The Weekly Consensus: Week of January 25, 2010
The Big Story: Bursting the “Brand Bubble”
Michael O'Hara
For a company headquartered in Massachusetts as we are, it is hard not to see the "big story" as little-known Scott Brown's remarkable come-from-behind victory over Attorney General Martha Coakley, the establishment's hand-selected candidate, in last week's special election to fill the U.S. senate seat formerly held by the late Edward Kennedy. In Massachusetts, there is a strong presumption that a Democrat will defeat a Republican and, further, that the winner of the Democratic Party primary will face only token resistance from the Republican challenger and has effectively won the seat by winning the primary. The short-term story last week, then, was Scott Brown's surprising victory; but the long-term big story remains the strength of the Democratic Party brand in Massachusetts. Said differently, Mr. Brown's victory would not have been quite so newsworthy if the Democrats had not established over a period of many decades such a strong a connection with the populace as to create a presumption that they would maintain not only power, but absolute power (had Ms. Coakley won, all ten members of the Massachusetts congressional delegation would have been Democrats).
At the other end of the attention scale, the Journal of Applied Corporate Finance this week released an article entitled "Measuring the Contributions of Brand to Shareholder Value (and How to Maintain or Increase Them)" by three authors associated with the advertising giant Young & Rubicam. The authors' thesis is that there may be a disconnect between the value of a company's brand implied in its stock price multiple and the true value of those companies' brands. The authors deploy a complex and well-thought out brand valuation model that one presumes is infinitely more thoughtful than used by most, if not all, stockholders valuing a brand owned by a public company. The Y&R authors focus, for example, on not just brand differentiation, but energized differentiation - the degree of enthusiasm and innovation the brand repeatedly exudes (think Apple). They also define and quantify, in decreasing order of importance, relevance, prestige and knowledge. The authors point out that strength of brand recognition is not necessarily indicative of future cash generation capability. For example, they cite Spam as a brand with the attribute of great customer knowledge, but little prestige, relevance and energized differentiation. Google, as you might imagine, is on the other end of the spectrum.
To avoid the decline that many larger brands suffer (TV Guide, Yellow Pages, American Airlines, etc.), the authors prescribe something deeper than simple messaging, something that goes to the essential culture of the business. They speak of constant innovation and risk-taking. They talk of engaging the customer by standing for something larger than the product for sale. They talk of hinting at exciting new things in development. And they talk about being tuned into and tapping the cultural milieu with precision. In this context, Barack Obama was Nike, Google and Apple when he won in 2008, and Martha Coakley was not last week. It remains to be seen whether Scott Brown is a harbinger for the Republican Party's brand re-imaging, or if he is simply the beneficiary of a great brand at the precipice of reinvention or decline.
Apparel/Swimwear/Intimates
Betsy White
Burberry Q3 Sales Smash Forecasts
Luxury goods group Burberry smashed third-quarter revenue forecasts and predicted annual profit towards the top of market expectations, adding to evidence that the rich are spending again. The 154-year-old maker of upmarket raincoats and handbags also said on Tuesday it expected further profit growth in 2010-11. Luxury goods firms have been hit hard in the recession but Burberry has coped better than most because it reacted quickly by slashing costs, jobs as well as its stock and range. The group, known for its camel, red and black check, said underlying revenue increased 12 percent to 380 million pounds ($624 million) in the three months ended December 31. Burberry said retail sales rose an underlying 16 percent, with growth in all regions led by Europe and Asia Pacific, while wholesale revenue increased an underlying 5 percent, driven by earlier and more frequent deliveries.
Laura Canada to Buy Liz Claiborne Canada Sites
Women's clothing chain Laura Canada said on Tuesday it plans to buy Liz Claiborne's Canadian stores, all of them suburban "power-center" outlets, as it moves to expand its presence across the country. The privately held Montreal-based company, which operates stores under the Laura, Laura Petites, Laura Plus and Melanie Lyne banners, said it would convert the 38 Liz Claiborne stores to either the Laura or Melanie Lyne names beginning in March. Seventeen stores are in Ontario, with the remainder in Quebec, Alberta, British Columbia, Nova Scotia and Manitoba.
