francesca (Photo credit: Nicola Brunetto)
FRAN : NASDAQ : US$26.98
Francesca’s Holdings Corporation is the holding company for specialty retailer Francesca’s Collections. Through a web site, Francesca’s sells apparel, jewelry, accessories, and gift items with an assortment tailored to its core 18-35 year-old, fashion-conscious female customer. All amounts in US$
FRAN reported Q4 EPS of $0.33, $0.03 above our estimate and consensus. SSS increased 9.2% on top of +14.7%, versus our estimate and consensus of +8%. The gross margin expanded 92bps in the quarter, better than the 55bps increase we had forecast. FRAN generated 309bps of SG&A expense leverage, compared with our estimate of 110bps improvement.
We are leaving our FY13 EPS estimate unchanged at $1.30, $0.03 ahead of prior consensus and at the high end of guidance of $1.27- $1.30. We are maintaining our BUY rating as FRAN offers industry-leading unit growth and EBIT margins more than double the average retailer, topping 26% in FY12.
Shares trade at 21x our FY13 EPS estimate and 11x FY13E EV/EBITDA. We are raising our DCF-generated price target from $34 to $36.
Greater sales productivity should help offset increased investments. We are raising our Q1 sales projection to +30% from +21% on higher new store productivity, largely offsetting a 160bps increase in our SG&A expense rate estimate. Our Q1 EPS estimate of $0.26 is in line with prior
The company has heightened its focus on ancillary channels. FRAN is planning the first phase of its website re-launch in Q1 and is seeing strong initial results from its three outlet stores.
Posted by jackbassteam on March 21, 2013
Dick’s Sporting Goods (Photo credit: Wikipedia)
DKS : NYSE : US$45.11
Dick’s Sporting Goods operates as a sporting goods retailer in the United States. It provides apparel, athletic shoes and accessories for sports. It also engages in ecommerce and catalog operations. Dick’s Sporting Goods was founded in 1948 and is headquartered in
While below-plan Q4 comps of 1.2% vs. our 4.5% led to disappointing results (EPS of $1.03 vs. our $1.06 estimate), the cause appears to be
transitory (poor sales of Live Strong treadmills due to Lance Armstrong fallout and too little outerwear at end of season hit comps by -4.2ppts).
Looking to 2013, incremental expenses of $25M (12c) are also keeping EPS growth in check. We believe the long-term growth story is intact
and arguably better with greater sq. ft. potential as smaller market entries (15-20% of new stores) create more opportunities.
The upside case for 2013 centers around DKS’ ability to out-comp its 2-3% target. The accelerated build-out of an additional 100 Nike and 70 UA shops plus 65 new adidas shops should meaningfully boost comps as the year 1 brand sales lift post shops is ~25%. Also, we do not see a deviation in the momentum of footwear/apparel.
Long-run store growth opportunity is now 1,100 stores, up from 900 as DKS gets into sub-200k population markets. New store concepts (True Runner and Field and Stream) could also add unit growth in years to come. DKS remains a solid sq. ft. growth story.
The acceleration in ecommerce/remodels/IT/new concepts investments, while necessary, is limiting current year leverage opportunities, but should help sustain long-term comp growth.
Our $59 PT is an average of 18x 2014E EPS estimate/9x EBITDA/DCF.
Posted by jackbassteam on March 13, 2013
Foot Locker (Photo credit: Wikipedia)
FL : NYSE : US$32.79
Foot Locker is an athletic footwear and apparel retailer with over 3,400 stores across North America, Europe, and Australia. The company operates under various banners including Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports, Footaction, and CCS. The
Direct-to-Customers segment sells athletic footwear and apparel through catalogs and e-commerce websites
FL posted decent Q4 results (73c vs. our 69c est.), but as we anticipated a below-expectations LSD QTD comp caused volatility in the shares – not
surprising given the macro factors impacting all of retail (payroll tax, delayed refunds, weather). Despite these seemingly transitory events,
there were some strong signals from FL that should ease concerns. Basketball continues to be solid, running remains positive, and Europe
is on the mend. Guidance of DD EPS growth with a MSD comp looks very achievable given current basketball trends. With FL likely taking share from FINL, an upward bias to estimates, and a supportive valuation, we reiterate our BUY.
Sources of upside to both comp and gross margin exist as March comps are +HSD, suggesting the FL consumer is back for now and apparel continues on its upward trajectory. With the merchandise margin expectation set reasonably low at modest expansion, we believe upside exists.
