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Key Markets Waking From Summer Slumber
  • by , 59 minutes ago
  • tags: CAT HYG SPY
  • Submitted by Wall St. Daily as part of our contributors program Key Markets Waking From Summer Slumber By Alan Gula, Chief Income Analyst   Underneath Yellowstone National Park lies a dormant supervolcano. Based on evidence of past eruptions, it’s capable of burying Wyoming, Montana, Idaho, and Colorado under several feet of volcanic ash. And there are indications that the caldera, the chamber of molten rock, may be expanding – a disturbing sign under the surface of the seemingly placid wilderness. Interestingly, it reminds me a lot of the S&P 500, which has continued to grind higher despite disturbing problems beneath the surface. That’s why the big picture is always helpful, especially when dealing with diversified portfolios made up of various asset classes. A macro perspective can help us identify significant risks before they become mainstream news headlines. With that in mind, let’s run through three key developments that you need to know about right now. The China Syndrome In case you haven’t noticed, industrial metal prices have been in free fall this year. Part of the reason is that Chinese demand has dropped just as production capacity is hitting its stride. The spot price for iron ore, for example, is plumbing levels not seen since 2009. And rebar futures prices on the Shanghai Futures Exchange have dropped to a record low. In reality, the problem is bigger than just industrial metals. China’s economy could be aptly described as a slow-motion train wreck right now, and building a few more uninhabited “ghost cities” won’t rectify the problem. At the end of March, I identified six companies acutely exposed to a disaster in China . Let’s take a look at how they’ve performed: As you can see, all of these stocks have underperformed the S&P 500 since my mention. However, my prognostications won’t truly be proven correct until China and Japan go to war. Interestingly, the majority of the Chinese may actually expect this outcome. According to a recent poll, 53% of Chinese respondents and 29% of Japanese respondents expect war to break out between the two countries by the year 2020. If war were to break out, one of Japan’s primary weaknesses would be its currency – even though yen depreciation is still being viewed as beneficial. Currency Volatility Returns In fact, currency volatility is generally on the rise after a summer slumber. The U.S. Dollar Index is on track to post its ninth consecutive week of gains, and one of the primary reasons has to do with the European Central Bank’s (ECB) plan to buy private sector assets totaling hundreds of billions of euros. This is tantamount to quantitative easing, and the plan sent the euro reeling (which is actually what the ECB wants). Meanwhile, the United Kingdom is experiencing its own fiat currency problems, but for a very different reason. The prospect of Scottish independence has routed pound sterling and implied volatility has spiked. Emerging market currencies are also coming under pressure. One way to take on risk in the foreign exchange market is to buy high-yielding emerging market currencies (South African rand, Turkish lira, Polish zloty) and fund the purchase with low-yielding currencies (U.S. dollar, euro, Japanese yen). Lately, though, these so-called carry trades have been unraveling. The chart below shows the divergence between the JPMorgan Emerging Markets Currency Index and the MSCI Emerging Markets Index (emerging equities): And like the foreign exchange market, the credit market tends to lead equities and can be a harbinger of doom. Credit Spreads Widening Perhaps you’ve noticed that high-yield bonds haven’t been performing quite as well recently. Since June 25, the iShares iBoxx High Yield Corporate Bond ETF ( HYG ) has lost around 2.8%. Widening credit spreads indicate declining risk appetite in the bond market. The chart below shows the relationship between the S&P 500 and the BofA Merrill Lynch High Yield Master II Index: This divergence is occurring at a time when bond investors are turning to leverage in low-yield desperation, which will inevitably end in tears. After all, leverage is not the answer to meet a 10% return hurdle. Instead, avoiding vulnerable assets before they underperform and patiently identifying opportunities as they’re presented is the ideal course of action. Bottom line: The financial markets are awakening. Volatility is picking up in various global markets. The caldera under risk assets is churning. This is a beautiful development that will create new opportunities. However, it’s also a situation for which few are prepared. Safe investing, Alan Gula, CFA The post Key Markets Waking From Summer Slumber appeared first on Wall Street Daily . By Alan Gula
    What the Worst Jobs Report of the Year Really Tells Us
  • by , 1 hours ago
  • tags: SPY TLT