The Cult of J.Crew
This shouldn't come as a shock: It's a bleak time for retailers. Stores have gone out of business, 70% off sales have become de rigueur and women are shopping in their closets rather than whipping out their credits cards to spend. But while most retailers have been suffering through this millennium's version of the Great Depression, J.Crew is having its golden era. First Lady Michelle Obama wore J. Crew while gabbing on Jay Leno's couch in 2008 and the first daughters donned Crewcuts, a children's line, to the inauguration. J.Crew's creative director, Jenna Lyons, has taken on fashion icon status comparable to the likes of superstar designers like Donna Karan and Miuccia Prada ("Jenna's picks," which are updated monthly on JCrew.com, often sell out). And J.Crew's recent success is more than just hype. The company reported 14% revenue growth for the third quarter of 2009 over 2008 and strong holiday sales. The retailer has managed to become fashion's glimmer of hope that women still like to shop, recession be damned.
Athletic & Sporting Goods
Michael O'Hara
Nike Launches Golf Clubs Without Tiger Woods
Nike Inc. will launch new golf clubs that are not directly linked to Tiger Woods. Instead, Nike said its Victory Red STR8-FIT Tour fairway woods, which will go on sale Jan. 28 for $299, were designed with input from all 13 U.S. golf endorsers. Promotional materials make no mention of Woods, whose tradition of wearing red shirts on the final day of golf tournaments inspired the Victory Red name. The materials note that the clubs were tested in tournament play by Lucas Glover, who claimed his first major victory last year when he won the U.S. Open Championship.
Bahrain's Arcapita Sells Yakima to Taiwan's Temflo
Bahrain-based Islamic investment house Arcapita has sold its U.S. sports gear maker Yakima to Taiwan's Kemflo International, its second private equity exit in the United States in five months. "It has been bought by one of its suppliers, who is trying to expand vertically," an Arcapita spokesman told Reuters. The spokesman declined to provide a value for the sale of the company, which it had bought out in 2001 for about $90 million.
Banking & Lending
Douglas Stebbins
Wells Fargo Sees Signs of Life in Consumer Lending
Wells Fargo says the economy is getting better - it sees signs of recovery in its loan business. But the big bank may be more of an exception than a leading indicator. Breaking from the cautious, even downbeat forecasts of rivals such as JPMorgan Chase & Co., Wells Fargo on Wednesday used words such as "favorable" and "confidence" about its future amid tentative signs that its loan defaults were close to a peak or already have peaked. The company thinks the recession-weary consumer could be making a comeback. The company is way ahead of other banks, although the CEO of Bank of America, which lost more than $5 billion last quarter, expressed mild optimism that sagging consumer sentiment may be turning around.
Why Bankers Tend to Hoard
The big gap between short- and long-term interest rates should mean fat lending profits for American banks. But some, like Wells Fargo, are wary of rising interest rates. Higher rates overall might encourage them to lend, but simultaneously could reduce their capacity to do so. It's a tricky problem. When long-term interest rates are substantially higher than short-term rates - a situation known as a steep yield curve - banks should be able to profit by borrowing cheaply in the short term and lending for longer periods at higher rates. But this time around, the net interest margins at American banks are not tracking the steepness of the yield curve as they generally have in the past, according to FBR Research. That's partly because banks do not seem to be lending as much as they have the capacity for.
Say Dubai, Mr. Jackson
David Jackson's credit cards have finally gotten the scissors. The flamboyant investor -- who became a poster-child for private-equity excess as his extravagant buyouts of luxury properties including Barneys New York went sour -- has been ousted from Istithmar World, the Dubai-based firm that he has saddled with crippling debts. Jackson, whose ill-timed shopping spree also included investments in the Queen Elizabeth 2 cruise ship, the Mandarin Oriental Hotel in Manhattan and Cirque du Soleil, has left Istithmar to "pursue other opportunities," the firm said.
