Tag: Trade

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The real star war begins

AMC to no longer play Universal movies in its U.S. theaters

AMC Theatres (AMC) sent a letter to Universal Studios (CMCSA) chairman Donna Langley, saying that, going forward, AMC will not license any Universal films in any of its 1,000 globally effective immediately.

AMC will no longer play Universal movies, Stockwinners

“For much of the past four and a half years, I have been in direct dialogue with Jeff Shell and Peter Levinsohn of Universal about the importance of a robust theatrical window to the viability of the motion picture exhibition industry,” the letter reads.

“Throughout that time, AMC has expressed a willingness to consider alternatives to the current windowing strategy common in our industry, where the aim of such alternatives is to improve both studio profitability and theater operator profitability.

Universal stated it only pursued a direct-to-home entertainment release for “Trolls World Tour” because theaters were closed and Universal was committed to a lucrative toy licensing deal. We had our doubts that this was wholly Universal’s motivations, as it has been a longstanding desire by Universal to go to the home day and date.

Nonetheless, we accepted this action as an exception to our longstanding business practices in these unprecedented times.”

AMC noted that Shell was quoted in the Wall Street Journal saying that the success of “Trolls World Tour” demonstrated the viability of PVOD, and as soon as theaters reopen, the company expects to release movies on both theater and PVOD formats.

“Going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms,” the letter said.

“Accordingly, we want to be absolutely clear, so that there is no ambiguity of any kind. AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies.

Universal owns some blockbuster franchises, Stockwinners

It assumes that we will meekly accept a reshaped view of how studios and exhibitors should interact, with zero concern on Universal’s part as to how its actions affect us. It also presumes that Universal in fact can have its cake and eat it too, that Universal film product can be released to the home and theatres at the same time, without modification to the current economic arrangements between us. It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice.

Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theatres in the United States, Europe or the Middle East. This policy affects any and all Universal movies per se, goes into effect today and as our theatres reopen, and is not some hollow or ill-considered threat.

Incidentally, this policy is not aimed solely at Universal out of pique or to be punitive in any way, it also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us, so that they as distributor and we as exhibitor both benefit and neither are hurt from such changes.

Currently, with the press comment today, Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response.”

STOCKWINNERS

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L3Harris Security Detection sold for $1 B

Leidos to acquire L3Harris security detection, automation businesses

Leidos (LDOS) announced that it has entered into a definitive agreement to acquire L3Harris Technologies’ (LHX) security detection and automation businesses, for $1B in cash.

The boards of both companies unanimously approved the transaction. L3Harris’ security detection and automation businesses provide airport and critical infrastructure screening products, automated tray return systems and other industrial automation products.

L3Harris sells its security division for $1B, Stockwinners

With headquarters in Tewksbury, Massachusetts and Luton, England, the combined businesses have 1,200 employees and a global sales and services operations footprint with more than 20,000 systems deployed world-wide across more than 100 countries.

The businesses serve customers in the aviation, transportation, government and critical infrastructure markets.

Leidos goes on $1B shopping spree, Stockwinners

This acquisition adds products that expand Leidos’ offerings to create a security and detection platform.

These products include checkpoint security products like checkpoint CT scanners, people scanners, comprehensive explosives trace detectors, checked baggage screeners and automated tray return systems, or ATRS.

This business expands customer penetration internationally, helping deliver on a stated objective to diversify revenue globally.

The deal will increase Leidos’ international security products revenue more than six-fold. The acquisition also enables the company to leverage technology investments across the combined portfolio to accelerate innovation and improve service efficiency for customers.

The transaction is expected to be immediately accretive to Leidos’ revenue growth, EBITDA margins, and non-GAAP diluted earnings per share upon closing.

Leidos expects to fund the $1B cash transaction through a combination of cash on hand and incremental debt.

The transaction is expected to close by the end of Q2, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.

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Hexcel and Woodward merge to form Woodward Hexcel

Hexcel, Woodward announce merger of equals

Woodward (WWD) and Hexcel (HXL) announced a definitive agreement to combine in an all-stock merger of equals “to create a premier integrated systems provider serving the aerospace and industrial sectors,” the companies said.

Woodward and Hexcel agree to merge, Stockwinners

Under the terms of the agreement approved by the Boards of Directors of both companies, Hexcel shareholders will receive a fixed exchange ratio of 0.625 shares of Woodward common stock for each share of Hexcel common stock, and Woodward shareholders will continue to own the same number of shares of common stock in the combined company as they do immediately prior to the closing.