  • Submitted by Profit Confidential as part of our   contributors program What the Worst Jobs Report of the Year Really Tells Us Recently, the Bureau of Labor Statistics (BLS) released its jobs market report for the month of August. To say the very least, there was nothing in that report that says the labor market in the U.S. economy is back on its feet. In fact, the report painted a gruesome image of employment in this country. In August, 142,000 jobs were added to the U.S. economy—the lowest monthly pace in 2014. And the jobs market numbers previously released for June and July were revised lower. (Source: Bureau of Labor Statistics, September 5, 2014.) But this is just the tip of the iceberg. Americans who have been out of work for more than six months continue to make up a significant portion of the total unemployed population—31.2% of all unemployed to be exact. Over the past few years, this number hasn’t really come down much. What’s worse is that the labor force participation rate, that is the rate of those who are in the working-age population and are looking for work, stood at 62.8% in August. This is the lowest rate of labor force participation in the U.S. economy seen since the late 1970s! (Source: Federal Reserve Bank of St. Louis web site, last accessed September 5, 2014.) Adding to the misery, and as I have reported many times in these pages, we are seeing more part-time jobs created than ever and job creation remains concentrated in the low-wage-paying sectors, like service and retail. There’s another problem that doesn’t get much attention. Incomes in the U.S. economy are falling. According to a report by the Federal Reserve, median household income in the U.S. economy fell by five percent between 2010 and 2013—median income was $49,000 in 2010 and in 2013 it was $46,700. (Source: Federal Reserve, September 2014.) The mainstream and the politicians will try to spin the poor jobs market figure into something more than what it is. They will argue that economic growth is in full throttle in the U.S. economy. Don’t buy into their optimism. August’s jobs market report just put another negative stamp on the U.S. economy. But have no fear, dear reader; the stock market tells us all is well with the U.S. economy.   The post What the Worst Jobs Report of the Year Really Tells Us appeared first on Stock Market Advice | Investment Newsletters – Profit Confidential .
    Large-Cap Tech Doubling in Price and Headed Higher
  • by , 1 hours ago
  • tags: XLK MSFT AMZN FB
  • Submitted by Profit Confidential as part of our   contributors program Large-Cap Tech Doubling in Price and Headed Higher Large-cap technology stocks, particularly old-school names, have really been on the rise, though they remain an untold story this year. Microsoft Corporation (MSFT) is on a major upward price trend and is getting close to its all-time record-high set during the technology bubble of 1999. The company’s stock market performance has been tremendous as of late, rising from around $27.00 a share at the beginning of 2013 to its current level of approximately $47.00, its 52-week high. Its share price has increased by more than $10.00 this year alone. (See “ Eight Stocks to Beat the Street .”) And that’s with a current dividend yield of 2.6% and a trailing price-to-earnings ratio of just less than 15. I think Microsoft is going to keep on ticking higher right into 2015 based on its sales and earnings growth momentum combined with a solid interest on the part of institutional investors seeking earnings predictability in a slow-growth environment. Microsoft would be a solid investment-grade pick in this market for those investors considering new positions and looking for income. Even without the company’s dividends, it should experience solid sales and  earnings growth going into its next fiscal year. And in an environment where institutional investors are bidding old-school names that are offering earnings reliability, $50.00 a share shouldn’t be too difficult for Microsoft to achieve by year-end. Share price momentum in previous technology growth stocks like Microsoft and Intel is indicative of a bull market, but one that’s still risk-averse. Price momentum in these stocks is healthy for the broader market because large-cap tech companies like Amazon.com, Inc. (AMZN) and Facebook, Inc. (FB) are very expensively priced, even with their above-average operational growth. One of the many trends to emerge within the last several years is the rising success investors have experienced while owning dividend-paying blue chips at a lot less risk than highflyers. And it’s all because institutional investors are just as skittish, choosing to pay for earnings reliability in a slow-growth world. I think this trend is likely to continue well into 2015 and an environment of rising interest rates. This is why many of the old-school blue chips like Microsoft should continue to keep ticking higher on the stock market, all the while offering rising earnings, dependable dividends, and lower investment risk.   The post Large-Cap Tech Doubling in Price and Headed Higher appeared first on Stock Market Advice | Investment Newsletters – Profit Confidential .
