Consumer
| Today's Consumer Stories | |
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News and Views
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Macro/Technicals
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Earnings
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Sector News, M&A, Capital Raises
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Research Away
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Top Events/Earnings Calendar
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Cantor Flows
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News and Views
Beware of the action ahead as we are nearing a seasonally weak time for the markets and earnings have yet to push us above real resistance even with the rally of late. We were down nearly 1% Friday to close basically flat on the day……. window dressing anyone??? Although the market has acted resilient lately, the SP 500 and COMP are both below their 200 day sma and the DJIA is barely above. If we can get a close above 1114 on the SPX cash then the market can still run a bit, but if the cracks we saw last week in some of the real companies in the Consumer Staples sector, then we are headed for another swing……down, not up. The VIX, stochastic crossovers above 80 headed downward, and the aforementioned resistance lines just above current levels also signal this action is poised for some downside unless we close above those resistance levels very soon.
Friday we were buyers of Consumer Discretionary and Consumer Staples 3-1.
This week will be highlighted by the Senate Hearing of for-profit colleges and we will be a buyer of COCO.
Same Store Sales for July will be out Thursday as retailers hope to get back to school shoppers in gear. We will be a buyer of the AEO, M, GPS, and ZQK and a seller of JWN, LTD, and LIZ.
Macro/Technicals
SP Futures: 1111.70; +13.40;SPX: 1101.60; +0.01
RLX: 405.06; +0.13
RTH: 89.35; +0.69
XLY: 31.44; +0.67
XLP: 26.98; +0.26
VIX: 23.5; -2.61
Leaders: CQB, LAD, LBY, EXPE, K, HLYS, MNRO, DBRN, MDS
Laggards: VLCM, NTRI, OWW, PLCE, GCO, VITC
Earnings
TSTY Tasty Baking reports Q2 EPS ($0.41) vs Reuters ($0.18) -- 1 estimate ($6.63)
Company reports revenues of $43.5M vs a single estimate of $49.0M.
- Gross sales reported $73.9M vs. $78.5M y/y.
NAVR Navarre reports Q1 EPS $0.03 vs Reuters $0.04 -- 2 estimates ($2.53)
Company reports revenues of $98.8M vs Reuters $110.5M. Reaffirms full year revenue guidance of $480M-$520M vs Reuters $499.1M.
Sector News, M&A, Capital Raises
Barron's interviews Mark Roberts, founder of Off Wall Street Consulting Group. Short Strayer (STRA): concerns about overly aggressive enrollment expectations, student's ability to pay tuition and the industry's bad debt.
COCO Corinthian Colleges approves $200M repurchase program ($9.10)
The board of COCO has approved a stock repurchase program under which the company may purchase up to $200M of its common stock. The company has not repurchased any shares of its common stock during the last twelve months. Any repurchases would be funded from available cash on hand and borrowings under the company’s Credit Facility.
APOL Apollo Group Draws Call-Buying Activity from TheStreet.com. Traders were buying calls in Apollo Group as the education company's stock climbed off multi-year lows.
MO Altria's Marlboro not likely to maintain its market dominance forever - WSJ ($22.16)
A "Heard on the Street" column says the probable fall is a greater worry for Altria investors than the shrinking US cigarette market is. At some time in the 20th century, Camel, Lucky Strike, and Chesterfield all held market shares similar to Marlboro's current 43% before they fell. The brand has already lost 9% of the 18-to-25-year-old segment since 1999. Lorillard (LO), in contrast, has picked up 3% of young smokers over the same period. The column notes that a drop in Altria's share price is likely to take time, but it thinks the drop is coming.
Price wars, large discounts likely to characterize back-to-school - WSJ
The National Retail Federation says back-to-school spending will rise 16% y/y to $55.1B, but retailers say shoppers appear to be spending more cautiously than they were when the retailers ordered a few months ago. The NRF predicts houses with school-age children will spend $225 on clothing, up 10% y/y, but still down (4%) from two years ago. The same houses are predicted to spend $182 on electronics, up 20% vs 2008. The NRF says consumers will buy more generic products this year than they did last year, and more people plan to comparison shop online.
United Biscuits owners choose banks for auction - FT
People familiar with the situation tell the FT that the company's private-equity owners may divide the company into a snacks business and a biscuits business, thinking the smaller units may attract more bidding interest than the company as a whole would. Sources name Kellogg (K), Kraft Foods (KFT), Nestle (NESN.VX), Pepsi (PEP), Campbell (CPB), Britannia (BRIT.IN), Ulker, and Meiji (2261.JP) as possible buyers.
Asda (WMT), Tesco (TSCO.LN) to expand grocery delivery in London to fight Ocado (OCDO.LN) - Mail on Sunday
Both chains will open ghost stores this month to allow them to deliver more than 10K orders a week. Ocado makes about 45K deliveries a week in London.
B Barnes Group files mixed securities shelf of indeterminate amount ($18.38)
Research Away
SJM J.M. Smucker downgraded to hold from buy at Jefferies ($61.43)
Target reduced to $64 from $74. The firm notes increased competition which could pressure sales and earnings.
PAG Penske Auto Group upgraded to buy from hold at Soleil Securities ($14.00)
Target increased to $20 from $15. Firm notes that the dealer group has outperformed the S&P 500 in three of the last four months, but PAG has under-performed, which the firm believes has provided an opportunity to get more aggressive with the stock.
AH.NA Ahold upgraded to buy from neutral at Bank of America Merrill Lynch (pre-European open)
Top Events/Earnings Calendar
Today
Earnings:
PRE: ASF, B, CACH, NAVR, TSTY
POST: AMPH, EXBD, HLF, SYKE
Events:
Cantor Flows
Consumer Staples: DLM, FARM, GMCR, K, WEYS
Consumer Discretionary: BBBY, BC, CRI, HGG, NEXC
Consumer Services: TBAC, RHI, COCO