Hexcel and Woodward to merge, Stockwinners

The exchange ratio is consistent with the 30-day average share prices of both companies.

Upon completion of the merger, existing Woodward shareholders will own approximately 55% and existing Hexcel shareholders will own approximately 45% of the combined company on a fully diluted basis.

In connection with the transaction, Woodward is increasing its quarterly cash dividend to 28c a share.

The merger is expected to be tax free for U.S. federal income tax purposes.

The combined company will be named Woodward Hexcel.

For each company’s respective fiscal year 2019 on a pro forma basis, the combined company is expected to generate net revenues of approximately $5.3B and EBITDA of $1.1B, or a 21% EBITDA margin.

The transaction is subject to the approval of the shareholders of both Woodward and Hexcel, as well as other customary closing conditions, including required regulatory approvals.

The parties expect the merger to close in the third calendar quarter of 2020, subject to satisfaction of these conditions.

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Shape Security sold for $1B

F5 Networks to acquire Shape Security for approximately $1B in cash

F5 Networks (FFIV) and Shape Security announced a definitive agreement under which F5 will acquire all issued and outstanding shares of the privately held Shape for a total enterprise value of approximately $1B in cash, subject to certain adjustments.

F5 Networks purchases Shape Security, Stockwinners

Shape protects the largest banks, airlines, retailers, and government agencies with sophisticated bot, fraud, and abuse defense.

In particular, Shape defends against credential stuffing attacks, where cybercriminals use stolen passwords from third-party data breaches to take over other online accounts.

Shape has built an advanced platform, utilizing artificial intelligence and machine learning, supported by powerful cloud-based analytics to protect against attacks that bypass other security and fraud controls.

Shape Security sold for $1B, Stockwinners

Upon closing of the acquisition, Derek Smith, and the leadership team will join F5 in key management roles.

Shape will remain located in their current Santa Clara headquarters.

The acquisition of Shape is consistent with F5’s vision to build the best end-to-end multi-cloud application services company. It accelerates F5’s product and total revenue growth; speeds F5’s transition to a software- and SaaS-driven business model; and is expected to meaningfully increase F5’s software subscription mix in fiscal year 2020.

F5 expects to achieve breakeven non-GAAP EPS within 24 months of closing the acquisition and anticipates that the combination will be accretive to free cash flow per share within 12 months of closing.

F5 expects to fund the transaction through cash on its balance sheet and $400M in a Senior Unsecured Term Loan A. The acquisition has been approved by the boards of directors of both F5 and Shape.

The acquisition is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the first calendar quarter of 2020.

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ChemoCentryx shares soar on data

ChemoCentryx, VFMCRP say pivotal phase-III ADVOCATE trial met primary endpoints

Vifor Fresenius Medical Care Renal Pharma, or VFMCRP, and ChemoCentryx (CCXI) announced positive topline data from the pivotal phase-III ADVOCATE trial of avacopan, an orally administered selective complement 5a receptor inhibitor, for the treatment of patients with anti-neutrophil cytoplasmic antibody-associated vasculitis (ANCA-associated vasculitis or ANCA vasculitis).

ChemoCentryx shares soar on its ANCA drug, Stockwinners

ANCA vasculitis is an autoimmune disease affecting small blood vessels in the body. It is caused by autoantibodies called ANCAs, or Anti-Neutrophilic Cytoplasmic Autoantibodies.

This global study, in which a total of 331 patients with ANCA vasculitis were enrolled, met both of its primary endpoints, disease remission at 26 weeks and sustained remission at 52 weeks, as assessed by the Birmingham Vasculitis Activity Score, or BVAS.

Remission was defined as a BVAS score of zero and being off glucocorticoid treatment for ANCA vasculitis for at least the preceding four weeks.

BVAS remission at week 26 was achieved in 72.3% of the avacopan treated subjects vs. 70.1% of subjects in the glucocorticoid standard of care control group.

Sustained remission at 52 weeks was observed in 65.7% of the avacopan treated patients vs. 54.9% in the glucocorticoid standard of care control group, achieving both non-inferiority and superiority to glucocorticoid standard of care.

Importantly, subjects who received avacopan experienced additional benefits compared to those in the glucocorticoid standard of care control group.