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    Alibaba IPO: Who owns the Chinese giant?
  • by , 1 hours ago
  • Submitted by Amigobulls as part of our contributors program . Alibaba IPO: Who owns the Chinese giant? Alibaba, the Chinese online commerce and technology giant is all set to launch its IPO within the next week. While the stock will list and trade on the NYSE under the ‘BABA’ ticker, investors should give a thought to what they will eventually own and also the risks involved in the ownership. So who owns Alibaba?? And does the listing on the NYSE entitle shareholders to ownership of the Chinese properties Taobao, Tmall and the various others operated by Alibaba? The answer as to who owns Alibaba would seem obvious at first with the answer being—shareholders of course.  However the answer isn’t as simple as it seems. If you are beginning to wonder why, let’s look a bit deeper into Alibaba’s latest F-1 amended filing with the SEC. One paragraph from Alibaba’s latest F-1 filing with the SEC throws light on the ownership structure. It states, “Due to PRC legal restrictions on foreign ownership and investment in, among other areas, value-added telecommunications services, which include Internet content providers, or ICPs, we, similar to all other entities with foreign-incorporated holding company structures operating in our industry in China, operate our Internet businesses and other businesses in which foreign investment is restricted or prohibited in the PRC through wholly-foreign owned enterprises, majority-owned entities and variable interest entities. The relevant variable interest entities, which are 100% owned by PRC citizens or by PRC entities owned by PRC citizens, hold the ICP licenses and operate the various websites for our Internet businesses. Specifically, our material variable interest entities are majority-owned by Jack Ma, our lead founder, executive chairman and one of our principal shareholders, and minority-owned by Simon Xie, one of our founders and a vice president on our China investment team where he works on projects related to our China acquisition and investment activities. These contractual arrangements collectively enable us to exercise effective control over, and realize substantially all of the economic risks and benefits arising from, the variable interest entities. See “Our History and Corporate Structure ? Contractual Arrangements among Our Wholly-foreign Owned Enterprises, Variable Interest Entities and the Variable Interest Entity Equity Holders.” The contractual arrangements may not be as effective in providing operational control as direct ownership. See “Risk Factors ? Risks Related to Our Corporate Structure.” The conclusion is that Jack Ma and Simon Xie own the majority share of all the Alibaba operated properties and will continue to do so post the Alibaba IPO, in-line with mandates of the PRC (People’s Republic of China). So what will shareholders who buy Alibaba stock eventually own post IPO? Let’s look into Alibaba group’s corporate structure which is displayed below. Alibaba Corporate structure Alibaba’s corporate structure is based on a combination of Variable interest entities, wholly foreign owned enterprises, and 100% owned intermediate holding companies, which use equity interests and Contractual obligations to operate within the PRC mandates. The Chinese online operating properties, which operate as variable interest entities (VIE), are entirely owned by Jack Ma and Simon Xie, two Chinese nationals. These Chinese companies have simultaneously entered into agreements with wholly foreign owned subsidiaries (WFOS). The WFOS are owned by Cayman Islands based Alibaba group holding limited through intermediate holding companies or direct shareholding. The contractual agreements between the Chinese companies (VIE) and the WFOS ensure that almost all of the VIE profits are passed on to the WFOS which in turn go to Cayman based Alibaba group holding limited, which will be listed on the NYSE. The shareholders post Alibaba IPO will, therefore, have access to the profits generated by the Chinese operating company but will have no direct ownership over the Chinese based operating companies. This is a structure which has been created to operate within the Chinese regulations and any changes in these regulations could directly impact the shareholders of Alibaba group. It is better that Shareholders hoping for a stake in the upcoming Alibaba IPO know what they will own and consider these risks in which come along with this complicated structure. However this isn’t something which should be a cause for alarm, as large institutional investors like Yahoo and Softbank are also exposed to this risk and this is also an inherent risk in every other Chinese company listed in the US. It is only a risk investors need to understand and factor into their investment decisions. The article Alibaba IPO: Who owns the Chinese giant? originally appeared on amigobulls.com .
