality-TV show Project Runway.
Still, the company is less diversified than industry giants such as LVMH Moët Hennessy Louis Vuitton (MC:FP), which sells goods from cognac to fine jewelry, and Kering (KER:FP), whose brands range from Gucci to Yves Saint Laurent. And not everybody is a fan. Maria Maortua, a 29-year-old entrepreneur in Madrid, says the label is overexposed and isn’t true luxury. “The brand name appears everywhere,” she says.
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>>> Michael Kors Holdings Ltd was incorporated on December 13, 2002 as a limited liability company under the laws of the British Virgin Islands. The Company is a luxury lifestyle brand retailer. It operates its business in three segments: retail, wholesale and licensing. Retail operations consist of collection stores, lifestyle stores, including concessions and outlet stores located in the United States, Canada, Europe and Japan. Wholesale revenues are principally derived from major department and specialty stores located throughout the United States, Canada and Europe. The Company licenses its trademarks on products such as fragrances, cosmetics, eyewear, leather goods, jewelry, watches, coats, footwear, men’s suits, swimwear, furs and ties. Sales of the Company’s products through Company owned stores for the Retail segment include ‘Collection’, ‘Lifestyle’ including ‘concessions and outlet stores located throughout North America, Europe, and Japan. Products sold through the Retail segment include women’s apparel, accessories (which include handbags and small leather goods such as wallets), footwear and licensed products, such as watches, fragrances and eyewear. The Wholesale segment includes sales to major department stores and specialty shops throughout North America and Europe. Products sold through the Wholesale segment include accessories (which include handbags and small leather goods such as wallets), footwear and women’s and men’s apparel. The Licensing segment includes royalties earned on licensed products and use of the Company’s trademarks, and rights granted to third parties for the right to sell the Company’s products in certain geographical regions (e.g. the Middle East) and countries such as Korea, the Philippines, Singapore, Malaysia, Russia and Turkey. <<<
>>> Vipshop Holdings Limited, through its subsidiaries, operates as an online discount retailer for various brands in the People's Republic of China. It offers a range of branded discount products, including apparel for women, men, and children; fashion goods; cosmetics; home goods and other lifestyle products; footwear; sportswear and sporting goods; luxury goods; and gifts and miscellaneous products. The company provides its branded products through its Website vipshop.com, as well as its cellular phone application. Vipshop Holdings Limited was founded in 2008 and is headquartered in Guangzhou, the People's Republic of China. <<<
CVS -- >>> How These Health Care Stocks Can Benefit From Obamacare
By Lee Samaha
November 11, 2013
http://www.fool.com/investing/general/2013/11/11/how-these-health-care-stocks-can-benefit-from-obam.aspx
Another set of earnings and another solid performance from drug store and pharmacy services company CVS Caremark (NYSE: CVS ) . The company raised its earnings guidance, and suggested its participation in public and private health care insurance exchanges would make it a net beneficiary of the Affordable Care Act, or ACA. There is a lot to like about CVS and its rival Walgreen (NYSE: WAG ) , and despite strong share price appreciation this year, they both look like good values.
CVS gets healthier
After delivering better-than-expected performance in 2013, CVS raised its full year EPS forecast to $3.94-$3.97 versus a previous estimate of $3.90-$3.96. In addition, it kept its free cash flow forecast at $4.8 billion-$5.1 billion, and pledged to return $5 billion in dividends and share buybacks to its investors.
How the Affordable Care Act is good news for CVS
While this year's performance seems assured, Foolish investors will want to look forward to see how CVS might fare in the new health care environment. Essentially, public and private health insurance exchanges are marketplaces set up in accordance with the ACA. They are being created to offer personalized health care plans in a standardized and regulated way. CVS is the second biggest pharmacy benefits manager, or PBM, after Express Scripts (NASDAQ: ESRX ) . One possible concern with both companies is that they may lose some business as a consequence of employers moving their employees to the new exchanges.
In its earnings presentation, however, CVS outlined why it sees itself as benefiting from the ACA.
•In the public health exchanges, it will participate as a PBM via its health plan clients, where the client offers pharmacy benefits as part of an integrated plan.
•It will act as a PBM via its health plan clients within private health exchanges as well.
•It will act as a stand-alone PBM where it can offer direct prescription offerings in other situations.
•CVS is already the leading player in managed Medicaid, so any expansion of that program should allow it gain business.
In other words, CVS is positioning itself to benefit from health care reform.
In any case, it may not turn out to be as big of a shift as many think. For example, CVS and Express Scripts are both forecasting that employers will be reluctant to shift employees to the private exchanges.The thrust of the argument, as outlined by Express Scripts CEO George Paz, is that employers will not want to make the shift because they won't want to pay the cost of risk coverage.
Employers have to pay 60% of the total cost of medical services in order to avoid a tax penalty. This means that the employer's risk goes up because it could losing control of what plans its employees are buying. If the cost of the plan goes up over time, possibly because the employee didn't buy a suitable plan, then the employer will still have to meet 60% of the rising cost.
Express Scripts predicts that "private exchanges represent less than 0.25% of prescriptions in 2013 and are projected to reach approximately 2% by 2016." CVS management forecasts:
Well, the fact is that less than 1% of covered lives are expected to move to private exchange products in 2014. And based on conversations we have had with our PBM clients and private exchange partners, we believe that most large employers are taking a wait and see approach to private exchanges, particularly with their active employees.
In other words, CVS and Express Scripts are positioning themselves to benefit should there be wide-scale shifts from employees. Even if this shift doesn't take place, they can benefit from lower income groups getting insurance.
Walgreen and CVS set to benefit
Unlike CVS, Walgreen doesn't have a PBM operation anymore. There is another catalyst to growth from the ACA, however. The reforms are likely to lead to more people being insured, and this should drive prescription demand for the drugstores.
Walgreen is aggressively transforming its business in preparation for these reforms. A big part of Walgreen's plans is to offer services whereby they administer ongoing treatments for indications like diabetes or rheumatoid arthritis, and CVS is doing the same with its MinuteClinics. Again, if more people are covered for these kinds of treatments (recall that the exchanges require standardized coverage) then CVS and Walgreen will benefit.
