Tag Archives: U.S. Listed Companies

How well have off-price retail stores done in this economy?

Compared to department stores, off-price retail stores have done very well (You can see a write-up on Macy’s and J. C. Penny on my blog).  Let’s look at the numbers behind one of the off-price stores Ross Stores, Inc (ROST).  Ross owns both Ross Dress for Less and dd’s DISCOUNTS.

Exhibit 1: Ross Stores Revenue (Q1 2013 to Q3 2015)

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Exhibit 2: Comparable Quarter Year-over-Year Revenue Growth for Ross Stores

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Exhibit 3: Ross Stores Total Yearly Sales Revenue (2012-2014)

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Exhibit 4: Yearly Sales Revenue Growth %

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Exhibit 5: Ross Stores Earnings Per Share Basic (USD)

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Exhibit 6: Weighted Average Basic Shares Outstanding

Screen Shot 2016-02-26 at 9.19.30 PM

June 12th, 2015 Ross Stores had done a 2:1 split of its shares there by increasing the number of shares outstanding in Q2 of 2015.

Ross Stores is scheduled to release its Q4 2015 earnings on March 1st, 2016.

Disclaimer:  I just love learning about companies.  I am not an investment advisor and this blog post should not be considered investment advice.

 

 

 

Is a turnaround taking hold at J.C.Penny?

February 21st, 2016

It has been a tumultuous few years for J. C. Penny (JCP).  Ron Johnson made drastic changes to the company that saw dramatic drops in revenue and profitability.  Ron has been blamed for alienating loyal customers.  But, the changes to store layout that he pioneered, in my opinion, makes for a more engaging shopping experience.  It seems like the new CEO – Marvin Ellison – has kept the layout changes pioneered by Ron.

The fourth quarter of 2015 results to be announced on February 26th, 2016 will be a crucial one.  J. C. Penny has shown momentum in revenue growth in 2015 and if there is strong revenue growth in Q4, it may put the company on path to more market share gains and hopefully, profitability at some point in the near future.  In January of 2016, J. C. Penny reported a  3.9% increase in sales at existing stores during the holiday period.  So, this is a very encouraging sign, barring a recession, it seems like a turnaround is taking hold at J. C. Penny.

I have compared Macy’s to J. C. Penny in some of the charts below.  You can also find my report on Macy’s on my blog post here.

Here’s are some of the financial facts in charts:

Exhibit 1: J. C. Penny Revenue For Fiscal Years 2012-2014

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Exhibit 2: J. C. Penny Quarterly Revenue for Fiscal Years 2012 to Q3 2015

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Exhibit 3: J. C.  Penny Quarterly Year-over-Year Revenue Growth Percentage (Q1 2013 Compared to Q1 2012)

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Exhibit 4: Macy’s Vs. J. C. Penny Quarterly Year-over-Year Revenue Growth (Percentage – Q1 2013 Compared to Q1 2012)

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Exhibit 5: Macy’s Vs. J. C. Penny Quarterly Revenue (In Millions of USD)

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Exhibit 6: J. C. Penny Earnings Per Share (USD Per Share)

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J. C. Penny has declared a loss the last four years, but all that could change if a turnaround takes hold.

Exhibit 7: J. C. Penny Weighted Average Diluted Shares Outstanding (No. of Shares)

Screen Shot 2016-02-20 at 4.27.54 PM

There’s been an increase of about 86 Million shares in the number of outstanding shares since Q3 of 2012.  If and when they return to profitability, the per share profit will be watered down because of this increase in number of outstanding shares.

Disclaimer:  I just love learning about companies.  I am not an investment advisor and this blog post should not be considered investment advice.

 

 

 

 

 

 

 

 

 

Is a Crisis Brewing at Macy’s?

February 6th, 2016

The iconic department store – Macy’s – seems to be heading towards trouble.  It is not just short-term lack of growth that can be blamed on slow growth of the overall economy.  Even though the GDP grew at an anemic 0.7% in the fourth quarter of 2015, consumer spending held-up fairly well.  The trouble at Macy’s seems to be of the type that could lead to long-term irrelevance.  They claim to be an omnichannel retailer, but have so far failed to show innovation and leadership in that area.

Lead with People and Process

Technological change that brought us to this iteration of retail that combines online and brick-and-mortar, is highly disruptive and slows decision making.  Alan Murray rightly pointed this out in a recent column and emphasized the fact that “the fundamental challenge of the new industrial revolution is not a technological one, but a human one“.  Adding a “pickup in store” button to your web page is just the beginning of a long process in providing an efficient omnichannel retail experience.  People and processes need to be streamlined to enhance customer experience and profitability.  For example, currently store associates spend an unacceptable amount of time walking back and forth from their point-of-sale counters to the back warehouse to fetch items to customers who placed orders online or who ordered items during Macy’s “Pre-Sale”.  The time it takes to serve a customer dramatically increases and throughput decreases.  During the holiday season, it becomes very critical for store associates to have quick turn around in serving customers.  Frederick Taylor’s Time-and-Motion studies are still relevant today and are applicable to analyzing work processes in a Macy’s store.