These benefits, assessed as pre-specified secondary endpoints, include: Significant reduction in glucocorticoid-related toxicity; Significant improvement in kidney function in patients with renal disease at baseline; Improvements in health-related quality of life metrics.

The topline safety results revealed an acceptable safety profile in this serious and life threatening disease with fewer subjects having serious adverse events in the avacopan group than in the glucocorticoid standard of care control group.

A full analysis of the data is underway and expanded results are expected to be announced in the coming weeks. “These results exceed our expectations,” said Thomas J. Schall, Ph.D., President and Chief Executive Officer of ChemoCentryx.

“Today we mark the dawn of a new and historic period in the lives of ANCA vasculitis patients. This day we have for the first time demonstrated that a highly targeted therapy aimed at the very center of the ANCA disease process is superior to the traditional approach of broad immune suppression therapy; a therapy which the present findings may make obsolete. Until now ANCA vasculitis patients have had to endure regimens that contain chronic high doses of steroids and all their noxious effects, but with today’s data it is clear that the time of making patients sick with steroid therapy in an attempt to make their acute vasculitis better may at last be over. Working with our partner VFMCRP, we plan to make regulatory submissions for full marketing approval to both the European Medicines Agency and the FDA in 2020.”

CCXI is up $26.68 to $34.65

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Tech Data sold for $5.4 billion

Tech Data to be acquired by Apollo Global for $130 per share in cash

Tech Data (TECD) announced it has entered into a definitive agreement to be acquired by an affiliate of funds managed by affiliates of Apollo Global Management (APO).

Tech Data is taken private at $130 per share, Stockwinners

Through the agreement, the affiliate of the Apollo Funds will acquire all of the outstanding shares of Tech Data common stock for $130 per share in a transaction with an enterprise value of approximately $5.4B.

Apollo buys Tech Data for $5.4B, Stockwinners

The purchase price represents a 24.5% premium to the unaffected 30-day volume weighted average closing share price of Tech Data’s common stock ended October 15, the last trading day prior to published market speculation regarding a potential transaction involving the company.

The Tech Data Board of Directors has unanimously approved the transaction and recommends that Tech Data shareholders vote in favor of the transaction.

The transaction is not subject to a financing condition and is expected to close in the first half of calendar year 2020, subject to the satisfaction of customary closing conditions including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, foreign regulatory approvals and approval by the holders of a majority of the outstanding Tech Data shares.

Tech Data expects to hold a Special Meeting of Shareholders to consider and vote on the transaction agreement as soon as feasible after the mailing of the proxy statement to shareholders.

Consistent with the Board’s commitment to maximizing shareholder value, the terms of the agreement provide that Tech Data will be permitted to actively solicit alternative acquisition proposals from third parties during a “go-shop” period from the date of the agreement until December 9.

There is no guarantee that this process will result in a superior proposal. Following the close of the transaction, Rich Hume will continue to lead Tech Data as CEO, and the company will continue to be headquartered in Clearwater, Florida.

Tech Data will become a privately held company, and Tech Data’s common shares will no longer be publicly listed.

Tech Data Corporation operates as an IT distribution and solutions company. The company offers endpoint portfolio solutions, including personal computer systems, mobile phones and accessories, printers, peripherals, supplies, endpoint technology software, and consumer electronics. It also provides advanced portfolio solutions, such as data center technologies comprising storage, networking, servers, advanced technology software, and converged and hyper-converged infrastructure, as well as specialized solutions. 

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Wesco Aircraft sold for $1.9 billion

Wesco Aircraft to be acquired by Platinum Equity affiliate for $1.9B

Wesco Aircraft sold to Carlyle Group affiliate, Stockwinners

Wesco Aircraft Holdings (WAIR) announced that it has entered into a definitive merger agreement to be acquired by an affiliate of Platinum Equity in a transaction valued at approximately $1.9B.

Upon closing, Wesco will be combined with Platinum Equity portfolio company Pattonair, a provider of supply chain management services for the aerospace and defense industries based in the United Kingdom.

Under the agreement, which has been unanimously approved by Wesco’s Board of Directors, Wesco shareholders would receive $11.05 per share in cash.

The cash purchase price represents a premium of approximately 27.5 percent to the 90-day volume weighted average share price for the period ended May 24, 2019, the last trading day prior to media speculation regarding a potential transaction involving Wesco Aircraft.

Wesco’s three largest shareholders, affiliates of The Carlyle Group (CG) and Makaira Partners, as well as the Snyder Family Trusts, support the transaction and have entered into voting and support agreements to vote their shares in favor of the transaction.