The bottom line
All these stocks look attractive from a valuation perspective. CVS may seem expensive in the following chart, but consider that this is a trailing chart and CVS is expecting to generate 37% of its free cash flow for the year in its fourth quarter.
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Hibbett Sports - profile -
>>> Hibbett Sports, Inc. operates sporting goods stores in small to mid-sized markets primarily in the south, Southwest, Mid-Atlantic, and the Midwest regions of the United States. Its stores offer an assortment of merchandise, including athletic footwear, team sports equipment, athletic and fashion apparel, and related accessories. As of August 3, 2013, it had 892 in 31 states. The company sells its merchandise directly to educational institutions and youth associations. The company was formerly known as Hibbett Sporting Goods, Inc. and changed its name to Hibbett Sports, Inc. in January 2007. Hibbett Sports, Inc. was founded in 1945 and is headquartered in Birmingham, Alabama. <<<
>>> Hennes & Mauritz - Retailer's Growth In United States Worth Investing In
Aug 2 2013
by: Chris Katje
http://seekingalpha.com/article/1598692-hennes-mauritz-retailers-growth-in-united-states-worth-investing-in?source=yahoo
Teen retailers American Eagle (AEO), Abercrombie & Fitch (ANF), and Aeropostale (ARO) might get a little more scared this back to school shopping season. The popular retailers have fared well with the heavy shopping teen market and seen online presences increase sales. European retailer Hennes & Mauritz (HMRZF.PK) is opening more stores in the United States and launching online sales in America for the first time this August.
Hennes & Mauritz is the second largest fashion retailer in the world. The company, who was previously number one, was overtaken by Inditex, owner of the popular Zara brand in 2006. Part of the reason for the sales boost was Inditex's willingness to allow internet sales. Inditex has internet sales available in 23 markets, versus the current eight for Hennes & Mauritz.
Hennes & Mauritz has over 2800 locations in 49 countries. Inditex has over 6000 stores in 86 countries. More importantly, Inditex is better diversified by region and growing steadily in Asia, where it gets 20% of its sales. Hennes & Mauritz on the other hand gets 80% of its sales from a weak European market and only 8% from growing Asian regions.
Along with its popular namesake brand, Hennes & Mauritz is also expanding its store base globally with new concept stores:
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Here is a look at Hennes & Mauritz's global base of stores, at the end of May (year of first store):
· Asia Pacific - China/Hong Kong (2007): 150, Japan (2008): 29, Malaysia (2012): 3, Singapore (2011): 2, South Korea (2010): 16, Thailand (2012): 98
· Europe - Austria (1994): 69, Belgium (1992): 72, Bulgaria (2012): 10, Croatia (2011): 12, Czech Republic (2003): 35, Denmark (1967): 95, Estonia (2013): 3, Finland (1997): 54, France (1998): 192, Germany (1980): 410, Greece (2007): 26, Hungary (2005): 29, Ireland (2005): 17, Italy (2003): 108, Latvia (2012): 2, Luxembourg (1996): 10, Netherlands (1989): 128, Norway (1964): 112, Poland (2003): 112, Portugal (2003): 26, Romania (2011): 25, Russia (2009): 43, Slovakia (2007): 13, Slovenia (2004): 12, Spain (2000): 154, Sweden (1997): 179, Switzerland (1978): 84, Turkey (2010): 16, United Kingdom (1976): 233
· Middle East/Africa - Bahrain, Egypt, Israel, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Saudi Arabia, United Arab Emirates (2008): Total 98 franchised stores in region
· North America - Canada (2004): 62, Mexico (2010): 1, United States (2000): 268
The popular retailer has almost 300 stores in the United States. The United States was the company's number two highest revenue country in 2012, behind Germany. Despite this strong base number, Hennes & Mauritz has no stores in 18 states. With no online sales, these states' teens are shut out from buying popular H&M clothing. Chief executive officer Karl-Johan Persson had this to say of the United States, "There is great potential in the growing online market. We are looking forward to launching our online sales in the US in August. In parallel, we are continuing our work on the global roll-out of H&M's online store, with the aim of adding several new online countries during 2014."
There is built up demand for Hennes & Mauritz products online in the United States. The company's website continues to rank as one of the most searched fashion retailers on Google, despite no items for sale on the site. Several Facebook petitions even surfaced to persuade the retailer to allow online sales in the states. Since launching its first physical store in the US in 2000, the brand has become synonymous with fashion and affordable.
The launch of online sales in the United States shouldn't come as a huge surprise to anyone who has followed the popular retailer. The company has attempted to launch online sales in America twice, but both times backed off. The main focus for expansion remains the United States and Chinese markets.
Expansion in the United States is one of many exciting growth stories for the retailer. Hennes & Mauritz is spending $130 million to add 50 more stores in India, to take advantage of a growing middle class. In 2012, Hennes & Mauritz opened its first store in South America in Chile. Brazil is listed as a coming-soon market with plans to explore several locations in the growing country. The company will also expand to Australia within the next 12 months. Plans call for 10 to 15% store expansion every year.
Shares of Hennes & Mauritz trade on the OMX stock exchange in the Nordic region. Shares also trade in the United States as a pink sheet stock. Shares have relatively low volume, but are approaching new 52 week highs.
In June, Hennes & Mauritz reported strong sales. The company saw total sales increase 13%. Stores at locations open more than a year increased 3%. Total sales were helped by a new base of 2926 stores, versus last year's total of 2596. Through the first half of the year, Hennes & Mauritz has seen total sales increase 5%, despite negative 4% same store sales. The European economy hurt same store sales in the first quarter, as did foreign currency impacts.
Hennes & Mauritz, known for its phrase "fashion and quality at the best price", is taking on the competitive United States retail segment. The company has a strong base with 300 stores, but should see tremendous growth in the region with online sales. States that have no locations, or states with locations only in the largest cities, will see customers getting online to buy merchandise for the first time, or more often than normal.
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Casey’s General Stores -- >>> The fastest-growing retailers
Aug 20, 2013
http://money.msn.com/top-stocks/post--the-fastest-growing-retailers
New data illustrates which stores have proven resilient to headwinds, and which are poised to take an even larger market share next year.