Agile Innovation using Technology

Continuous innovation is the new mantra in every industry and retail is no exception.  A software solution that you put in place today is quickly redundant within a couple of years.  To stay in close touch with the innovation in technology; many retail companies, including Wal*Mart and Kohl’s, have opened technology centers in Silicon Valley.

In my own line of work, I hear a lot about selecting the right platform so that you can have the good, flexible foundation to build your applications.  Fortunately, technology approaches such as the software-defined data center (SDDC), open stack, and application delivery approaches such as public or hybrid cloud give you the flexibility to select the right platform and innovate at a faster pace.

Macy’s has been investing in new technology to support omnichannel retail, such as the new RFID-based inventory visibility platform from Tyco.  This is a good start but they have a long way to go before they can compete against the likes of Amazon.  Amazon has not only moved into brick-and-mortar, but has also been a fast innovator in the retail space.  They are experimenting with using their online sales and feedback data to curate products (currently, books) for their physical stores and their ambitions for these physical stores may go well beyond just selling books.

The Numbers that Matter 

There has been scant or negative growth in revenue between fiscal years 2012 and 2015 Q3.  The 3rd quarter of fiscal year 2015 was a decisive one.  Revenue in that quarter fell over 5% compared to the 3rd quarter of fiscal year 2014.  Here are the charts depicting revenue per quarter and the growth rates (or lack thereof):

Exhibit 1: Macy’s Revenue Per Quarter Fiscal Years 2012 to Q3 2015

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Macy’s had already lowered their fourth quarter earnings per share guidance.  Wall Street is speculating that Macy’s is in a negative comps environment.  The remedy is to focus on the long-term initiatives that drive customer experience and not on short-term boosters such as real estate monetization.

Exhibit 2: Macy’s Quarterly Year-over-Year Revenue Growth Percentage

(Q1 2013 compared to Q1 2012 and so on)

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Basic earnings per share have fallen off a cliff – declining by over 40% in Q3 fiscal year 2015 compared to Q3 fiscal year 2014.

Exhibit 3: Macy’s Basic Earnings Per Share 2012 to Q3 2015 (in USD)

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Exhibit 4: Macy’s Growth Rate of Earnings Per Share (%)

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Misadventures of Stock Repurchase

Personally, I have never been a supporter of share repurchase programs.  It probably gives a short-term boost to their share price and earnings per share, ultimately your brand’s relevance to your customer will decide the long-term value of your company.  BlackRock CEO Larry Fink – the world’s largest investor – has written an excellent letter to chief executives of S & P 500 companies regarding the dangers of short-term thinking.  He says: Dividends paid out by S&P 500 companies in 2015 amounted to the highest proportion of their earnings since 2009.  As of the end of the third quarter of 2015, buybacks were up 27% over 12 months.  We certainly support returning excess cash to shareholders, but not at the expense of value-creating investment.  We continue to urge companies to adopt balanced capital plans, appropriate for their respective industries, that support strategies for long-term growth.

I am aware of the argument for stock repurchases and this article in the Barron’s magazine rekindles the debate between issuing dividends vs. doing stock repurchases.  My biggest problem has been that most companies seem to buy when their stock is high and then when the stock drops investors are left wondering if they would have been better off with dividends. Macy’s seem to have done that same mistake.

  • Between August 2nd and October 31st, 2015, Macy’s repurchased a total of 16.7 Million shares at an average price of $53.88.
  • Between May 3rd and August 1st 2015, Macy’s repurchased a total of 8 Million shares at an average price of $68.69.
  • As of February 5th, 2016 the Macy’s stock was trading at $40.30.

Exhibit 5: Macy’s Quarterly Average Basic Shares Outstanding

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Exhibit 6: Macy’s Quarter to Quarter Percent Change in Shares Outstanding (Q2 2012 Compared to Q1 2012)

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The Competition

Apparel accounts for about 46% of the revenue for Macy’s.  On that front, Amazon is becoming the biggest threat.  According to wall street analysts, Amazon is slated to overtake Macy’s as the largest apparel retailer  in the U.S.  Costco is also becoming a bigger threat.  They seem to have added a “permanent” apparel section in their stores for year-around shopping experience.  Costco is always known for its very fluid warehouse layout with unmarked aisles.  Having apparel in a fixed location probably highlights the success that Costco has had in selling it.  In my experience, Costco always seems to find right quality at the lowest price.  Finally, there’s been a resurgence of sales at J. C. Penny.  They reported a 3.9% growth in sales in November/December of 2015.  There  is a possibility that J. C. Penny would continue their revival and take market share from Macy’s.