    Wal-Mart Logo
  • commented 7 hours ago
  • tags: WMT
  • Is WFM going to be able to compete over the coming years, despite the stiffening competition from other organic retailers, such as walmart? [ less... ]
    Is WFM going to be able to compete over the coming years, despite the stiffening competition from other organic retailers, such as walmart?
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    A Look At Kimberly-Clark's Health Care Business
  • by , 18 hours ago
  • tags: KMB CL UL PG
  • Kimberly-Clark Corp. (NYSE:KMB) is one of the world’s top producers of professional and consumer tissue, baby care non-wovens, female hygiene care, adult incontinence care and disposable healthcare products. The company sells its products in 150 countries and maintains manufacturing operations in 41 countries. It is one of the top 2 brands in its respective product segments in over 80 countries. The company had annual revenues of about $21 billion last fiscal year, and has a market capitalization of nearly $40 billion. The company has four broad operating divisions: Personal Care, Consumer Tissue, K-C Professional and Health Care. The Personal Care division is Kimberly-Clark’s largest operating division, with a revenue share of approximately 45.2%. Kimberly-Clark’s Consumer Tissue business is second largest, with a revenue share of 31.4%. The remaining business units, K-C Professional and Health Care, account for approximately 15.7% and 7.7% of total revenues respectively. In terms of profitability, the K-C Professional business unit is its most profitable segment with an operating profit margin of 16.6%. This is closely followed by its Personal Care unit, which has a 16.2% operating profit margin. The remaining divisions, Consumer Tissue and Health Care, have operating profit margins of 13.5% and 12.9% respectively. In this research note, we present a brief overview of the company’s Health Care business. See Our Full Analysis for Kimberly-Clark Health Care Unit Spin-off Could Unlock Greater Value As noted above, Kimberly-Clark’s health care business accounts for 7.7% of total revenues and has an operating profit margin of 12.9%, making it the smallest and least profitable segments in the company’s portfolio. Kimberly-Clark’s management has been mulling a spin-off of the Health Care business unit since November 2013 to focus on its core business lines. In early May 2014, the company filed a registration statement with the Securities and Exchange Commission (SEC) announcing an approval from its Board of Directors to spin-off Halyard Health Inc., a wholly-owned subsidiary that owns Kimberly-Clark’s health care business. The spin-off of Halyard is expected to be completed in the second half of this year. Kimberly-Clark currently owns 100% of Halyard’s stock and the spin-off transaction will involve a tax-free distribution of Halyard’s common stock. The distribution is expected to be completed at the end of the third quarter or potentially in the fourth quarter of 2014, subject to market, regulatory and other conditions. Both the stock-to-stock ratio and the size of the distribution have yet to be determined. We believe spinning off the healthcare business is a good move for Kimberly-Clark, allowing it to focus on its larger and more profitable businesses. The Health Care division has been under-performing relative to the other divisions of the company, with sales remaining flat at approximately $1.6 billion since 2011. The stagnation in sales was a result of the slowing market for certain healthcare products (such as surgical procedures) and infection prevention because of the high level of healthcare awareness in the developed countries. The developing nations present better growth opportunities due to lower levels of awareness among the population. The company has been aggressive in exiting underperforming markets across other product categories and allocating those resources to high-growth markets. Prior to the planned spin-off of the health care unit, Kimberly-Clark stopped selling Huggies diapers in 13 countries and exited its remaining five markets in Q2 2013. Exiting these markets allowed the company to divert resources towards China, Brazil and Russia, few of the fastest growing diaper markets. In the second half of 2013, Kimberly-Clark’s diaper sales rose by more than 35% in China and by 20% in Brazil and Russia. The latest exit from Health Care should benefit Kimberly-Clark’s business in the long term, with savings being reinvested into core product categories in high-growth markets. See More at Trefis | View Interactive Institutional Research (Powered by Trefis) Get Trefis Technology
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    Showtime Will Continue To Drive Growth For CBS' Cable Operations
  • by , 19 hours ago