Though Macy’s (M +1.67%) and Wal-Mart (WMT -0.05%) blamed their weak Q2 earnings on reasons ranging from a shaky economy to payroll tax cuts to a hesitancy of non-essential spending by consumers, some retailers are still flourishing -- including those you may never have considered, or even heard of.
Here are some of this year's Top 100 Hottest Retailers, as ranked by year-over-year percentage sales growth, and based on Kantar Retail data provided by the National Retail Federation.
Grocery
On its recent Q2 earnings call, Wal-Mart U.S. CEO Bill Simon cited nearly $1 billion in growth for the quarter in the store’s grocery sales (which includes food and consumables), in part thanks to efficiencies in transporting the product from farm to shelf.
Though the numbers are promising, the grocery business represents a $450 billion opportunity and one that Bryan Gildenberg, chief knowledge officer at Kantar Retail, says tends to be "a bit of a mirror as to what is happening in retailing in general."
In its data, Kantar recognizes the latest sign of healthy demand for natural foods retailers, particularly with 62% year-over-year sales growth seen in specialty grocers like Sprouts Farmers Market (SFM -1.20%) (whose shares have more than doubled after the initial public offering on August 1), and The Fresh Market (TFM +0.43%), a North Carolina-based chain that has 129 locations in the United States, and has experienced 20% year-over-year sales growth.
If consumers begin to prefer such niche specialty retailers over larger brands like Whole Foods Market (WFM +0.46%) (ranked No. 21 on the list) and Kroger (KR +0.37%) (No. 84), these up-and-comers may in fact be poised to capture an even larger share of the market. That said, Amazon’s (AMZN +1.27%) latest move into grocery delivery service with Amazon Fresh (currently available only in Los Angeles and Seattle markets) might prove to be an even more significant game-changer for the grocery segment as a whole.
Apparel
Though Nordstrom (JWN +1.83%) recently cut its full-year earnings outlook, the company reported second-quarter profits rose from $156 million a year earlier to $184 million this year, signaling a positive sign for higher end retail.
Likewise, Kantar’s top 100 list includes both established and up-and-coming brands in this category. With 63% year-over-year sales growth, Michael Kors Holdings (KORS +2.55%) takes the No. 2 spot on Kantar’s Hot 100, with J.Crew ranking at No. 12, and Ralph Lauren (RL +1.87%) at No. 23. Lifestyle and active wear brand Lululemon Athletica (LULU +2.60%) takes the No. 4 spot for growth, despite its recent scandals -- including its sheer yoga pants debacle and the subsequent investor class action lawsuit regarding this matter. Whether the No. 5-ranked Under Armour (UA +1.12%) will capture customers in the wake of Lululemon's fallout (or whether loyal Lululemon customers are even swayed by these events) remains to be seen; the company's shares gained 24.63% in the last three months.
Foot Locker (FL +2.82%) and Dick’s Sporting Goods (DKS -6.50%) ranked at No. 29 and No. 32, respectively, for positive year-over-sales growth. Genesco (GCO +1.57%), the parent company of retail store brands like Lids and Journeys, ranked at No. 91 with 6.2% year-over-year sales growth. Whether due to price-sensitive fashion lovers, a rocky economy or a combination of these two factors, brands like H&M (HMRZF) at No. 8 on the list, Rue 21 (RUE) at No. 13, and Chicos (CHS +2.67%) at No. 16, all had double-digit year-over-year sales growth.
TJX (TJX +5.83%), parent company of four separate segments including Marmaxx, HomeGoods, TJX Canada, and TJX Europe, ranked No. 34.
Tech/Online
A list of the hottest retailers wouldn’t be complete without Apple Stores/iTunes (AAPL -0.57%) and Amazon, which were ranked No. 5 and No. 7, respectively, for positive year-over-year sales growth. Names like AT&T Wireless (T +0.77%), which was recently ranked first place for "overall purchase experience" among wireless service providers in a J.D. Power Wireless Purchase Satisfaction Study, also earned accolades at the No. 17 spot on the Hot 100. Verizon Wireless (VZ +0.97%) ranked No. 71 with 7.6% year-over-year sales growth.
Convenience and discount club stores
Gildenberg predicts that club, drug, and dollar stores will continue to be successful in the next few years, though the competitive advantage will be found in those who remain successful in curating quality products and offering a high level of customer convenience.
Kantar’s list includes major players like Costco (COST +0.98%), ranked No. 42; Dollar General (DG -0.37%), which came in at No. 62; CVS Caremark (CVS +1.71%), which ranked at No. 83; and lesser established brands like Iowa-based Casey’s General Stores (CASY +0.67%), which ranked No. 74 with 7.6% year-over-year sales growth; and retailer-owned cooperative, ShopRite, which was ranked No. 90.
Particularly in the wake of health care industry reform, which could amount to a $15 billion boost in prescription medicine spending by consumers, this is one segment that may change dramatically in the next few years and boost smaller retailers onto a whole new playing field.
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Body Central -- >>> Ahead of the Bell: Body Central sinks
Body Central stock loses a third of its value in premarket trading after weak 2Q report
Associated Press
http://finance.yahoo.com/news/ahead-bell-body-central-sinks-131056973.html
NEW YORK (AP) -- Shares of Body Central Corp. lost a third of their value in premarket trading Friday after a disappointing second-quarter report marked by fewer customers and heavy discounting.
The seller of trendy women's clothing late on Thursday posted a loss of $12.8 million, or 78 cents per share, for the three months through June 29, while revenue fell 5 percent to $75.2 million. Last year the company posted profit of $3.5 million, or 21 cents per share.
Excluding one-time items such as writing down the value of its catalog and online sales division, the company posted a 15-cent loss.
Analysts polled by FactSet expected a profit of 10 cents per share on revenue of $82 million.
Body Central runs nearly 300 Body Central and Body Shop stores, targeting women in their teens and twenties with lower-priced clothing.
Body Central's stores in its June quarter suffered "a decline in store traffic combined with deep markdowns," said CEO Brian Woolf in a statement. Its catalog and online sales posted a "significant decline in sales" and profitability as the company tweaked its offerings.
Woolf said the company took "aggressive steps" to sell out old inventory so Body Central could stock new clothing that the company thinks will be more appealing for shoppers.