The Answer: Prioritize, Focus, and Experiment

The goal for Macy’s should be to become the best innovator in retail.  That’s the only way to compete against the likes of Amazon, Wal*Mart, and Costco.  They need to invest a lot of money experimenting on everything from store layouts, product selection, employee training, and workflow processes.  To achieve this, they should focus on the customer experience as a driver for every innovation they try.

Macy’s could probably copy Amazon and try having lockers in their stores.  Lockers could be used to deliver on-line shipments and thus relieve store associates from retrieving packages.  Like Amazon, Macy’s can make store inventory decisions based on feedback they receive online.  Amazon has a vast database filled with feedback, Macy’s probably does not.  That’s why it’s critical for Macy’s to enhance their online shopping experience to win the omnichannel wars.

Expensive investments are required by Macy’s to achieve this goal.  They may have to suspend their dividend or stop their share repurchase or do both to fund these investment.  In the short-term (2-3 years), their stock will get battered and will languish, but they have a chance to win the long-term.  But, if they stick with their current path without dramatic changes they may die a slow death.

In the end, the only thing that matters is the customer experience.  If your brand can make an emotional connection with a customer, your company will win in the long-term. This is true for every company in the world and retailers such as Macy’s are no exception.

For Macy’s, the road ahead is tough, but the journey is worth it.

Disclaimer:  I just love learning about companies.  I am not an investment advisor and this blog post should not be considered investment advise.

 

 

 

 

 

 

 

 

SIC – 1531 – Operative Builders – U.S. Listed Companies.

Wednesday, March 11th, 2015

Ticker Symbol Company Name
TOL TOLL BROTHERS INC
DHI HORTON D R INC /DE/
HOV HOVNANIAN ENTERPRISES INC
KBH KB HOME
PHM PULTEGROUP INC/MI/
RYL RYLAND GROUP INC
NVR NVR INC
LGIH LGI Homes
MHO M I HOMES INC
WCIC WCI Communities
BZH BEAZER HOMES USA INC
MTH Meritage Homes CORP
TMHC Taylor Morrison Home Corp
SPF STANDARD PACIFIC CORP /DE/
TPH TRI Pointe Homes
MDC MDC HOLDINGS INC
CHCI Comstock Holding Companies
IVDA Iveda Solutions
WLH WILLIAM LYON HOMES
VRC VANJIA CORP
ALPL ALP LIQUIDATING TRUST
AVHI AV Homes
Shea Homes Limited Partnership
UCP UCP
NWHM New Home Co Inc.
CCS Century Communities

Source: SEC.gov

SIC – 1520 – General Building Contractors – Residential Building – U.S. Listed Companies.

Tuesday, March 10, 2015

Ticker Symbol Company Name
LEN LENNAR CORP
AFFR AFFORDABLE GREEN HOMES INTERNATIONAL
FBHS Fortune Brands Home & Security
PGRX PROSPECT GLOBAL RESOURCES INC.
CHLN China Housing & Land Development
PRXG Pernix Group
INSB Inspired Builders
IBP Installed Building Products
SPCI SPECIALTY CONTRACTORS
PPCI PREMIER PACIFIC CONSTRUCTION

Source: SEC.gov.

SIC – 1400 – Mining and Quarrying of Nonmetallic Minerals – No Fuels – U.S. Listed Companies

Tuesday, March 10th, 2015

Ticker Symbol Company Name
MDU MDU RESOURCES GROUP INC
USU USEC INC
IPI Intrepid Potash
VMC Vulcan Materials CO
MLM MARTIN MARIETTA MATERIALS INC
PPI PASSPORT POTASH INC
SGGV STERLING GROUP VENTURES INC
NESL New Enterprise Stone & Lime Co.
VHMC Valley High Mining CO
HCLP Hi-Crush Partners LP
SLCA U.S. SILICA HOLDINGS
HL-2 HECLA MINING CO/DE/
CMP COMPASS MINERALS INTERNATIONAL INC
TVER TERRACE VENTURES INC
MDEX MADISON EXPLORATIONS
FORC FORCE MINERALS CORP
OCIR OCI Resources LP
ACO AMCOL INTERNATIONAL CORP
GDFI GOLDFIELDS INTERNATIONAL INC
LKAI LKA GOLD Inc /DE/
AYXE AYERS EXPLORATION INC.
USLM UNITED STATES LIME & MINERALS INC
BMIX Brazil Minerals
LEU CENTRUS ENERGY CORP
FMSA FMSA HOLDINGS INC

Source: SEC.gov

SIC – 1382 – Oil and Gas Field Exploration Services – U.S. Listed Companies.