Catalog & Internet
Christopher Ellis
Sharper Image Hiring Brookstone Execs
The newly relaunched SharperImage.com is hiring talent away from its rival Brookstone. The high-tech gifts and gadgets brand announced Jan 21 it's hired Steve August as senior vice president/chief marketing officer. August had been Brookstone's operating vice president for customer marketing. A few weeks ago, another former Brookstone executive, Mark Anthony, joined SharperImage.com as senior vice president/general merchandise manager. Anthony had been Brookstone's operational vice president/general merchandise manager. Sharper Image is owned by a joint venture of Bluestar Alliance, Hilco Consumer Capital and Gordon Bros. The three private investment firms acquired Sharper Image in May 2008, three months after the company filed for bankruptcy. Camelot Venture Group developed and operates the SharperImage.com site under license. While the former Sharper Image had been a cataloger/retailer, the brand's strategy is to distribute its products in select stores as well as to consumers via e-commerce. Camelot relaunched the Sharper Image Website in October; it also plans to mail a catalog in time for Father's Day. The new catalog will include both Sharper Image branded products as well as third-party goods, as was the case in the brand's former incarnation.
More CPG Players Embrace e-Commerce
This looks to be the year of the e-store for package-goods marketers, as an online retail environment once deemed largely irrelevant to them suddenly gains traction with at least 30 of the industry's players. Procter & Gamble Co. and General Mills announced plans over the past week to expand their online retail efforts. But what could make 2010 more significant is that a far wider swath of the industry is embracing e-stores than these usual suspects. For example, Alice.com, which launched last summer with a proposition to pool the efforts of CPG marketers into a single site with a single shopping cart and free shipping, is setting up e-stores for 29 marketers, mostly in package goods, linked to their brand websites, said CEO Brian Wiegand, including players such as Johnson & Johnson, Nestle, Novartis, Bausch & Lomb, General Electric and Sara Lee in addition to General Mills. And P&G is opting to develop its own e-store to launch this spring powered by a different company, PSweb, and featuring exclusively P&G products, following a pilot of the site with 5,000 consumers.
Consumer Electronics/Video/Audio
Douglas Stebbins
Google Scraps China Cell Phone Launch Amid Dispute
Google on Tuesday postponed the launch of its mobile phone in China, adding to the potential commercial fallout of its dispute with Beijing over Internet censorship and e-mail hacking. One person briefed on Google's decision said it was linked to the company's threat that it will shut its Chinese-based search engine if restrictions aren't eased. The company concluded it would "not be a good experience" for consumers to receive a phone right now with its applications, said the person, who spoke on condition of anonymity due to the sensitivity of the issue. Marsha Wang, a spokeswoman for Google Inc., however, only said the planned Wednesday ceremony with local carrier China Unicom Ltd. was postponed. She declined to give a reason or say when the launch might be rescheduled.
Apple Said to Talk with Microsoft to Replace Google on iPhone
Apple Inc. is in talks with Microsoft Corp. to replace Google Inc. as the default search engine on the iPhone, according to two people familiar with the matter. The negotiations may not be concluded quickly and might still fall apart, the people said. The discussions reflect the intensifying rivalry between Apple and Google, currently the main search engine on the iPhone. While the companies have worked as partners in the past and Google Chief Executive Officer Eric Schmidt served on Apple's board, they now compete in markets such as mobile phones. Google introduced its Nexus One phone this month and offers a mobile operating system called Android.
Cosmetics & Pharmacy
William Busko
New Report Emphasizes Importance of Retail Clinics, Projects Growth
A recent report by the National Center for Policy Analysis, a nonprofit public policy research organization, underscored the importance of retail-based health clinics and stated that the number of clinics is likely to grow to 3,200 by 2014. "The growth of the Internet, high-speed telecommunications networks and electronic medical records have made it possible for patients to seek care in a variety of clinical settings without losing the continuity of care a primary care provider offers," the report stated. "Healthcare entrepreneurs using these technologies in retail clinics are making medical care increasingly accessible and convenient, while raising quality and reducing costs." The NCPA report stated that there are currently 1,100 to 1,200 clinics and the number is likely to grow to 3,200 by 2014.
Profession is in 'Revolutionary' Times, Says NACDS' Top Pharmacy Official
Pharmacy practitioners need to recognize that the profession is now in the midst of "revolutionary" changes and adapt to a far more proactive role in patient outreach and community care, a top executive with the National Association of Chain Drug Stores told more than 300 leaders in health care, business, government and community activism. As the health paradigm shifts, pharmacists need to leverage their strengths as "medication experts" who can coordinate healthcare efforts within the community, and put patients at the center of those efforts, said Edith Rosato, SVP pharmacy affairs for NACDS and president of the NACDS Foundation. Rosato was addressing a meeting of the Massachusetts Health Council, the nation's the largest and oldest council devoted to health issues.