CG to buy Wesco Aircraft, Stockwinners

The transaction will be financed through a combination of committed equity financing provided by affiliates of Platinum Equity Capital Partners IV, L.P., as well as debt financing that has been committed to by Bank of America Merrill Lynch.

The transaction is expected to be completed by the end of calendar 2019 and is subject to Wesco shareholder approval, regulatory clearances and other customary closing conditions.

Upon the completion of the transaction, Wesco will become a privately held company, and shares of its common stock no longer will be listed on any public market.

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Vail Resorts buys Peak Resorts for $11.00 per share

The deal is valued about $170 million

Peak Resorts (SKIS) announced that it has entered into a definitive merger agreement with Vail Resorts, Inc. (MTN) pursuant to which Vail Resorts will acquire all outstanding shares of common stock of Peak Resorts for $11.00 per share in cash.

Vail Resorts to buy Peak Resorts, Stockwinners

The transaction represents a 116% premium to Peak Resorts’ closing stock price on July 19, 2019.

The transaction is expected to close in fall 2019 and is subject to certain conditions, including a vote of Peak Resorts shareholders and antitrust clearance.

Vail Resorts buys Peak Resorts, shares jump. Stockwinners

The transaction was approved by the Boards of Directors of both companies. Peak Resorts’ Board of Directors also recommends that the Company’s shareholders approve the transaction.

Moelis & Company LLC is serving as financial advisor to Peak Resorts. Perkins Coie LLP, Sandberg Phoenix & von Gontard P.C. and Armstrong Teasdale LLP are serving as legal counsel to Peak Resorts.

About the Companies

Peak Resorts, Inc. owns, operates, and leases day and overnight drive ski resorts in the United States. Its resorts activities and amenities include skiing, snowboarding, terrain parks, tubing, dining, lodging, equipment rentals and sales, ski and snowboard instruction, golf, zip lines, mountain coasters, mountain biking, hiking, paint ball, and other summer activities. It operates 17 ski resorts primarily located in the Northeast, Mid-Atlantic, and Midwest.

Vail Resorts has been on a shopping spree, Stockwinners

Vail Resorts, Inc. operates mountain resorts and urban ski areas in the United States. The company operates through three segments: Mountain, Lodging, and Real Estate. The Mountain segment operates 11 mountain resorts, including Vail Mountain, Breckenridge Ski, Keystone, and Beaver Creek resorts in Colorado; Park City resort in Utah; Heavenly Mountain, Northstar, and Kirkwood Mountain resorts in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in Canada; Stowe Mountain resort in Vermont; and Perisher in Australia, as well as 3 urban ski areas, such as Wilmot Mountain in Wisconsin, Afton Alps in Minnesota, and Mount Brighton in Michigan.

Vail Resorts expands its footprint by purchasing Peak Resorts, Stockwinners

Its resorts offer various winter and summer recreational activities. The Lodging segment owns and/or manages various luxury hotels and condominiums under the RockResorts brand, and other lodging properties; various condominiums located in proximity to the company’s mountain resorts; destination resorts; and golf courses, as well as offers resort ground transportation services. This segment operates approximately 5,400 owned and managed hotel and condominium units.

The Real Estate segment owns, develops, and sells real estate properties in and around the company’s resort communities. 

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No more rate hikes in 2019

Majority of Fed members see rates unchanged for rest of 2019

Members see rates to remain unchanged in 2019, Stockwinners

Minutes from the last Federal Reserve meeting read, “With regard to the outlook for monetary policy beyond this meeting, a majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year.

Several of these participants noted that the current target range for the federal funds rate was close to their estimates of its longer-run neutral level and foresaw economic growth continuing near its longer-run trend rate over the forecast period.

Participants continued to emphasize that their decisions about the appropriate target range for the federal funds rate at coming meetings would depend on their ongoing assessments of the economic outlook, as informed by a wide range of data, as well as on how the risks to the outlook evolved.

Short term rates should decline as 30-year rates rise, Stockwinners

Several participants noted that their views of the appropriate target range for the federal funds rate could shift in either direction based on incoming data and other developments.

Some participants indicated that if the economy evolved as they currently expected, with economic growth above its longer-run trend rate, they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year.”

Economic growth in 2019 likely lower than previous forecast

“Participants continued to view a sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes over the next few years.