Wednesday, February 18th, 2015

Ticker Symbol Company Name
MWOG MIDWEST OIL & GAS INC.
WSEG Dominovas Energy Corp
EXXI Energy XXI Ltd
DWSN DAWSON GEOPHYSICAL CO
AOIX American Oil & Gas Inc.
EFLO EFLO ENERGY
FROT Falconridge Oil Technologies Corp.
ARAO AuraSource
IO ION GEOPHYSICAL CORP
SEIT SEITEL INC
KOG Kodiak Oil & Gas Corp
PEDO PEDEVCO CORP
SARA SARATOGA RESOURCES INC /TX
GPR GEOPETRO RESOURCES CO
GTSO Green Technology Solutions
POGI Perkins Oil & Gas
EXXI ENERGY XXI (BERMUDA) LTD
CEGX Cardinal Energy Group
RCAR RenovaCare
TAT TRANSATLANTIC PETROLEUM LTD.
TGE TGC INDUSTRIES INC
WIZD Wizard World
GGS Global Geophysical Services Inc
SKPI SKY PETROLEUM
ZN ZION OIL & GAS INC
FOSI FRONTIER OILFIELD SERVICES INC
CRMI Core Resource Management
DLTA DELTA OIL & GAS INC
WSEG Western Standard Energy Corp.
SAEX SAExploration Holdings
RIGP Transocean Partners LLC
TEXJ Texas Jack Oil & Gas Corp
NEGY NATION ENERGY INC

Source: SEC.gov

SIC – 1381 – Drilling Oil and Gas Wells – U.S. Listed Companies.

Wednesday, February 18th, 2015

Ticker Symbol Company Name
AKVA ARKANOVA ENERGY CORP.
CAK CAMAC Energy Inc.
HENI HINTO ENERGY
QBC CUBIC ENERGY INC
SENY SAUER ENERGY
IFNY INFINITY ENERGY RESOURCES
NBR NABORS INDUSTRIES LTD
KEG KEY ENERGY SERVICES INC
HP HELMERICH & PAYNE INC
RIG Transocean Ltd.
RDC ROWAN COMPANIES INC
PTEN PATTERSON UTI ENERGY INC
NE NOBLE CORP
ATWD ATWOOD OCEANICS INC
ESV Ensco plc
VPRS RAMBO MEDICAL GROUP
VNGE Vanguard Energy Corp
VTG Vantage Drilling CO
HERO HERCULES OFFSHORE
PDE PRIDE INTERNATIONAL INC
WFT Weatherford International Ltd./Switzerland
OCTX OCTAGON 88 RESOURCES
DO DIAMOND OFFSHORE DRILLING INC
RGEE Reef Oil & Gas Drilling & Income Fund
PES PIONEER ENERGY SERVICES CORP
SSN Samson Oil & Gas LTD
MEP Mewbourne Energy Partners 10-A
RGEB Reef Global Energy VII
RGEA Reef Global Energy VI
MASP MASS Petroleum Inc.
PKD PARKER DRILLING CO /DE/
RDC ROWAN COMPANIES PLC
ARP Atlas Resource Partners
MASP Cannamed Corporation.
PGN PARAGON OFFSHORE PLC
LOGL Legend Oil & Gas
ROIL RICHFIELD OIL & GAS Co
BLZE Blaze Energy Corp.
ICD Independence Contract Drilling
CHUM CHUMA HOLDINGS

Source: SEC.gov

SIC – 1221 – Bituminous Coal and Lignite Surface Mining.

Tuesday, February 17th, 2015

Ticker Symbol Company Name
MEE MASSEY ENERGY CO
BTU PEABODY ENERGY CORP
NRP NATURAL RESOURCE PARTNERS LP
CNX CONSOL Energy Inc
ARLP ALLIANCE RESOURCE PARTNERS LP
ANR Alpha Natural Resources
ACI ARCH COAL INC
WLB WESTMORELAND COAL Co
AHGP Alliance Holdings GP
CLD CLOUD PEAK ENERGY INC.
CLD Cloud Peak Energy Resources LLC
Armstrong Energy
RNO Rhino Resource Partners LP
OXF Oxford Resource Partners LP

Source: SEC.gov

SIC – 1090 – Miscellaneous Metal Ores – U.S. Listed Companies

Thursday, February 12th, 2015.

Ticker Symbol Company Name
EXIN EXCALIBUR INDUSTRIES
AEXE Aim Exploration Inc.
IROG Ironwood Gold Corp.
ABHD Abtech Holdings
GLNS Golden Star Resource Corp.
NAEY NORTH AMERICAN ENERGY RESOURCES
UEC URANIUM ENERGY CORP
SWC STILLWATER MINING CO /DE/
CTDT CENTAURUS DIAMOND TECHNOLOGIES

Source: SEC.gov