Morning Call

Consumer Daily – January 22

Consumer stocks remained stable yesterday as there were no significant movers. Investors should look out today for retail sales data and earnings of key players


Watch out for new data to be released today, which includes the ICSC Retail Store Sales index and Redbook Chain Store Sales numbers. Coach (COH), Brinker International (EAT), and Netflix (NFLX) will also report their quarterly results today.

ETF Performance

Here's how consumer exchange-traded funds (ETFs) performed yesterday:

XLY Consumer Discretionary SPDR: +0.25%

XLP Consumer Staples SPDR: +0.38%

Consumer stocks did not show any significant movement yesterday as no major economic data was released during the day.

Macro Data

ICSC Retail Store Sales (expected time – 7:45 am EST)

The ICSC Retail Store Sales index is a periodic indicator of consumer spending, measuring changes in comparable store sales of retail chains. The index, covering 10% of total retail sales, is calculated every week, by the International Council of Shopping Centers. For the week ending January 14, 2014, the index was down 1% compared to the previous week. However, the index was up 1.3% compared to the same week a year ago.

Redbook Chain Store Sales (expected time – 8:55 AM EST)

Redbook will release its estimates of chain store sales for the previous week, today. The data is an important indicator of consumer spending. The sales growth rate has been falling over the last two weeks, and came in at 2.9% when the last announcement was made on January 14, 2014.

Earnings Announcements


Netflix is expected to announce its fourth quarter (4Q) earnings for fiscal year 2013 (FY13) at 4 pm EST. The company’s share price is down about 12% over the last one month. Analysts estimate adjusted EPS to be $0.86, and the company’s guidance has projected an increase in its subscriber base to 43.6 million.

Brinker International

Brinker International will announce its financial results for 2QFY14 today at 9:30 am EST. Analysts estimate the company’s adjusted EPS for the quarter to be around $0.58. The company’s stock price has increased by around 3.6% over the last five days.


Coach is expected to announce its 2QFY14 earnings today at 8:30 am EST. The company’s share price is down about 5% over the past one month. Analysts estimate the company’s adjusted EPS for the quarter to be at $1.11.


Tesla Motors Inc.

Tesla Motors’s (TSLA) share price jumped 3% as the automaker announced plans to expand its supercharger network in Europe connecting Netherlands, Germany, Switzerland, and Austria. The company says that by the end of the year, 100% of the German population will be within 320 kilometers of a supercharger.


Daniel Ravicher, a lawyer from Florida, had accused activist investor Carl Icahn and three large US banks, namely Bank of America Corp (BAC), JPMorgan Chase & Co (JPM), and Wells Fargo & Co (WFC), of allegedly helping Herbalife (HLF) perpetuate a pyramid scheme by providing the company with around $1.2 billion in financing. Ravicher accused them of being responsible for a loss of over $75,000 on his short position in the company.

However, a US court dismissed the lawsuit yesterday, saying the plaintiff, Daniel Ravicher, failed to show that Icahn owed him a duty not to promote Herbalife, or that the billionaire's actions caused his losses. The company’s share price was up 3.9% yesterday.

Mondelez International

Mondelez (MDLZ) announced the addition of Nelson Peltz, an activist investor who was pushing Mondelez to sell itself to PepsiCo, to its board of directors yesterday. The company took him on in a compromise agreement which ends his campaign of pushing for a merger between the two companies. Mondelez’s stock price was down around 2.3% yesterday as investors’ expectations of a merger faded.

Under Armour Inc.

Under Armour’s (UA) share price jumped 3.4% yesterday, and a further 0.26% in after-market trading, as the company announced a partnership with the University of Notre Dame. As per the agreement signed between the two, Under Armour will supply footwear, apparel, and equipment to the university’s athletic teams for 10 years.

Expedia Inc.

Expedia’s (EXPE) stock price plunged 4% yesterday as search metrics indicated that the online travel agency has lost 25% of its search visibility on Google due to an unnatural link penalty.

GameStop Corp.

GameStop’s (GME) share price climbed 1.5% yesterday after Barron’s published a report suggesting a potential 50% upside on its share price. The report said that last week’s 18% decline on the news of soft sales during the holiday season was an overreaction by investors.

The TJX Companies, Inc.

TJX Companies (TJX) was downgraded by Sterne Agee from a Buy rating to Neutral, which led to a stock price decline of 3%.

The Gap, Inc.

Gap’s (GAP) share price was up 3% yesterday as Sterne Agee revised its rating from Underperform to Buy, citing it as an outperformer during the challenging holiday season.

Nu Skin Enterprises, Inc.

Nu Skin’s (NUS) stock price fell 3% as the company admitted to finding instances of marketing malpractices by its employees and sales force, in an initial review of its business practices in China. The management has agreed to run a review on its sales-force after the article published in People’s Daily newspaper accused the company of running an “illegal pyramid scheme’’ in the country.

Tourism from China Set to Increase

A report published by the CLSA forecasts the number of Chinese tourists to increase to 200 million, double the number in 2011. However, the share of Macau and Hong Kong as destination cities is expected to decline from 62% to 45% by that time.

comments powered by Disqus