  • tags: CBS DIS VIA TWX FOX CMCSA
  • CBS Corporation ‘s (NYSE:CBS) cable networks have seen phenomenal growth over the past few years primarily driven by the success of its Showtime networks. Shows such as Homeland and Dexter have done well in the past and new programming such as  Ray Donovan and Masters of Sex have also performed well in their premiere seasons.  Showtime networks are commercial free premium channels and generate revenue primarily from affiliate fees and distribution of their networks. The segment contributed 14% to CBS’ overall revenues and 21% to its EBITDA in 2013. We believe that Showtime’s continued focus on original programming will drive the cable networks business in the coming years. See our complete analysis for CBS A Brief Snapshot of CBS’ Cable Networks CBS’ cable networks include the Showtime networks, the CBS Sports Network, and the Smithsonian networks. Showtime networks consists of premium TV channels: Showtime, Flix and The Movie Channel. These premium TV channels offer a variety of programming to cable and satellite subscribers in the U.S. who pay additional monthly premiums for access to these channels. For instance,  Comcast (NASDAQ:CMCSA) customers need to pay an additional $10 on most of the pay-TV packages to get the Showtime channel. CBS Sports Network shows programming based on college sports, especially athletics. Showtime networks have seen a solid subscriber growth over the past few years, growing from 54.8 million subscribers in 2007 to 76 million subscribers in 2013. With the rise in subscriber base, cable networks revenues also grew from $1.16 billion in 2007 to $2.07 billion in 2013. What Is Driving The Growth? The appeal of Showtime has primarily led this growth. Flix airs classic movies, which differentiates it from other channels airing more contemporary movies, and reality shows as well. Showtime’s compelling original programming also has been on a roll. Its shows such as Dexter and Homeland have done well in the past. Last year, the network came up with two new hits, Masters of Sex and Ray Donovan . Both these shows saw good ratings in the first season. However, season 2 ratings have declined by 33% for Masters of Sex and 6% for Ray Donovan as of September 9, 2014. Homeland has been the star series for Showtime over the past three years. In 2011, the premiere season averaged 4.23 million average weekly viewers across platforms. In 2012, into its second season, the show continued to outperform averaging 5.9 million weekly viewers, up 37% over the first season. Last year, the show returned for its third season and continued to break records in terms of viewership and became the first show to cross 7 million average weekly viewers for the network. The show has won many awards including the 69th and 70th Golden Globe Awards for Best Television Series – Drama. It will return for its fourth season with the premiere episode airing on October 5, 2014 and we are eager to see how the ratings trend in 2014. Meanwhile, shows such as Homeland continue to aid subscriber growth for the Showtime network. Furthermore, the contracts between media companies and pay-TV service providers are long-term, and include pre-defined yearly subscription rate increases. Given the demand for good content, CBS’ cable networks will continue to benefit from these yearly increases. We believe the above factors will continue to drive growth for CBS’ cable networks in the coming years. Accordingly, we estimate cable networks’ revenues to grow to $3 billion by the end of our forecast period. An estimated EBITDA margin of 49% will translate into EBITDA of $1.5 billion by 2021. It must be noted that there could be a potential upside of 10% to our price estimate if the cable networks continue to grow at a higher pace and revenues are north of $4 billion by the end of our forecast period. On the other hand, there is a downside risk of more than 5% to our price estimate, if the growth rate is lower and cable networks revenue remain rangebound around $2.5 billion by the end of the forecast period. View Interactive Institutional Research (Powered by Trefis): Global Large Cap |  U.S. Mid & Small Cap |  European Large & Mid Cap More Trefis Research
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    Urban Outfitters To Debut In Hong Kong; Mainland China Likely To Be Next Stop
  • by , 19 hours ago
  • tags: URBN ANF GPS