Body Central's management team has a chance to make some progress given low expectations, said analyst Randal Konik of Jefferies. The company's recent efforts to improve its merchandising and marketing teams should result in clothing and accessories that are more appealing to trend-focused shoppers, he wrote in a client note. Konik has a "Hold" rating on the stock.
The Jacksonville, Fla.-based company's stock dropped $4 to $7.95 before the market open. Shares have gained 20 percent this year.
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CST Brands, Casey's General Stores, Susser Holdings -- >>> Is This Valero Spinoff a Compelling Opportunity?
By Anh HOANG
May 16, 2013
Tickers: CASY, CST, SUSS, VLO
http://beta.fool.com/hoangquocanh/2013/05/16/is-this-new-spinoff-a-compelling-opportunity/34134/?source=eogyholnk0000001
In the middle of April, Fool contributor Jim Royal posted quite an interesting article about Valero’s (NYSE: VLO) spinoff, CST Brands (NYSE: CST). He mentioned that he would be buying $1,000 worth of the company’s shares for his special situation portfolio. Interestingly, CST Brands have just begun trading on the market for more than a week ago. It becomes the second biggest public fuel and convenience retailer in North America. Let’s take a closer look to determine whether or not we should get into CST Brands at its current trading price.
Business overview
CST Brands operates nearly 1,880 convenience and retail stores, including 1,032 company-operated fuel and convenience stores in the U.S. and 848 retail sites in Canada, with two main operating segments: Retail-U.S. and Retail-Canada. In the past four years, the Retail-U.S. segment has generated majority of its inside revenue, around 32% to 36% of the tota, from cigarettes. Alcohol ranked second, accounting for 17%-18% of the total inside sales. CST sold around 5,083 gallons of fuel per site per day, with the average margin of $0.147 per gallon in 2012. In the Retail-Canada segment, cigarettes accounted for as high as 50% of the total inside sales. In 2012, it sold 3,340 gallons per site per day, with the margin staying at $0.233 per gallon.
Decent net debt/EBITDA
In 2012, CST generated around $1.3 billion in revenue, with the pro-forma 2012 EBITDA of $379 million. The company reported that it has spent around $455 million in capital expenditures, mainly to remodel its stores and on other sustaining activities. In 2012, the pro-forma free cash flow was around $240 million. As of December 2012, CST would have $470 million in equity, $245 million in cash and 1.05 billion in long-term debt, of which net proceeds would be distributed to Valero. However, with a decent EBITDA of $379 million, its net debt/EBITDA is not so high, at 2.12. CST is trading at around $31 per share, with the total market cap of nearly $2.33 billion. Thus, after the cash and debt are being adjusted, its enterprise value stayed at $3.1 billion. Consequently, the market values the company at around 8.2 times EV/EBITDA. Compared to its peers including Casey’s General Stores (NASDAQ: CASY) and Susser Holdings (NYSE: SUSS), CST has the lowest valuation among the three.
Casey’s General Stores is the most expensively valued
Casey’s General Stores is the operator of 1,731 convenience stores under Casey’s General Store brand name in 14 Midwestern states in the U.S. The majority of its revenue, $1.19 billion, or 71.6% of the total third quarter revenue, were generated from the sale of gasoline. Grocery & Other Merchandise ranked second with $329.7 million in revenue while the revenue of Prepared Food & Fountain in the third quarter ended March 2013 were $137 million. Its third quarter revenue increased nearly 5.3% to $1.66 billion. However, its earnings came in at $0.40 per share, a bit lower than $0.43 per share in the third quarter last year. The lower profit was due to a 12.2% rise in operating expenses. Chairman and CEO Robert J. Myers commented that the recent quarter was negatively affected by the “challenging cigarette environment”.
As of Jan 2013, Casey’s General Stores had around $733 million in debt and $27 million in cash while it generated nearly $319 million in EBITDA in the past twelve months. Thus, its net debt/EBITDA was equivalent to CST, at nearly 2.2. Casey’s General Stores is trading at $57.70 per share, with the total market cap of $2.2 billion. The market values the company at 9.33 times EV/EBITDA.
Susser Holdings seems to be the most conservatively financed
Susser Holdings is considered to be the leading convenience store operator in Texas, operating 559 convenience stores in Texas, Oklahoma and New Mexico. Motor fuel contributed the most to its revenue of nearly $3 billion, accounting for 74.7% of the total revenue in 2012. Merchandise (excluding food service) ranked second, with $766.8 million in revenue. Recently, Susser Holdings beats analysts’ expectations with its first quarter earnings results. In the first quarter 2013, revenue rose nearly 5.7% to $1.49 billion. While analysts estimated a loss of $0.05 per share, Susser Holdings has narrowed the loss to $232,000, or $0.01 per share.
Susser Holdings also employs a lot of leverage in its operations. As of December 2012, it had $389 million in equity, $286 million in cash and $607 million in long-term debt. Thus, its net debt stayed at $321 million. In the past twelve months, Susser Holdings generated $178.6 million in EBITDA, so its net debt/EBITDA was the lowest among the three, at 1.8 only. Susser Holdings is trading at $51.20 per share, with the total market cap of $1.1 billion. It is valued a bit more expensive than CST, at 8.4 times EV/EBITDA.
My Foolish take
CST does not seem to be a screaming bargain at its current trading price. I would prefer Susser Holdings the most, due to its lowest net debt/EBITDA ratio. As for CST Brands, I would prefer to see further price contraction before initiating any position in this stock.
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VF Corp -- >>> 3 Inconspicuous Stocks Dividend Investors Love
By Nicole Seghetti
May 15, 2013
http://www.fool.com/investing/general/2013/05/15/3-inconspicuous-stocks-dividend-investors-love.aspx
The power of dividends is nothing new to decade-long income investors. Yet, more recently, droves of investors are jumping on the dividend bandwagon, thanks to all-time low savings rates. But not all dividend-paying stocks are created equal.
Looking beyond the Aristocrat status
These two great examples show us that concentrating on one sole metric, like dividend yield, means that we're likely overlooking potential red flags. Instead, a more sustainable strategy is buying dividend stocks that harness both reliable dividend growth and low payout ratios.
Take a look at these three under-the-radar companies. While each of them belongs to the elite S&P 500 Dividend Aristocrats, an exclusive club of blue chips that have boosted their dividends for at least 25 consecutive years, these three are great dividend stocks for other reasons too.