Department & Discount Stores
Mark Lenz
Boscov's to Create 240 Positions
Confident that its business is back on track, Boscov's department store chain says it plans to hire 240, mostly full-time, employees beginning next month and continuing throughout the year. This week's announcement comes several months after the Reading retailer emerged formally from Chapter 11 bankruptcy under a family-ownership team led by Albert Boscov. The hiring surge will help replenish some of the 1,300 jobs that were lost when the chain, with stores in Pennsylvania, New Jersey, and three neighboring states, closed 10 locations after filing for bankruptcy in late 2008, said Ed Elko, senior vice president of human resources. The move to add mostly sales associates is intended to improve customer service across the 39-store chain, which currently employs about 6,800 people, Elko said. The decision came straight from Boscov himself, who at age 80 has returned as chief executive officer after helping to rescue the company from potential liquidation.
Lands' End Lays Off 60 Employees
Lands' End Inc., a direct merchant based in Dodgeville, WI, said that it laid off 60 employees Wednesday in a realignment of its corporate structure to boost efficiency. The company said in a statement that about half of the affected positions were at its headquarters, and that the layoffs occurred across all divisions.
Stores within Bigger Stores Seem to Pump Up Sales
It seems almost counterproductive. A grocery store with shelves of coffee for sale offers a Peet's Coffee & Tea stand selling fresh-brewed java and coffee beans. A department store with yards of makeup counters installs a ministore selling handmade soap and natural cosmetics. It turns out, the more the merrier. The more coffee brands, the more customers. The more makeup lines, the more hand lotion, the more food choices, the more sales.
Energy Alternatives
Christopher Ellis
Electric Carmaker Garners $115.3 Million in Equity for Plug-In Model
Automotive, the Irvine, CA-based developer of electric cars, said it has raised an additional $115.3 million in private equity funding to develop plug-in hybrid cars. The money allows Fisker, founded by Danish design guru Henrik Fisker, to satisfy a U.S. Department of Energy condition to gain access to $528.7 million in federal loans. The DOE loan is part of a $25- billion fund approved by Congress in 2007 to spur automakers to build electric and fuel-efficient vehicles. Together the funds will help Fisker to develop its Karma, the company's first plug-in hybrid. The company said it was glad it could obtain the private funding "at a time when capital is scarce, the auto industry is struggling and the global economy is just beginning to rebound." Fisker said development of the $87,900 Karma will pave the way for a lower-cost plug-in hybrid that the company is calling Project Nina.
World's Largest Pellet Factory Planned in U.S.
RWE Innogy is to build a factory to produce biomass pellets in the southern part of the U.S. state of Georgia. The plant will have an annual production capacity of 750,000 tonnes, making it the biggest and most modern of its type in the world, the company says. Carried out in collaboration with BMC Management AB, which specialises in the development of biomass manufacturing solutions and is based in Sweden, the total investment in the project is some €120 million. Pellets manufactured in the facility will initially be burnt in the existing power plants of Amer in the Netherlands, where currently already up to 30% of the hard coal has been replaced by solid biomass, mainly wood pellets. There are plans to expand the proportion of co-firing to up to 50%. The two power plant units belong to Essent, which RWE took on as a result of the partnership both companies entered in September 2009.
Footwear
Michael O'Hara
Giorgio Armani Collaborates with Reebok International
Giorgio Armani and Reebok International have partnered to produce a cobranded collection. The cobranded EA7 and Emporio Armani/Reebok collection will be available globally in Emporio Armani boutiques and select Reebok concept stores and retailers, according to reports. The line includes clothing and trainers that mix style and innovative technology and the range made its debut in Milan at the Emporio Armani autumn 10 show last weekend. Giorgio Armani said: "Today, sportswear and activewear have become really important parts of our wardrobes. I wanted to offer my customers the possibility of wearing sports clothes that were stylish and comfortable. My new alliance with Reebok is a natural consequence of this philosophy." Reebok International president Uli Becker said of the collaboration that it "offers a new perspective for the design-minded, fashion-conscious, active consumer."