  • As growing competition from fast fashion brands and a consumer spending pullback continue to trouble  Urban Outfitters (NASDAQ:URBN) in the U.S., it has turned its attention to international expansion. A recent note published in the South China Morning Post reported that the American clothing chain is planning to open its first Asian retail store in Hong Kong later this month. Although Urban Outfitters entered Asia through a partnership with World Co. Ltd. a couple of years back, this will be the first time it will open a company-operated store. International expansion has become an inevitable move for U.S. retailers as the domestic apparel market is saturating. Moreover, while Urban Outfitters performed exceedingly well last year amid an edgy retail environment, its growth has faltered lately due to some poor merchandise selections. Therefore, extending its presence to certain lucrative Asian markets appears to be a sensible move. We believe that Urban Outfitters’ debut in Hong Kong will pave the way for its future expansion in China, which has become a hub for western apparel retailers. The second largest apparel market in the world is set to grow at a robust pace driven by a booming middle class and changing lifestyle with growing urbanization. Although Urban Outfitters will most likely remain at the forefront of this growth, there are few factors that can have a mitigating impact in the long run. The Chinese apparel market is highly competitive and consumers are extremely discerning with different needs and demands among different demographics. High operating costs in tier 1 & 2 cities, and the dominance of low-cost local players in tier 3 & 4 cities, discourage foreign retailers from expanding aggressively. Nevertheless, Urban Outfitters should have no trouble with its growth in its initial expansion phase, given that there is a lot to explore in the market. Our price estimate for Urban Outfitters at $41, implies a premium of about 5% to the current market price. See our complete analysis for Urban Outfitters China is a Lucrative Market Although the Chinese apparel market is struggling currently on account of a consumer spending pullback, it is set to boom in the long term. With rising disposable income and growing urbanization, the market grew from $110 billion in 2009 to $140 billion in 2012 and is expected to touch $220 billion by 2016. Within the market, men’s and women’s casual wear are among the biggest and fastest growing apparel segments. A 2012 AT Kearney report estimated women’s casual wear market to be at $67 billion and men’s casual wear market to be at $56 billion. The same report projected their CAGR (compound annual growth rate) for the period of 2012 and 2016 at 15% and 17%, respectively. Fashion casual wear sales account for about two-thirds of the overall casual wear sales, which suggests that the addressable market for Urban Outfitters is large at around $95 billion (estimated figure for 2013). The fashion casual wear market is expected to grow at a CAGR of 15% for the next few years, indicating that it will remain ahead of the overall market growth. During the 1990s, middle-aged Chinese consumers started switching from their work related formal uniform to casual outfits, which propelled growth in the apparel market. For over two decades, Chinese buyers exhibited great interest in lifestyle oriented clothing, due to the availability of wide range of products and brands. Additionally, with rising disposable incomes and growing urbanization, their budget for branded apparel has grown. A substantial rise in the region’s labor costs, an ageing population and increased government regulations were the primary reasons responsible for increasing disposable incomes. Development of rural areas encouraged the local population to look for work opportunities in their vicinity, which prevented migration to urban areas, resulting in fewer workers and more expensive labor. China’s population is aging and about 243 million Chinese are expected to be above the age of 60 by 2020, which will further add to the labor shortage. The younger generation increasingly prefers college over factory work, which reflects increased awareness of education and the opportunities it affords. Apart from fueling labor costs, this trend is likely to enhance the youngsters’ living standards and likely increase the demand for specialty apparel. But, it doesn’t Come Without Challenges One of the biggest challenges for Urban Outfitters in China is to understand the shrewd consumer behavior. Between 2000 and 2005, top 500 domestic brands in China had an average life cycle of just 1.5 years. In addition to the fierce competition in the market, this was attributable to rapidly changing consumer tastes. Among different age groups, consumer preferences vary drastically, which makes it difficult for retailers to target a particular age group. For instance, if a retailer specifically targets the age group of 18-25 years, several loyal customers will outgrow this age range within a few years. Subsequently, their needs will change and they might start shopping at other places. Ultimately, the retailer loses its loyal customer base due to