1. VF (NYSE: VFC )
Through economic (and consumer waistline) recessions and expansions, the company behind North Face apparel and 7 For All Mankind jeans has increased its dividend for an impressive 40 years! VF pays a modest 1.9% dividend yield, but don't let that dupe you. The company has increased its dividend by 248% over the past decade, outpacing the Consumer Price Index nearly tenfold.
And VF's dividend payout ratio, which indicates how much of the company's net income is paid to shareholders through dividends, is 31%. That means the company has plenty of room to grow its dividend even more in the future.
In the ultra-premium-priced jeans market, VF has gained some of competitor True Religion's (NASDAQ: TRLG ) female customers on pricing. True Religion's stock has vastly underperformed, and its profitability has shrunk. Meanwhile, VF's has skyrocketed. For the first quarter, VF's earnings were up an impressive 25%.
2. Sigma-Aldrich (NASDAQ: SIAL )
Maker of test tubes and beakers, Sigma-Aldrich has increased its dividend every year since 1976. Even though the company pays a relatively scrawny 1.1% dividend yield, its 21% payout ratio signals the company has ample opportunity to up its dividend for many years to come.
Sigma-Aldrich recently hiked its dividend by 7.5%. And during the past decade, the specialty chemical maker has upped its dividend at a rate that outpaced the CPI more than sixfold. Last quarter, Sigma-Aldrich was value investing giant Donald Yachtman's biggest new holding.
3. Illinois Tool Works (NYSE: ITW )
This maker of industrial products and equipment like fasteners, coatings, and plastic stretch films has increased its dividend for 49 consecutive years. Even though the stock suffered badly in 2008 when the construction and transportation industries it depends on were hit hard, Illinois Tool Works is greatly benefiting from the current economic recovery.
Its stock currently boasts a 2.2% dividend yield, and the company recently grew its dividend by 5%. In fact, the Illinois-based manufacturer increased its dividend by 230% over the past decade, outpacing the CPI by eight-and-a-half times. Its payout ratio is a very healthy 26%.
Foolish takeaway
By ignoring companies that pay lower yields, you're likely missing out on the next best dividend growth stocks. Don't stop your search at high dividend yields alone. Be sure the company has the financial resources to boost its dividend, effectively giving you a pay raise, for years to come.
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CVS -- >>> Druggists Get A Spoonful Of Sugar
Investor's Business Daily
5-2-13
http://finance.yahoo.com/news/druggists-spoonful-sugar-185000850.html
They call it an earnings surprise. But the fact that the three top drugstore chains beat analyst consensus earnings forecasts for the first quarter, with room to spare, shocked no one.
The group's stock performance, on the other hand, has caught some industry onlookers off guard. As a group, drugstores are up 27% year-to-date — better than double the S&P 500's pace.
Walgreen (WAG) has posted a 32% advance. CVS Caremark (CVS) jumped 20%. Rite Aid's (RAD) battered shares have soared 90%, although they're still trading well below 3.
What's the draw? Drugstore chains are benefiting from higher margins thanks to a wave of generic drugs replacing brand name drugs falling off the so-called "patent cliff," losing their patent protection. Investors are also anticipating increased demand from the Affordable Care Act going into effect in January 2014, wrote Joseph Agnese, an analyst with S&P Capital IQ, in a client note April 20.
Those factors have boosted the five-stock drugstore group to a No. 13 ranking Friday among 197 industries tracked by IBD, up from a No. 134 ranking at the start of March.
Generic-Drug Boom Brand-name drugs with $35.1 billion in annual sales — including some of the biggest blockbusters in history — lost patent protection in 2012, according to Evaluate Pharma. And the trend is continuing.
"By 2016, medicines that generate sales of $133 billion for their manufacturers in the U.S. alone will be exposed to generics," the industry consulting firm reported. Once drugs lose patent protection, their revenues could plunge as much as 90%. Generics typically cost 30% of the brand-name price tag, but carry wider margins for retailers.
That means drugstores face slower revenue growth as generics take over brand-name drugs. Prescriptions account for at least two-thirds of all sales. Third-party payers, government programs, private insurers or pharmacy benefit managers pick up the tab almost entirely. A cut in reimbursement rates would squeeze drugstores' profits and margins.
Demographics And ObamaCare An aging U.S. population is expected to live longer than ever. About 10,000 baby boomers celebrate their 65th birthday every day, becoming eligible for the federally funded Medicare prescription drug program. That, and a spike in the number of insured thanks to the Affordable Care Act, set to go into effect in 2014, pledges a swarm of new pharmacy customers.
Evaluate Pharma forecasts prescription drug sales will increase by 4% per year between 2010 and 2016.
"We expect that the estimated additional 27 million people who will be covered by health insurance in 2014, as well as the closing of the 'doughnut hole' in Medicare Part D, will have a positive impact on our business," Rite Aid stated in its 10-K report for the fiscal year ended March 2, 2013.
The so-called doughnut hole, a coverage gap under Medicare Part D, requires seniors to pay a higher rate after spending $2,970 on prescriptions. Once they spend $4,750, "catastrophic coverage" kicks in. Under ACA, that gap tapers off, then disappears by 2020 .
Store Growth And Acquisitions From a customer's standpoint, CVS, Walgreen and Rite-Aid stores may all look largely similar.
CVS is the largest player in the group, with a market capitalization of $71.6 billion and 2012 revenue hitting $123.1 billion. It opened a net of 131 new stores in 2012, bringing its total to 7,525 locations. The Woonsocket, R.I.-based chain plans to increase total store square footage by 2% to 3% this year. It expanded overseas this year by acquiring Brazilian pharmacy chain Drogario Onofre, with 44 stores and a 9% market share in the country, for undisclosed terms.
Walgreen weighs in with a much smaller market cap, $46.9 billion, and 2012 sales of $71.6 billion. But it owns the most stores, with 8,537 locations in 50 states, the District of Columbia, Guam and Puerto Rico. And location is often key to snatching pharmacy business.
This chain is also rapidly building its overseas presence.