Underlying economic fundamentals continued to support sustained expansion, and most participants indicated that they did not expect the recent weakness in spending to persist beyond the first quarter.

Nevertheless, participants generally expected the growth rate of real GDP this year to step down from the pace seen over 2018 to a rate at or modestly above their estimates of longer-run growth. Participants cited various factors as likely to contribute to the step-down, including slower foreign growth and waning effects of fiscal stimulus.

A number of participants judged that economic growth in the remaining quarters of 2019 and in the subsequent couple of years would likely be a little lower, on balance, than they had previously forecast. Reasons cited for these downward revisions included disappointing news on global growth and less of a boost from fiscal policy than had previously been anticipated.”


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Zoosk sold for $255 million

Spark Networks to acquire Zoosk, sees adjusted EBITDA to exceed $50M in 2020

Spark Networks (LOV) announced its entry into a definitive agreement to acquire Zoosk.

Zoosk shareholders will receive $95 million in cash, Stockwinners

The combination will drive a meaningful increase in Spark’s scale, with over one million monthly paying subscribers across the two platforms. Spark expects the transaction to drive meaningful margin expansion in 2020 and beyond.

“Zoosk is one of the strongest dating apps in the North American market, which comprises half of the $5B global online dating opportunity,” said Jeronimo Folgueira, Chief Executive Officer of Spark Networks SE.

“Similarly, North America has been a key strategic market for Spark, and the focal point for our growth initiatives. Our deal with Zoosk creates the second largest online dating platform in North America and the second largest publicly-listed dating company in the world.

Spark buys Zoosk for $255 million, Stockwinners

Over the past 18 months, our management team has successfully integrated acquisitions and developed new brands. As a result of these efforts, our brand portfolio now includes SilverSingles, which continues to exceed our expectations, and the Christian Mingle, Jdate and JSwipe brands, which have all shown significant improvement since they were acquired in late 2017.

Our acquisition of Zoosk is the most transformative deal in our history, and we expect the transaction to immediately strengthen our position in the online dating market. With the increased scale that results from the combination, we see a clear path to profitability improvements and greater opportunity to invest in innovation and growth initiatives that will drive shareholder value.”

With the addition of Zoosk, Spark will more than double in size and the combined business will be considerably more valuable than the two stand-alone entities: Following the completion of its integration plans, Spark expects to drive significant Adjusted EBITDA margin expansion.

In 2020, Spark expects Adjusted EBITDA to exceed $50M. Under the terms of the agreement, Spark will acquire 100% of Zoosk’s shares with a combination of cash and stock valuing the company at approximately $255M based on the closing price of Spark Networks SE stock on March 20.

Spark will issue 12.98M American Depository Shares valued at approximately $150M based on the closing price of Spark Networks SE stock of $11.53 on March 20.

Additionally, Zoosk shareholders will receive net cash consideration of $95M at closing and $10M via a deferred cash payment in December 2020, which will be funded through a new $120M senior secured debt facility.

The transaction is expected to close early in the third quarter of 2019.

LOV closed at $11.90.

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Chipotle to name a new CEO

Chipotle forms search committee to identify new CEO

Chipotle Mexican Grill spokesman Chris Arnold says the company is aware of a "small number" of illnesses linked to a store in Sterling, Virginia
Stocks to Avoid, Stocks to short, Put Options, Stocks to Watch

Chipotle Mexican Grill  (CMG) announced that Steve Ells, chairman and CEO — and the founder of the company in 1993 — will become executive chairman following the completion of a search to identify a new CEO.

The Board has formed a search committee comprised of Directors Robin Hickenlooper and Ali Namvar, as well as Ells, to identify a new leader with demonstrated turnaround expertise to help address the challenges facing the company, improve execution, build customer trust, and drive sales.

Ells said, “Simply put, we need to execute better to ensure our future success.

The Board and I are committed to bringing in an experienced leader with a passion for driving excellence across every aspect of our business, including the customer experience, operations, marketing, technology, food safety, and training.

Bringing in a new CEO is the right thing to do for all our stakeholders. It will allow me to focus on my strengths, which include bringing innovation to the way we source and prepare our food. It will ultimately improve our ability to provide our guests with delicious food that is prepared with high quality ingredients that are raised responsibly and served in a way that is accessible to everyone. I am confident that this will allow us to deliver value for our shareholders, and provide rewarding opportunities for our employees. Chipotle has vast unrealized potential.