the lack of merchandise relevant to different life stages of a customer. While companies usually operate multiple brands in China to encompass different age groups, doing so won’t be easy for Urban Outfitters, given that it has established itself strongly as a teen apparel brand. While it may seem that Urban Outfitters has several expansion opportunities at hand, identifying appropriate locations to open stores will be an arduous task. The company might not want to target tier 3, 4 & 5 cities with more than 320 million households for its expansion since disposable income in these regions is low. Moreover, they are dominated by local players who have a superior understanding of the market and strong support from the local government. This leaves six tier 1 cities and more than 60 tier 2 cities with over 54 million households for Urban Outfitters to target. However, expensive real estate and high labor costs in developed cities can have a mitigating effect on Urban Outfitters expansion. Therefore, we believe that the retailer will have to plan its expansion carefully, if and when it decides to enter China. Fast fashion brands Zara and H&M are challenging several apparel retailers including Urban Outfitters in the U.S., and they are on their way to do so in China as well. These brands have entered tier 1 cities and are planning to grow their business rapidly. Zara operated about 120 stores in China in 2012, which is likely to double in the near future. It may be too soon for Urban Outfitters to be worried about these challenges, but it should carefully analyze them to formulate suitable expansion plans. See More at Trefis |  View Interactive Institutional Research (Powered by Trefis)
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    DirecTV's Latin America Operations See Continued Subscriber Growth But Declining Currencies Stall ARPU Growth
  • by , 19 hours ago
  • tags: DTV DISH CMCSA TWC
  • DirecTV (NASDAQ:DTV) is one of the largest pay-TV operators in Latin America with more than 12 million subscribers and it has been growing at an average rate of 25% annually over the past few years. The pay-TV business in Latin America, accounts for 20% of DirecTV’s stock price, according to our estimates. While the pay-TV industry is saturated in the U.S., Latin America has been the driving force for DirecTV. While the company has been consistently growing its subscriber base in the region, depreciating regional currencies has stalled ARPU growth over the past few quarters. In this article, we talk about the company’s subscriber growth and the ARPU trends in the region and our estimates for these drivers.
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    Wal-Mart's Answer To Dollar Chain Bidding War: Rebrand Express To Neighborhood
  • by , 19 hours ago
  • tags: WMT TGT
  • The world’s largest retailer,  Wal-Mart (NYSE:WMT), recently unveiled plans to rebrand its Express stores to Neighborhood Markets in an attempt to have a more uniform approach towards its small store strategy. The company has been aggressively opening smaller format stores in urban markets to continue its expansion in the U.S. and better cater to buyers’ needs for convenient shopping. Wal-Mart currently has two main small store concepts – Wal-Mart Express and Neighborhood Markets, and it is testing a couple of new concepts – Wal-Mart To Go and Wal-Mart On Campus. However, the retailer stated in its earnings call that shopping trends in both its main concepts have been somewhat similar so far and thus, it makes sense to operate both these formats under a single brand name. Wal-Mart currently operates 21 Express stores in the U.S. and plans to take this count up to 90 by the year end. With the retailer’s rebranding strategy, the new Neighborhood concept will range from 15,000 – 45,000 square feet as opposed to the previous format of 45,000 square feet. Competition in the small store space is heating up as Dollar Tree and Dollar General have entered a bidding war for Family Dollar, a company that was also a potential acquisition candidate for Wal-Mart. A few weeks back, Family Dollar agreed to sell itself to Dollar Tree for $8.5 billion, after which Dollar General pitched a better offer of $8.95 billion. After Family Dollar rejected this offer, Dollar General upped its bid to $9.1 billion. While it seems clear that Dollar chains are threatened by Wal-Mart’s aggressive small store expansion, the retail giant had been surprisingly quiet until now. Wal-Mart’s recent rebranding strategy appears to be its answer to the growing competition in the small store space. The retailer will continue its aggressive expansion in urban markets under a single banner, which should make inventory and store management easier.

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