In August, Walgreen paid $6.7 billion in cash and stock for a 45% stake in U.K.-based Alliance Boots, which runs 3,000 pharmacies and a wholesale drug unit with 370 distribution centers serving more than 170,000 pharmacies in 21 countries. It has an option to buy the remaining 55% for $9.5 billion in three years.
"Walgreen expects combined synergies across both companies to be between $100 million and $150 million in the first year and $1 billion by the end of 2016," the company said in a statement.
Last year, it also bought regional drugstore chain USA Drug and an 80% interest in Cystic Fibrosis Foundation Pharmacy LLC.
Rite Aid, the third-largest U.S. drugstore chain based on revenues and store count, has 4,623 stores in 31 states. The Camp Hill, Pa.-headquartered firm plans to open one new store, relocate 19, remodel 400 into its "Wellness" format, while closing 50 stores in fiscal 2014, Frank Vitrano, Rite Aid's chief financial and chief administrative officer, said during a fourth-quarter fiscal 2013 conference call on April 11.
Rite Aid's Wellness stores take a page out of natural food grocer Whole Food Market's (WFM) playbook. They offer gluten-free products, natural personal and home-care products, health-related magazines and books in addition to workout equipment, and private consultations with pharmacists. In a partnership with GNC Holdings (GNC), it also houses GNC stores within its stores at 2,100 locations and plans to open more.
The ABCs Of PBMs CVS is largely differentiated from its peers by Caremark, the pharmacy benefits manager (PBM) business it acquired in 2007. Caremark competes with independent PBMs including Catamaran (CTRX) and Express Scripts (ESRX). The industry's supply chain is complex. PBMs negotiate pricing deals between drugmakers and employers, and manage employee drug plans.
PBMs pay drugstore chains to dispense drugs. The chains obtain the bulk of their drug supplies through large distributors, such as Cardinal Health (CAH) and McKesson (MCK).
CVS' PBM operations accounted for 60% of first-quarter revenue and 30% of operating profit.
Walgreen sold its more modest PBM operation to Catalyst Health for $525 million in 2011. (Catalyst was then bought by SXC Health Solutions, which subsequently merged with rival Medco Health Solutions and changed its name to Catamaran.) As a result, Walgreen has fought a pitched battle with Express Scripts, losing in the struggle an estimated $4 billion in fiscal 2012 revenue.
CVS, on the other hand, may be poised for a double benefit from the oncoming Affordable Care Act, analysts say, with both its retail and PBM operations set to grab a piece of the increasing pool of insured consumers.
On the stock market side, the companies have also invested heavily to please shareholders.
CVS spent $4.3 billion on share buybacks and $829 million on dividends in 2012. It plans to spend $4 billion on repurchases this year, which will reduce the number of shares outstanding by 5.2%, according to S&P Capital IQ. CVS currently pays an annual dividend of 90 cents a share.
Walgreen has $425 million remaining through the end of December 2015 from a $2 billion buyback plan announced in mid-2011. It currently pays a $1.10 a share annual dividend.
"We have paid a dividend in 321 straight quarters (more than 80 years) and have raised our dividend for 37 consecutive years," Michael Polzin of Walgreen's corporate communications told IBD. "Most recently, we raised our dividend 22.2% in June 2012. Over the past five years, our dividend rate has grown by a compound annual growth rate of nearly 24%.
The struggling Rite Aid is the exception, with no buyback plans and no dividend since 2000.
Investment Risks Walgreen is battling to win back the customers it lost during its 2011-12 dispute with Express Scripts. CVS and Rite Aid benefited from the dispute, which forced Express Scripts drug card users to switch pharmacies or pay more for meds from Walgreen.
Analysts with Lazard Capital Markets estimate Walgreen has recovered about 40% of those customers, since resolving the issue in July 2012. Lazard estimates Walgreen will ultimately lure back 50% of its lost clientele.
Drugstores face stiff competition from online and mail-order providers, warehouse clubs, dollar stores, grocery stores, convenience stores and mass retailers with aggressive discounts on generic drugs such as Target and Wal-Mart.
They could suffer from "sluggish growth in front-end sales, which are rather sensitive to broader economic trends and consumer spending habits," Raymond James analysts wrote in a client note April 12.
While both CVS and Walgreen have remained steadily profitable, Rite Aid is just climbing out of seven years of losses. It devotes a huge chunk of its cash flow to service a $6 billion debt — almost three times its market value. If interest rises considerably, analysts contend the company will have to sell assets or refinance at unfavorable terms.
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PetSmart -- >>> 3 Stocks Any Growth Investor Should Consider
By Federico Zaldua
November 14, 2012
http://beta.fool.com/martinzaldua/2012/11/14/3-stocks-any-growth-investor-should-consider/16490/?ticker=BLL&source=eogyholnk0000001
A solid retail growth story
In a recent report, Needham projected that PetSmart's (NASDAQ: PETM) sales will continue to be strong across all merchandising categories, expecting continued margin expansion and solid growth. According to the American Pet Products Association, in 2012 U.S. households spent over 50 billion dollars on their pets. Since 1994, the amount of money spent on pets has increased every year, even during the economic recession. PetSmart is different from other retailers (Wal-Mart or Target), as it offers an array of services to meet the needs of people who are passionate and knowledgeable about pets. By offering more specialized services and products, PetSmart makes 4.6 times greater annual gross margin per customer.
The company is a strong grower, reflected in its 3 year average EPS growth of 25% and 9% sales growth. In the recent report, the company reported net income growth of 28% and same-store revenue growth of 7%. PetSmart's performance in the second quarter was due to the strengths across all three merchandising categories: consumables, hard goods and live goods, as well as services. The company will keep growing, driven by its comparative everyday low price strategy, coupled with its commitment to uniquely engaged in-store experience that is not easily duplicated. This approach has led to continued growth, even in today’s challenging economic environment. The company is not expensive at 17x forward P/E and just 1.1 P/S. Tudor Investment Corporation bought the stock in the recent quarter.
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Aaron's -- >>> Aaron's, Inc. Reports Record Third Quarter Results
-- Revenues Up 9% to $529.5 Million
-- Same Store Revenues Increase 6.5%
-- GAAP Diluted EPS $.38; Up 6%
-- GAAP Diluted EPS Includes $.08 Retirement-Related Charge
-- Non-GAAP Diluted EPS $.46: Up 28%
Press Release: Aaron's, Inc.