As we work hard to restore our brand, I believe we can capitalize on opportunities, including in areas such as the digital experience, menu innovation, delivery, catering, and domestic and international expansion, to deliver significant growth.”

ANALYST COMMENTS

Chipotle CEO change to be welcomed by investors, says SunTrust – After Chipotle announced it has started a search to identify a new CEO and that founder Steve Ells will become executive chairman when one is identified, SunTrust analyst Jake Bartlett said he views the news as positive for both the company’s turnaround efforts and the stock as he expects investors to welcome a CEO with a proven operational track record. Bartlett has a Buy rating and $355 price target on Chipotle shares.

William Blair downgraded the stock to Market Perform from Outperform. William Blair analyst Sharon Zackfia downgraded Chipotle Mexican Grill to Market Perform . While a new leader may accelerate the company’s turnaround longer term, today’s move likely signals that Chipotle’s trends remain under pressure and creates more near-term uncertainty, Zackfia tells investors in a research note. The analyst adds that transition years, in which costs accelerate before sales trends rebound, often follow new CEOs. As such, she’s more cautious on Chipotle’s earnings recovery trajectory following today’s announcement. The market, on the other hand, is applauding the company’s decision.

CMG closed at $285.86. It last traded at $300 in pre-market action.

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Meredith to buy Time for $2.8 billion

Meredith will pay $18.50 per share for publisher of Fortune and Time

TIME sold to Meredith for $2.8 B

Meredith Corp.  (MDP) said it will acquire Time Inc.  (TIME) in a deal valued at $2.8 billion, a further sign of consolidation in the print magazine industry.  Meredith has agreed to pay $18.50 a share for the publishing company that owns magazines  such as Time, Fortune and Sports Illustrated.

The deal includes $1.85 billion in cash and the assumption of debt. It had been approved by both firms’ boards of directors and is expected to close in the first quarter in 2018.

The transaction received financial backing from the billionaire Koch brothers. Meredith said it secured $650 million from Koch Equity Development, the investment arm of Koch Industries, but the publisher said Koch Equity Development would not have a seat on the Meredith board and “will have no influence on Meredith’s editorial or managerial operations.”

Meredith Corporation is the owner of Family Circle, Better Homes and Gardens and AllRecipes, and is based in Des Moines Iowa.  The company also owns local television stations — that has allowed Meredith to better weather the economic storm that has faced print publishers.

A deal between Meredith and Time Inc. fell apart in 2013 after Meredith reportedly said that it did not want to acquire some of Time Inc.’s best-known titles, including Time, Fortune and Sports Illustrated. Meredith also expressed interest in buying Time Inc. earlier this year before it walked away — in part because it could not secure sufficient financing. The Kochs helped the company overcome that problem.

MDP closed at $61.00. TIME closed at $16.90.

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Wal-Mart reports on Thursday

What to watch in Wal-Mart earnings report

Wal-Mart Guides Higher. See Stockwinners.com for details

Wal-Mart (WMT) is scheduled to report results of its third quarter before the market open on Thursday, November 16, with a conference call scheduled for 7:00 am EDT.

What to watch for:

1. GUIDANCE:

Wal-Mart is expected to update its guidance for the fiscal year. Wal-Mart previously forecast Q3 EPS of 90c-98c and comp sales for Walmart U.S. up 1.5%-2% excluding fuel and Sam’s Club comps excluding fuel up 1%-1.5%.

The company raised the low end of its FY18 adjusted EPS view to $4.30-$4.40 from $4.20-$4.40 and backed this guidance at its investor day.

Also at the investor day event, Wal-Mart forecast FY19 EPS to be up approximately 5% vs. FY18 adjusted EPS, with consolidated net sales growing at or above 3%. Baird analyst Peter Benedict expects a solid quarter with good comps and traffic momentum and a guide to earnings growth.

2. COMPETITION:

Retailers like Wal-Mart have been hurt by an increase in online shopping on sites like Amazon (AMZN) rather than at brick-and-mortar stores.

According to reports, Wal-Mart has raised prices for some food and household items on its U.S. website to be higher than prices for the same products sold in-store in an effort to increase profits and drive store traffic.

Wal-Mart, which has previously tried to keep online prices equal to in-store prices, is testing a new system, which has caused higher web prices for products that would otherwise be unprofitable to ship.