Yue Yuen's FY09 Sales Increase 2%
Yue Yuen Industrial (Holdings) Limited said total revenues rose 2% in its year ended Sept. 30, to $5.01 billion. Net profit attributable to equity holders of the company decreased by 0.9% year on year to approximately $464.7 million, or 28 cents a share. Directors have recommended paying a final dividend of HK$0.55 per share, the same as in FY2008. The total dividend for the year will be HK$0.89 per share, the same as in FY2008. Footwear manufacturing activity for the Group was similar to last year's level, with turnover from the key product category, athletic shoes declining slightly by 2.6%. There was a moderate reduction in the total number of shoes produced by the Group to 246.2 million pairs, representing a minus decline of 3.5% compared with the previous year.
Gifts/Accessories/Luggage/Pets
Mark Boucher
Reed & Barton to Buy Lunt Assets
Lunt Silversmiths Inc., which declared Chapter 11 bankruptcy in mid-December 2009, Lunt flatware entered into an Asset Purchase Agreement with fellow silver manufacturer Reed and Barton Corp. Reed & Barton plans to buy Lunt's assets, including inventory, finished goods, work in process, components, raw materials, spec samples, tools, molds, intellectual property, sales collateral materials, customer and supplier records, and UPC numbers. However this is not yet a done deal; Reed & Barton is the "stalking horse bidder" while Lunt solicits higher offers. The deadline for submission of offers is February 8 at 4:30 p.m. In its bankruptcy filing, Lunt listed assets and liabilities that are essentially equal at $3+million each.
The Riche Get Richer
Like their well-heeled clientele, luxury companies lately appear to be in more of a shopping mood. Emboldened by improved holiday sales, big luxury firms are not only ramping up growth plans in China and other fast-growing markets, but also mulling acquisitions as the aftershocks of the Wall Street crisis subside. Yesterday, European media reported that Richemont, the Swiss conglomerate that owns upscale brands like Cartier, Montblanc and Chloe, is in talks to buy a stake in Rodenstock, a debt-ridden German eyeglass maker that's owned by British buyout firm Bridgepoint. Earlier this month, The Post reported that Richemont has been in talks to buy a passive minority stake in Prada. While Prada has denied the report, Richemont has declined to comment.
Laundry by Shelli Segal Announces License Agreement with Nolan Glove Company
Perry Ellis International has entered into an exclusive license agreement with Nolan Glove Company to manufacture, design and distribute women's Laundry by Shelli Segal year-round accessories, including hats, caps, earmuffs, gloves, mittens, scarves and wraps.
Grocery/Healthy Foods/Snacks/Confectionery
Mark Boucher
Price Chopper Withdraws Offer for Penn Traffic Stores
Price Chopper has dropped its offer to purchase 22 P&C supermarkets owned by the bankrupt Penn Traffic Co., according to published reports. Golub Corp., which owns and operates 120 stores under the Price Chopper banner, additionally won't sue Penn Traffic over a binding contract it allegedly signed to purchase the locations in central New York, Vermont, New Hampshire and Pennsylvania for $54 million. Penn Traffic's creditors and other interested parties are backing a bid from Williamsville, NY-based Tops Markets, LLC, which offered $85 million for all 79 of Penn Traffic's stores, in addition to $70 million in financial incentives. The offer was made a few weeks after the Golub Corp. had signed a contract with Penn Traffic to purchase the 22 stores.
Target Sees Gains from P-Fresh Additions
Expanded food assortments at Target stores have lifted shopper frequency "as never before," Doug Scovanner, executive vice president and chief financial officer, told an investors conference. In remodeled stores with the new, expanded P-fresh food departments, sales and traffic are up an average of 6% 12 months after the remodelings, he said, which translates into 1,000 extra trips per store per week, or gains of $4.5 million at minimum per year. Minneapolis-based Target said it expects to remodel approximately 340 stores this year, which could boost comparable sales by 1%, Scovanner said in his presentation. At stores with the expanded food sections, gross margins are running at a rate of 18% of sales, he noted, while EBITDA margins increase about 7% the first year, rising about 1.5% a year in the second and third years to 10%.