Thu, Oct 25, 2012 4:15 PM
http://finance.yahoo.com/news/aarons-inc-reports-record-third-201500593.html
ATLANTA, Oct. 25, 2012 /PRNewswire/ -- Aaron's, Inc. (AAN), a leader in the sales and lease ownership and specialty retailing of residential furniture, consumer electronics, home appliances and accessories, today announced record revenues and earnings for the three and nine months ended September 30, 2012.
For the third quarter of 2012, revenues increased 9% to $529.5 million compared to $484.7 million for the third quarter in 2011. Net earnings were $28.9 million versus $28.0 million last year. Diluted earnings per share were $.38 compared to $.36 per share in 2011.
For the first nine months of this year, revenues advanced 10% to $1.654 billion compared to $1.500 billion for the first nine months of 2011. Net earnings were $136.4 million versus $83.2 million a year ago. Diluted earnings per share for the first nine months were $1.77 for 2012 compared to $1.04 in 2011.
During the third quarter of 2012 the Company recorded a $10.4 million, or $.08 per diluted share, charge to earnings for costs associated with the retirement of the Company's founder and Chairman of the Board. Additionally, as previously reported, the Company recorded a charge of $36.5 million in the second quarter of 2011 related to a lawsuit with a former Aaron's associate. In the first quarter of 2012 the Company settled this lawsuit and reversed into income $35.5 million of this charge.
Excluding from all periods the third quarter retirement-related charge and the 2011 lawsuit-related charge and subsequent 2012 reversal, net earnings for the third quarter of 2012 would have been $35.4 million compared to $28.0 million for the same period in 2011, and earnings per share assuming dilution would have been $.46 compared to $.36 a year ago, a 28% increase. Net earnings for the nine months of 2012 would have been $120.8 million compared to $105.8 million a year ago, up 14% over the same period in 2011, and earnings per share assuming dilution would have been $1.57 versus $1.32 last year, a 19% increase.
"We are pleased with our third quarter results of operations. Excluding the charge related to the retirement of our founder, earnings exceeded expectations. Revenue growth remains very strong and our planned new store openings are on schedule," said Ronald W. Allen, President and Chief Executive Officer of Aaron's. "Demand for the high-quality, basic home furnishings we offer, with superior service and flexible payment terms, continues in these difficult economic times, and we expect 2012 will be another record year for the Company in both revenues and earnings."
"Our HomeSmart stores are ramping up in revenues as anticipated and we remain quite optimistic that this weekly pay concept will substantially contribute to our future growth. However, we still have some work to do in perfecting the store business model, and do not currently plan to open a significant number of additional HomeSmart stores until after the first half of next year," Mr. Allen continued. "We feel we still have substantial opportunity for adding additional Aaron's Sales & Lease Ownership stores, and expect our overall new store growth in 2013 to be comparable to the number of stores added in 2012."
"Finally, I join the management team and all Aaron's associates, both past and present, in wishing our founder Charlie Loudermilk a very long and well deserved retirement. The vision, leadership, knowledge and other contributions Charlie gave to Aaron's over 57 years, as well as the impact he has had in the business and civic community, are too many to mention. He certainly will be missed," Mr. Allen concluded.
Same store revenues (revenues earned in Company-operated stores open for the entirety of both quarters) increased 6.5% during the third quarter of 2012 compared to the third quarter of 2011, and customer count on a same store basis was up 8.2%. For Company-operated stores open over two years at the end of September 2012, same store revenues increased 4.8% during the third quarter of 2012 compared to the third quarter of 2011. The Company had 1,090,000 customers and its franchisees had 572,000 customers at the end of the third quarter of 2012, a 12.2% increase in total customers over the number at the end of the third quarter a year ago (customers of our franchisees, however, are not customers of Aaron's, Inc.).
During the first nine months of this year the Company generated over $86 million of cash flow from operations and had $156 million of cash on hand at the end of September 2012. The Company reacquired 872,908 shares of Common Stock in the third quarter of 2012 and 1,236,689 shares during the first nine months of the year, and has authorization to purchase an additional 4,044,655 shares.
Division Results
The Aaron's Sales & Lease Ownership division increased its revenues in the third quarter of 2012 to $513.6 million, a 7% increase over the $478.0 million in revenues in the third quarter of 2011. Sales and lease ownership revenues for the first nine months of 2012 increased 8% to $1.608 billion compared to $1.488 billion for the same period a year ago.
Revenues of the HomeSmart division increased in the third quarter to $14.2 million, compared to $5.7 million in revenues in the third quarter of 2011. HomeSmart revenues for the first nine months of 2012 were $40.4 million versus $6.7 million for the same period a year ago.
Components of Revenue
Consolidated lease revenues and fees for the third quarter and first nine months of 2012 increased 12% and 11%, respectively, over the comparable previous year periods. In addition, franchise royalties and fees increased 1% for the third quarter and 5% year to date compared to the same periods in 2011. Non-retail sales, which are primarily sales of merchandise to Aaron's Sales & Lease Ownership franchisees, increased 1% to $87.2 million for the third quarter from $86.1 million in the comparable period in 2011, and increased 10% to $299.2 million for the first nine months compared to $271.2 million for the first nine months of last year. The increases in the Company's franchise royalties and fees and non-retail sales are the result of an increase in revenues of the Company's franchisees, who, collectively, had revenues of $231.6 million during the third quarter and $733.6 million during the first nine months of 2012, a 3% and 7% increase, respectively, over the prior year periods. Same store revenues and customer counts for franchised stores increased 3.2% and 9.9%, respectively, for the third quarter compared to the same quarter last year. Revenues and customers of franchisees, however, are not revenues and customers of Aaron's, Inc.
Store Count
During the third quarter of 2012, the Company opened 14 Company-operated Aaron's Sales & Lease Ownership stores and 13 franchised stores. The Company also acquired four franchised stores and the accounts of three third party stores which were added to Aaron's Sales & Lease Ownership stores. In addition, the accounts of two third party stores were acquired and transferred to a HomeSmart store. The Company also sold two Company-operated stores to franchisees and the one remaining Aaron's Office Furniture store was sold to a third party. Two Company-operated stores were closed during the quarter.