Wal-Mart recently sent a recreational vehicle to the University of Pennsylvania as part of a roughly dozen college recruitment tour to break into Ivy League recruitment, Bloomberg reported. The move comes after CEO Doug McMillon told investors Wal-Mart would “look even more like a tech company” to respond to competition from Amazon.

Recently, rival eBay (EBAY) said it will match rivals’ prices on many top Black Friday deals through Cyber Monday. Lidl is gaining little traction after expanding in the U.S. with grocers Wal-Mart and Kroger (KR) recovering most of the market share they lost when the German discounter opened its first nine U.S. stores in June, The Wall Street Journal reported last month.

In October, Wal-Mart said it expects to have grocery pickup in over 2,000 stores by the end of 2018 and noted that its Sam’s Club fresh food efforts are “really encouraging.”

3. OTHER INITIATIVES:

Wal-Mart is looking to grow its presence in the online fashion market, recently buying Bonobos, ShoeBuy, Moosejaw and ModCloth.

Wal-Mart President and CEO Doug McMillon said on the Q2 earnings call that the retailer is testing associate delivery of online orders in “a few” stores and plans to have approximately 100 automated pickup towers in stores across the U.S. by the end of the year, “where customers can pick up their orders within a matter of minutes.”

He also noted that Wal-Mart has tests going on with “digital endless aisle shopping, robotics and image analytics to scan aisles for outs and we’re using machine learning to assist our merchants with pricing.”

More recently, Walmart.com and Lord & Taylor said that Lord & Taylor will launch a flagship store on Walmart.com in Spring 2018.

4. HOLIDAY SEASON:

Wal-Mart is giving employees the opportunity to work extra hours during the holiday season rather than hire temporary seasonal workers.

In addition, the retailer said it will offer more than 2M items for free two-day shipping without a membership fee on orders over $35.

Also, Wal-Mart announced plans to bring back its Holiday Helpers, associates dedicated to assisting customers, and will increase the number of them in stores to help customers.

Wal-Mart will also host more than 20,000 holiday parties at its Supercenters.

WMT last traded at $90.58.

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Target reports on Wednesday

What to watch in Target’s earnings report

target

Target (TGT) is scheduled to report results of its third fiscal quarter before the market open on Wednesday, November 15, with a conference call scheduled for 8:00 am EDT.

What to watch for:

1. COMPETITION WITH ONLINE RETAILERS

Retailers like Target have been hurt by an in online shopping on sites like Amazon (AMZN) rather than at brick-and-mortar stores. Analysts and investors will be listening for Target executives to comment on Amazon’s acquisition of Whole Foods.

Earlier this month, Reuters said Target and other retailers are using legal rights in real estate agreements to limit the initiatives of Amazon’s Whole Foods Market in malls, adding that the retailers have legal rights that enable them to limit Amazon’s Whole Foods activity near their location and bans on Amazon lockers and delivery operations near Target stores in Illinois and Florida have already been established. Morgan Stanley analyst Kimberly Greenberger told investors that her firm’s latest apparel survey lends support to her belief that Amazon is quickly gaining traction at the expense of department stores and certain specialty retailers.

Target Chairman and CEO Brian Cornell said that the retail environment is “crowded” and the environment will continue to be challenging.

2. GUIDANCE

Following better than expected second quarter results, Target forecast third quarter adjusted EPS of 75c-95c and said both Q3 and Q4 comp growth will be within the range the company experienced in Q1 and Q2. The company expects FY17 comp sales growth to be around flat, plus or minus 1%.

Target again raised its FY17 adjusted EPS view to $4.34-$4.54 from $3.80-$4.20.

3. HOLIDAY SEASON UPDATE

Target recently announced plans for the holiday season, including free shipping and gifts under $15.

The company is also allowing customers to receive their orders in several ways, including visiting one of its 1,800 stores, ordering online for delivery from Target.com, using Order Pickup or using Target Restock.

Last month Target said it planned to hire about 100,000 team members across the country for the upcoming holiday season, up from the 70,000 employees it hired last year, and said it would hire 4,500 team members at the company’s distribution and fulfillment centers to replenish products to stores and fulfill digital sales throughout the season. Earlier this month, Target announced its nationwide expansion on Google Express (GOOG, GOOGL), including voice- activated shopping, as well as the addition of Target REDcard as a payment option in 2018.

4. STORE REMODELS, CLOSURES

Target is expanding its plans to remodel supercenters and open smaller stores in cities. Target will remodel over 55% of its current stores by year end 2020.