Kraft Snares Cadbury for $19.6 Billion
Kraft Foods agreed a recommended deal to buy Cadbury for around 11.9 billion pounds ($19.6 billion), creating the world's top confectioner after frantic last-minute talks broke an impasse over price. Kraft's CEO Irene Rosenfeld had to inject more cash into her bid and drop the number of new Kraft shares in the offer to win over Cadbury Chairman Roger Carr and mollify her top shareholder, billionaire investor Warren Buffett. Kraft's cash-and-share deal values each Cadbury share at 840 pence, with shareholders also set to get a 10p special dividend, bringing it to a total of 850p, which prompted a unanimous recommendation from the Cadbury board in favor of the deal. The deal would create the world's largest confectionery group ahead of privately owned Mars-Wrigley and bring under one roof Cadbury's Dairy Milk chocolate and Trident gum and Kraft's Milka, Toblerone and Terry's chocolate brands.
Home Improvement/Auto Repair
William Busko
Home-Remodeling Spending Seen On Track for 1Q Bottom-Study
Homeowner spending on remodeling is likely reaching a cyclical bottom in the current quarter, according to the latest research from Harvard University's Joint Center for Housing Studies. The center's leading indicator of remodeling activity also suggests U.S. spending on home improvement should steadily increase through 2010 to end three years of declines. Remodeling activity is important to sales and earnings for Home Depot Inc., the world's largest home-improvement retailer, and smaller rival Lowe's Cos. Spending on remodeling fell 8.7% to $109.7 billion in 2009, slightly better than the October outlook and an improvement from the 14% drop in 2008, the center said Thursday. But first-quarter spending is expected to weaken further, tracking at an annualized rate of $103.9 billion before improving enough by the third quarter to track at an annualized rate of $110.9 billion.
Baird Capital Partners Invests In American Auto Auction Group
Baird Capital Partners (BCP), the U.S.-based buyout fund of Baird Private Equity, announced it has established American Auto Auction Group, LLC (AAAG) in partnership with experienced industry veterans to execute an acquisition platform strategy in the whole car auction market. BCP plans to invest significant equity capital to support the acquisition platform. Concurrent with the establishment of the holding company, AAAG acquired two separate auction businesses, Charleston Auto Auction (Moncks Corner, SC) and Rea Brothers Mid-South Auto Auction (Pearl, MS). Auto auctions create a transaction marketplace for finance companies, fleets, wholesalers, independent dealers, and franchise dealers to sell and purchase vehicles. AAAG will focus on acquiring independent auction facilities in order to create a nationwide auto auction platform.
Housewares/Furniture
William Busko
Newell Rubbermaid Shares Rise on P&G Rumors
Share prices for Newell Rubbermaid stock rose yesterday morning as rumors circulated that Procter & Gamble might be interested in purchasing the manufacturer, according to a report from Barrons.com. Spokespersons with both companies declined to comment on a potential deal. The report said the boards of directors for both companies "met earlier," and that Newell is seeking at least $21 or $22 a share.
Diane Von Furstenberg, Springs Sign to Do Home Collection
Diane von Furstenberg is homeward bound. The legendary fashion designer has signed up with Springs Global to do a new line of home furnishings products, including, bedding, bath and tabletop that will debut in spring 2011. The trade will get its first look at the products this spring. For von Furstenberg, it marks her first entry into a full-line, freestanding home collection, although she did a program in the 1970s with Sears. And for Springs, it is the first high-profile licensed program the company has had in many years, although it does continue its Court of Versailles program. It also takes Springs into tabletop, a product classification it has not participated in before.
Hendricks Furniture's Plan to Emerge from Chapter 11 Wins OK
Hendricks Furniture Group said a court approved its plan to emerge from bankruptcy protection Wednesday, and that the company will focus on its five remaining North Carolina stores. The Conover-based parent of Boyles Furniture & Rugs and affiliated companies, which filed for Chapter 11 in June, said the plan already has received the nod from 98% creditors. Hendricks should emerge from bankruptcy protection over the next few months, officials said.