Through the three months and nine months ended September 30, 2012, the Company awarded area development agreements to open seven and 36 additional franchised stores, respectively. At the end of September 2012, there were area development agreements outstanding for the opening of 201 franchised stores over the next several years.
At September 30, 2012, the Company had 1,190 Company-operated Aaron's Sales & Lease Ownership stores, 717 Aaron's Sales & Lease Ownership franchised stores, 78 HomeSmart stores, one franchised HomeSmart store, 17 Company-operated RIMCO stores, and six franchised RIMCO stores. The total number of stores open at the end of September 2012 was 2,009.
Fourth Quarter and Full Year 2012 Outlook
The Company is updating its guidance for 2012 and expects to achieve the following:
•Fourth quarter revenues (excluding revenues of franchisees) of approximately $575 million.
•Fourth quarter diluted earnings per share in the range of $.48 to $.52 per share.
•Fiscal year 2012 revenues (excluding revenues of franchisees) of over $2.2 billion.
•GAAP fiscal year 2012 diluted earnings per share in the range of $2.25 to $2.29.
•Non-GAAP fiscal year 2012 diluted earnings per share in the range of $2.05 to $2.09, which excludes the first quarter reversal of the accrued lawsuit expense and the third quarter retirement charge.
•Our initial earnings guidance for fiscal year 2013 is to achieve diluted earnings per share in the range of $2.25 to $2.41 per share.
•EPS guidance does not assume any additional significant repurchases of the Company's Common Stock.
•New store growth of approximately 5% to 7% over the store base at the end of 2011, for the most part an equal mix between Company-operated and franchised stores, and including a small number of HomeSmart stores. We expect overall new store growth in 2013 in the range of 4% to 6% over the store count at the end of 2012. This will be a net store growth after any opportunistic merging or disposition of stores.
•The Company will continue, as warranted, to consolidate or sell stores not meeting performance goals.
•The Company also plans to continue to acquire franchised stores or sell Company-operated stores as opportunities present themselves.
Conference Call
Aaron's will hold a conference call to discuss its quarterly financial results on Friday, October 26, 2012, at 10:00 am Eastern Time. The public is invited to listen to the conference call by webcast accessible through the Company's website, www.aaronsinc.com, in the "Investor Relations" section. The webcast will be archived for playback at that same site.
Aaron's, Inc., based in Atlanta, currently has more than 2,009 Company-operated and franchised stores in 48 states and Canada. The Company's Woodhaven Furniture Industries division manufactured approximately $89 million, at cost, of furniture and bedding at 14 facilities in eight states in 2011. The production of Woodhaven is for shipment to Aaron's stores.
Use of Non-GAAP Financial Information
This press release presents the Company's net earnings and diluted earnings per share excluding a $36.5 million charge recorded in the second quarter of 2011 related to a previously announced lawsuit verdict against the Company, and associated legal fees and expenses, and the subsequent reversal into income of $35.5 million of such charge in the first quarter of 2012 related to the settlement of that lawsuit, as well as a $10.4 million charge to earnings in the third quarter of 2012 for costs associated with the retirement of the Company's founder and Chairman of the Board. These measures are not presented in accordance with generally accepted accounting principles in the United States ("GAAP").
While the lawsuit and retirement-related charges may not be considered as non-recurring in nature in a strictly accounting sense, management regards the circumstances of this particular lawsuit and retirement-related charge as infrequent and not arising out of the ordinary course of business. The adjustments involve matters that are not entirely susceptible to prediction or effective management, and consequently management believes that presentation of net earnings and diluted earnings per share excluding these adjustments is useful because it gives investors supplemental information to evaluate and compare the performance of the Company's underlying core business from period to period. Non-GAAP financial measures, however, should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP, such as the Company's GAAP basis net earnings and diluted earnings per share, which are also presented in the press release.
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Body Central -- >>> Management Changes at Body Central
By Zacks Equity Research
Aug 22, 2012
http://finance.yahoo.com/news/management-changes-body-central-212936542.html
Body Central Corp. (BODY) recently promoted Tom Stoltz to the position of the chief operating officer (COO) as well as the interim chief executive officer (CEO). Stoltz had been serving as the company’s executive vice president, chief financial officer (:CFO) and treasurer since September 26, 2011. However, he will continue to operate as the CFO of the company.
The shuffle in management follows the retirement of Allen Weinstein from the position of president and CEO, effective August 16, 2012. The company will now be on the lookout for a permanent CEO.
In his new role, Tom Stoltz will be in charge of the company’s regular operations as well as all financial issues including corporate finance, financial planning and analysis, tax, treasury, corporate facilities and information technology.
Stoltz has donned many important roles in his illustrious career. He was the CFO at Fanatics, LLC from 2008 to 2011. Prior to that, he held the same post at Cato Corp. (CATO), Citi Trends Inc. (CTRN), and Factory Card Outlet. Cato and Citi Trends are well-known retailers of urban fashion apparel and accessories in the United States.
With his rich financial experience, Stoltz can easily be tagged as an industry veteran in both specialty store and e-commerce channels. A number of senior finance positions held at Dollar General Corporation (DG), a discount retailer of general merchandise in the southern, southwestern, mid-western, and eastern United States, and Food Lion Inc. also vouch for his expertise.
Management is hopeful that Stoltz’s vast know-how and expertise regarding retail will add value to Body Central’s growth during his tenure as the interim CEO. The Florida-based multi-channel specialty retailer, selling quality apparel and accessories also incorporated other managerial changes. It has appointed an industry veteran, Robert Glass, as a member of the Board of Directors. The company is also hiring a general merchandise manager to support its merchandise division.
In the second quarter of 2012, Body Central’s net revenue grew 6.3%, while its net income dipped 35.8% year over year. The company also slashed its guidance for the second half of 2012 reflecting a tough retail environment.
In such a scenario, the role of an interim CEO will be crucial as the company needs proper brand re-invigoration and sales strategies to drive revenue and earnings. Also, the transition is still at its early stage, keeping us cautious until there is further evidence of successful execution.
Body Central currently retains a Zacks #5 Rank, which translates into a short-term Strong Sell rating. We are maintaining our long-term Underperform recommendation on the stock.
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