The remodelling of 15% of Champs doors and ~10% of FL doors should help drive incremental comp gains over the medium term.
That said, the Lady FL turn will likely be slower given a new customer focus.
Our new $40 PT (from $42) reflects a blend of 13x our 2014 EPS estimate, 6x EBITDA, and DCF.
Posted by jackbassteam on March 12, 2013
Jamba Juice (Photo credit: Wikipedia)
JMBA : NASDAQ : US$2.86
Jamba owns the Jamba Juice brand and restaurant system, which through both company-owned and franchised stores is the largest retailer of smoothies in the US. The company also licenses its brand for development of consumer products and is expanding its franchise system internationally.
We maintain our BUY rating and continue to believe that Jamba has successfully developed the operating model for an efficient and profitable growth company.
JMBA reported EPS of $(0.09); we and the Street were at $(0.11). While the quarter was mixed vs. our forecast, the trends were generally favorable as a slightly softer comp was met with further profitability gains.
Comps of -1.2% were pretty resilient when viewed against growth of 7.7% in the prior-year period. Comps through the first two months of Q1/13 are surprisingly strong, trending modestly positive against 12.7% growth in Q1/12.
F2013 guidance is unchanged, as are our EPS forecasts on modestly higher revenue estimates given the stronger Q1 trends thus far.
The shares trade at 11x F2013 forecasted EBITDA. We view the valuation as attractive given the quality of the brand. Our $3.50 12-month price target is increased from $3 reflects 10x our C2014 EBITDA forecast
Posted by jackbassteam on March 7, 2013
Image via CrunchBase
NYSE : US$17.16
Best Buy’s fiscal fourth-quarter loss narrowed sharply as the big-box consumer-electronics retailer recorded fewer onetime
charges, although core earnings dropped as same-store sales declined.
The quarterly report came a day after Best Buy ended talks with its largest shareholder and founder, Richard Schulze, over a deal in which he and a group of buyout firms were proposing to take a minority stake in the firm in exchange for three seats on the board.
For the quarter, Best Buy reported a loss of $409 million, or $1.21 a share, versus a loss of $1.82 billion, or $5.17 a share, a year earlier. Among other items, the latest quarter included $202 million in restructuring charges, $822 million in goodwill impairments, and an $18 million gain on the sale of investments. The year-ago period included $32 million in restructuring charges, $1.21 billion in goodwill impairments and a $55 million gain. Stripping out one-time items, per-share earnings were $1.64 versus $2.18 a year ago.
Revenue was roughly flat at $16.71 billion. Analysts expected earnings of $1.54 a share on $16.34 billion in revenue. “It was a quarter that was driven, not given,” said Joly, adding that Best Buy is “intently focused on the two problems we have to solve: stabilizing and improving our comparable store sales and increasing profitability across our global businesses.”
Posted by jackbassteam on March 5, 2013
JCPenney in Frisco, TX (Photo credit: Wikipedia)
NYSE : $17.57
J.C. Penney was taking it on the chin Thursday after reporting weak Q4 results, with CEO Ron Johnson admitting the company had made big mistakes in its turnaround effort.
The retailer posted a loss of $2.51 per share, much wider than the $0.24 loss that analysts had expected while same store sales sunk by 31.7%. Internet sales, which have been rapidly increasing across the industry, fell by 34.4% at JCP. Revenue fell 28.4% to $3.8 billion. Johnson said that in his quest to “be the favorite store for everyone:, the retailer had made some errors, including marketing issues and an assessment that customers want simple pricing without constant sales.
He commented, “I had a personal conviction to deliver everyday value beginning with truth on the price tag. We worked really hard and tried many things to make the customer understand that she could shop anytime on her terms. But we learned she prefers a sale, at times she loves a coupon and always, she needs a reference price.”
Going forward, the company will be running sales, as opposed to “everyday low pricing” and will begin to offer some coupons.
Posted by jackbassteam on March 4, 2013
Go! Go! Ackman (Photo credit: Wikipedia)
(HLF : NYSE : US$37.78)
Your daily Herbalife news.
Herbalife reported its Q4 earnings after the close on Tuesday, with both sales and earnings beating estimates.
The diet supplement company, which has become the battleground for hedge fund managers Bill Ackman and Carl Icahn, posted earnings of $1.05 per share on revenue of $1.06 billion while analysts were expecting $1.03 on $1.05 billion. Sales in Asia Pacific, the largest revenue generating region for Herbalife, increased by 19% to $295.2 million in the quarter.