Moosehead Furniture Bankruptcy Filing Staves Off Liquidation
Case goods manufacturer Moosehead Furniture was able to stave off a final shutdown by declaring Chapter 11 bankruptcy as prospective buyers stood by waiting for an equipment auction to begin, the Bangor Daily News reported today. This is the second time the company was set to close. The company was purchased by a small group of investors in September 2007 after the family who owned it for 60 years said it was closing because of competition from lower priced imports.
Intellectual Property & Multi-brand Companies
Douglas Stebbins
Salter, Force Behind Hilco Consumer Capital, Departs Firm
Jamie Salter, the driving force behind a Hilco Consumer Capital investment vehicle that purchased failed consumer brands such as Polaroid, The Sharper Image and Linens 'n Things, has left the company. During the past two years Mr. Salter aggressively purchased up a stable of struggling retail brands, many of them out of bankruptcy. The hope was to exploit the remaining value of the brands, striking licensing and other merchandising agreements with manufacturers and retailers. Hilco Consumer Capital, which was formed in 2006, is jointly owned by Hilco Trading, a financial firm known for its large retail liquidation business; Mr. Salter; and several other executives. Goldman Sachs Group Inc. and Cerberus Capital Management LP, which own minority stakes in the Hilco parent, also have interests in the venture.
Britney Spears to Remain the Face of Candie's
Iconix Brand Group, Inc. has renewed its exclusive partnership with singer Britney Spears for its Candie's brand, which is available only at Kohl's Department Stores. Spears will appear in the Candie's only at Kohl's marketing campaigns throughout 2010.
The Jessica Simpson Collection Broadens Lifestyle Fashion Offering to Include Jeanswear
Jones Apparel Group, Inc. and Camuto Group today announced that they have entered into an exclusive licensing agreement to design, develop, produce and distribute Jessica Simpson Jeanswear under the Jessica Simpson Collection. The Jessica Simpson Collection exemplifies Americana of today. The vision of the collection is to be iconic yet fashion forward; always accessible yet timeless. This total lifestyle brand offers consumers stylish, contemporary products in twenty categories, and is available in over 3000 doors nationwide. The denim-inspired apparel line, which will include jeanswear as well as woven and knit tops, will be available in 700 doors for Fall 2010. Jeans will wholesale from $20.00 to $24.00 and tops will wholesale from $9.00 to $20.00.
Jewelry/Mining
Mark Lenz
Swatch Clocks Up 'Phenomenal' Christmas
The luxury goods sector received a second fillip in a week as Swatch Group, the world's leading premium watchmaker, reported on Wednesday "phenomenal" sales over Christmas and that revenues for 2009 had exceeded market expectations. The group, best known for upmarket brands such as Breguet and Blancpain as well as the ubiquitous Swatch, said business had picked up sharply in the second half. Full figures, including profits, will not be released until mid-March, but the group indicated margins had risen compared with the depressed first half of 2009, with the biggest gains in the core watch and jewelry business.
India's Gem, Jewelry Exports Up 45 Percent
Exports of gems and jewelry from India were up 45 percent in December, statistics released recently by the Gem and Jewellery Export Promotion Council (GJEPC) show, as the manufacturing hub continues to rebound from last year's steep decline in demand. Overall exports for the country totaled $1.89 billion in December, compared to $1.30 billion in December 2008, a 45.35 percent increase. According to the GJEPC, the growth in exports and imports over last year is due to the voluntary halting of rough diamond imports from Nov. 24 to Dec. 23, 2008, a stoppage brought about by the economic crisis and subsequent drop in demand for diamonds.
De Beers Urges Sightholders to Stay Lean, Cautious
As Diamond Trading Co. sightholders gathered for their annual reception in London to discuss the global economy's "new normal," De Beers executives urged attendees to focus on cost management and ensuring that consumers remain excited about diamonds. According to a press release from De Beers, the event, held Tuesday night in London, provided sightholders with an opportunity to discuss how the diamond industry can create value as the world begins to recover from the recession. Present at the event were De Beers Group Chairman Nicky Oppenheimer, De Beers Group Managing Director Gareth Penny and DTC Managing Director Varda Shine, all of whom gave speeches.