CEO Brian Cornell said sales have increased 2%-4% at recently remodeled stores.

In addition to the 110 stores remodeled in 2017, Target plans to fully renovate more than 325 in 2018, 350 in 2019 and 325 in 2020.

CNBC said Target is planning to close about a dozen underperforming stores in Michigan, Florida, Illinois, and Texas, with those locations closing in February of 2018.

“We have a rigorous process in place to evaluate the performance of every store on an annual basis, closing or relocating underperforming locations as needed,” a spokesperson said, adding that “Typically, a store is closed as a result of seeing several years of decreasing profitability.”

TGT last traded at $59.78. The issue has a 52-weeks trading range of $48.56 – $79.33.

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Michael Kors Higher following results

Michael Kors’ beat and raise boosts shares of luxury retailers

Michael Kors to acquire Jimmy Choo PLC for $1.35B. See Stockwinners.com for stocks to buy, stocks to watch, stocks to follow

Shares of Michael Kors (KORS) jumped in Monday’s trading after the apparel and accessories maker gave better than expected guidance for the fiscal year after announcing top and bottom line results for its most recent quarter that topped consensus forecasts.

EARNINGS BEAT

Michael Kors reported second quarter earnings per share of $1.33 on revenue of $1.15B, handily beating analysts’ consensus estimates of 83c and $1.04B, respectively.

Second quarter comparable store sales decreased 2.5%, a smaller decline than the 4.7% drop analysts were expecting.

The company’s earnings also beat previous guidance calling for EPS of 80c-84c on revenue of $1.035B-$1.055B and comp sales down in the mid-single digits range.

Retail net sales for the quarter increased 8% to $645M, while wholesale net sales were up 2.5% to $263.6M on a constant currency basis. Licensing revenue fell 2.1% to $38M.

Looking ahead, Michael Kors raised its fiscal 2018 forecast and now sees EPS of $3.85-$3.95 on revenue of about $4.59B, against analysts’ estimates of $3.71 and $4.3B, respectively.

Comparable sales for the Michael Kors brand are expected to decline in the mid-single digits. In its last earnings report, Michael Kors forecast EPS of $3.62-$3.72 on revenue of $4.275B and SSS down in the mid-single digits.

Third quarter earnings per share, however, is expected to be $1.22-$1.27, well below analysts’ estimates of $1.50, but includes anticipated dilution from Jimmy Choo of about 4c.

Revenue is seen at $1.355B-$1.385B, including $105M-$110M of incremental Jimmy Choo revenue, above estimates of $1.29B. Comparable sales for the Michael Kors brand are expected to decline in the high-single digits.

TRANSITION YEAR

Michael Kors Chairman and Chief Executive Officer John Idol said in a statement that “Our second quarter results were better than expected, and we are pleased with our continued progress executing on our strategic plan, Runway 2020.” Idol, who reiterated that FY18 will be a “transition year” for the Michael Kors brand, said its efforts will ultimately drive improved financial performance.

On its earnings conference call, Idol reiterated that he believes Jimmy Choo can reach $1B in sales over time.

Additionally, Idol revealed a 360-degree marketing campaign with Google (GOOG, GOOGL) to support Access smartwatches “to further heighten demand.”

Idol said the fashion watch category is “challenging” and sees continued sales declines for the year in the total watch category. The company expects to close 40-50 stores in the fiscal year, more than its previous view of 20-40 stores. Kors previously announced plans to close 100-125 of its full-price retail stores over the next two years.

ANALYST COMMENTARY

Buckingham maintained its Neutral rating on Michael Kors and noted that Q3 guidance calls for “significant” deceleration and margin pressure. The firm said the Kors brand still has a loyal consumer base, albeit smaller than at its peak, that will pay full price for the brand, but that overall growth will be “a challenge.” The firm remains on the sidelines despite an “attractive” valuation, but would look to become more constructive when it is more confident that sales and margins represent “trough” levels.

Oppenheimer noted Kors’ “strong” quarter, and said the stock would be up more if not for the lower Q3 guidance.

PRICE ACTION

Shares of Michael Kors are up about 15% in early trading to $54.70. Shares are up nearly 28% year-to-date.

OTHERS TO WATCH

Others in the luxury accessory space trading higher include Vera Bradley (VRA), up 3%, and Coach, which recently changed its name to Tapestry (TPR), up 1%.

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