AEO

10 Bucks per Hour; What It Really Means

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Source: US Department of Labor, Walmart Walmart (WMT) is quite savvy. The big box retailer announced February 19 it would raise the minimum wage for all of its US workers to $9 per hour in April of this year and at least $10 per hour by next February. The move comes amid ongoing public scrutiny of its labor practices, elevated worker turnover, and general malaise among the ranks on social media platforms. At face value, the news headlines show Walmart caving to public pressure, and a win for big labor, but in reality, the retailing giant is merely doing what good businesses do – pleasing customers (which are its workers, too) and widening its economic moat. Hiking wages accomplishes both. … Read more

Investing In Teen Retail Is Like Rolling the Dice

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There’s probably nothing more difficult to do in all of investing than predict the fashion trends of teenagers. Every season it seems there’s something new, and what was “in” a few weeks ago is now yesterday’s news. To me, predicting what kids will wear during each of the four seasons of the year is like asking my three-year-old what he did at school today: the answer is not always clear. Others say it’s like rolling the dice at the craps table. Very few firms make it in teen retail, and recent results reveal why. Abercrombie & Fitch (ANF) An excerpt from Abercrombie & Fitch’s third-quarter report: “As referenced in our earlier Business Update, our third quarter results were disappointing in … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

What a Week in Retail: Some Good, Mostly Bad

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The week ending January 10 brought a plethora of news that confirmed our fears: promotional activity during the shortened holiday shopping season of 2013 wasn’t just bad, it was cutthroat. Many retailers were left unable to recover from the ice and winter storms that ravaged much of the US during December/early January. Bed Bath and Beyond (BBBY) Five Below (FIVE), Pacific Sunwear (PSUN), Sears (SHLD) and Zumiez (ZUMZ) all revealed difficult performance during the period. The variant business models of the aforementioned retailers suggest weakness was widespread. Surprisingly, even discount retailing giant Family Dollar (FDO) wasn’t able to lower prices enough to keep customers in the stores. No category seemed to be spared. Needless to say, we’re not expecting much … Read more

Summers Bows Out

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Equity markets jumped higher Monday as Federal Reserve Chairman frontrunner Larry Summers ended his pursuit of the position. The news suggested Summers had been President Obama’s preferred successor to current Chairman Ben Bernanke, but several Democratic senators opposed the nomination, and Summers may be bowing out to avoid any chance of embarrassment. With Summers out of contention, Fed Vice-Chair Janet Yellen is the clear frontrunner. As we’ve mentioned before, Yellen is viewed as a consensus builder and receives credit for predicting the housing bubble. Powerful Democratic Massachusetts Senator Elizabeth Warren, who sits on the Senate Banking Committee, supports Yellen and indicated that she would be able to gather the necessary votes for her nomination. Regardless of the politics behind the decision, … Read more

Market Overreacts to Urban Outfitters’ 10-Q

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Clothing retailer Urban Outfitters (click ticker for report: ) filed its 10-Q report for its relatively strong second quarter. Shares proceeded to drop heavily on Tuesday after a line from the quarterly regulatory filing revealed that third-quarter comparable store sales growth was decent, but not running at a near double-digit pace. Taken directly from the 10-Q: “Thus far during the third quarter of fiscal 2014, comparable Retail segment net sales are mid-single-digit positive.” This “mid-single-digit” rate compares to the 8.5% growth rate the firm posted during its second quarter, driven largely by Free People and a recovery at Anthropologie, a name tied more directly to housing. Source: Company Filings Assuming the mid-single-digit growth rate is somewhere between 4-7%, Urban will … Read more

American Eagle and the Difficulty of Investing in Teen Retailers

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Monday after the market close, teen retailer American Eagle (click ticker for report: ) reduced its second quarter earnings outlook. After a relatively weak first quarter, the firm was generally optimistic about its prospects heading into the second quarter, predicting flat same-store sales and earnings per share of $0.19-$0.21. However, earlier this week the firm said earnings per share will now be closer to $0.10 for the second quarter, a decline of 50% compared to the same period a year ago. Same-store sales that were predicted to be flat will actually be down 7% year-over-year (compared to 8% growth in the same period a year ago). Thus, same-store sales are only about 1% higher than they were two years ago.   … Read more

Dividend Increases for the Week Ending May 31

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Below we provide a list of firms that upped their dividends for the week ending May 31. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here. Firms Raising Their Dividends This Week American Eagle Outfitters (AEO): now $0.125 per share quarterly dividend, was $0.11. Canadian Imperial Bank of Commerce (CM): now C$0.96 per share quarterly dividend, was $0.94. CryoLife (CRY): now $0.0275 per share quarterly dividend, was $0.025. Daktronics (DAKT): now $0.12 per share semi-annual dividend, was $0.115. Eastern Insurance Holdings (EIHI): now $0.11 per share quarterly dividend, was $0.09. Hill-Rom Holdings (HRC): now $0.1375 per share quarterly dividend, was $0.125. Lowe’s Companies (LOW): now … Read more