Office/Crafts & Hobby/Flowers/Party
Mark Lenz
Xerox to Buy Office Equipment Provider Irish Business Systems for $31 Million
Xerox Corp. said it will pay $31 million in cash for the office equipment maker Irish Business Systems Ltd. The copier and printer company said the deal will give it 11,000 new customers in Ireland, where IBS provides office hardware and manages printing services for small and medium-sized businesses. Xerox said IBS will distribute a full range of Xerox products as a wholly owned subsidiary based in the city of Cork.
Jo-Ann Stores Promotes COO to President
Citing strong business results, Jo-Ann Stores Inc. is promoting its chief operating officer to president on Jan. 31. Travis Smith will retain the COO title and its responsibilities, which include overseeing marketing, merchandising, sourcing, inventory management, supply chain and store operations, the fabric and craft chain said in an announcement Tuesday. Jo-Ann's stock price has nearly tripled in the past year.
Restaurants/Food Service
Mark Boucher
Uno Restaurant Holdings Corporation Announces Plan to Restructure Debt
Uno Restaurant Holdings Corporation announced a restructuring which will recapitalize the Company and eliminate substantial debt through the conversion of $142 million of senior notes into a controlling equity stake. The recapitalization will give Uno the resources to invest in its growth opportunities. In order to most effectively consummate this restructuring, Uno elected to file a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court, Southern District of New York. The Company's filing involves a pre-arranged reorganization transaction which includes a negotiated term sheet outlining the material terms of the restructuring plan and related plan support agreements from the Noteholder Group. In addition, subject to certain conditions, Uno has negotiated the terms under which they intend to seek court approval for a debtor-in-possession financing facility of $52.0 million from its existing senior lender, Wells Fargo Capital Finance, Inc.
Taco Del Mar Files for Ch. 11
Taco Del Mar Franchising Corp. has filed for Ch. 11 bankruptcy protection, at least the third restaurant company to do so this month. Taco Del Mar, which has more than 225 fast-casual locations, said Friday its operations would continue without interruption as it works to restructure its debt. Taco Del Mar, which has locations in the United States, Canada and Guam, said franchised branches were not involved in the company's restructuring. In its Chapter 11 petition, the company listed both assets and liabilities in a range of between $1 million and $10 million.
BK to Sell Beer at New Whopper Bar
Burger King said it will sell beer at a Whopper Bar set to open next month on South Beach. In a domestic first for the nation's No. 2 burger chain, the new Whopper Bar will serve beer from 8 a.m. to 5 a.m. in the store and from 8 a.m. to midnight on the 46-seat landscaped patio. The new Whopper Bar will offer four Anheuser-Busch and MillerCoors brands in aluminum bottles for $4.25 each. The unit will be open 24 hours a day, seven days a week, with the patio offering the chain's first walk-up window for to-go orders. Delivery service via moped also will be offered.
Starbucks' 1Q Profit Soars as Sales Rise
Starbucks Corp. gave credit to brisk holiday business and the launch of its new instant coffee as it reported first-quarter profit that nearly quadrupled from a year ago and posted its first same-store sales increase in two years. For the quarter ended Dec. 27, the Seattle-based coffeehouse giant reported a same-store sales increase of 4 percent globally, driven by a 1-percent increase in traffic and a 4-percent increase in average check.
Honey Dew's Doughnut War
Honey Dew Donuts is taking advantage of the weak economy to make its move against much bigger rivals Dunkin' Donuts and Starbucks. Honey Dew Associates Inc., the Plainville, MA owner of the 150-location chain, has hired its first director of franchise development to orchestrate a significant expansion. The 37-year-old company wants to fill in under-served New England markets, including central and western Massachusetts, north of Boston, New Hampshire, Maine, Vermont and Connecticut, with a targeted 15 percent annual growth in new units.
Those are the latest headlines. Thank you for reading.
Sincerely,
The Team at Consensus
73 Newbury Street | Boston, MA 02116 | P: 617.437.6500 | F: 617.437.6506
1325 Avenue of the Americas, 25th Floor | New York, NY 10019 | P: 212.651.2135 | F: 212.504.2772
All securities transacted through Consensus Securities LLC member FINRA/SIPC.