Looking ahead, management said it expects earnings in the current year to be $4.45-4.65 per share versus the consensus estimate of $4.64. In addition to the results, the company also revealed in a regulatory filing that the SEC‟s Division of Enforcement has been inquiring about the company‟s operations since December. Herbalife said it contacted the regulator after Ackman accused the company of being a pyramid scheme and said that it would fully cooperate with the inquiries. Ackman is claiming that the company is unsustainable because distributors earn more than 10 times as much from recruitment than sales Herbalife has refuted the allegations, saying that several distributors sign on with Herbalife to get discounts, as opposed to becoming part of the sales forcce.
Posted by jackbassteam on February 22, 2013
House Salad at Buffalo Wild Wings (Photo credit: Tojosan)
MCD : NYSE :
You pay for what you get.
The world’s largest restaurant chain was the biggest hit to the Dow on Wednesday, after President Barack Obama announced a plan to raise the minimum wage. The blizzard that lashed the U.S. Northeast at the end of last week possibly hurting the company’s sales, and Buffalo Wild Wings’ (BWLD) report on Tuesday that same-store sales are declining this year, may also be affecting McDonald’s stock, but most analysts agreed Obama’s call to raise the federal minimum was the main driver.
Obama called for a federal minimum wage increase to $9 an hour, from $7.25; he also proposed tying the minimum wage to the cost of living. The current minimum wage has been in effect since 2009. McDonald’s and its franchisees don’t disclose what they pay their restaurant workers. Its franchisees, as well as other restaurant chains, such as Wendy’s (WEN) and Jack in the Box (JACK), spend money lobbying against minimum-wage increases.
McDonald’s, which has about 14,000 U.S. locations, has been vying with other eateries to lure cash-strapped Americans. Earlier this month, the chain reported that U.S. same-store sales gained 0.9% in January as it advertised its Dollar Menu and tested new items to help boost sales.
Posted by jackbassteam on February 15, 2013
Wendy’s (Photo credit: Wikipedia)
WEN : NASDAQ :
! Shares of Wendy’s got a lift after the company received a positive mention in Barron’s over the weekend.
The magazine notes that over the past several months, the restaurant has gone back to its roots, focusing on high-quality products and better marketing, as well as a remodeling of its stores. Wendy’s has launched 66 new restaurants and 48 renovations that have met with a positive response from customers. Sales in the newer-looking stores are up 25% since remodeling.
The company plans to remodel 200 stores this year, and open 120 new units. In 2015 it is targeting 1,300 new and remodeled outposts. From a valuation perspective, Barron’s pointed to its enterprise value of 8.4 times EBITDA as attractive given than competitors such as McDonald’s (MCD) and Yum! Brands (YUM) sport EV/EBITDA ratios of 10 or higher.
times 2014 estimated EBITDA, the magazine says Wendy’s would be worth $7.20, and the upside is complimented with a dividend yield north of 3%.
Posted by jackbassteam on February 13, 2013
Cold Weather Is Coming, Beware! (Photo credit: Wikipedia)
COLM : NASDAQ
Columbia Sportswear reported Q4 EPS of $1.15 versus consensus of $1.14.
Initial 2013 guidance of flattish sales and EBIT margin contraction is worse than he expected. With the fall order book yet to be completed, visibility remains low as retailers exhibit incremental caution. Lyon believes the flat 2013 sales guidance from Columbia portends continued challenges for the winterreliant vendors in 2013.
While winter apparel inventory is relatively clean in the channel due to early and steep discounts, retailers are looking to cut fall 2013 pre-book orders by 10-20% in the category. They are becoming hyper-conservative after two warm winters and are trying to force the vendors to take all the inventory risk.
Lyon believes this heightens the risk for brands most exposed to this category such as COLM and North Face (VFC). Unlike apparel, cold-weather footwear inventory is heavy in the channel, he believes, and will likely result in retailers carrying product over to next season. This will likely lead
to a reduction in open-to-buy dollars for fall 2013. Given the extended lead times in footwear, the vendors will have to take inventory onto their balance sheets with the hopes of getting at-once orders later in the season, or build inventory to lower order levels. In either case, Lyon sees another challenging year for the cold-weather footwear brands like Deckers (DECK) and COLM, and to a lesser extent Wolverine World Wide (WWW).
Posted by jackbassteam on February 12, 2013