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business newsWilliams-Sonoma Printing Plenty of Dollar Bills for Investors
By
Justin Sharon
Mar 15, 2011 4:50 pm
Investors should be looking to own the stock -- at least on a pullback.
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Turn to Trendspotting: Investing in a Retail Rebound and Catalog Themes in Keeping With the Times.
Brace yourselves for difficult days at DENTSPLY International Inc. (XRAY), among the many stocks to suffer collateral damage from events in Asia. Not from nuclear concerns -- although radiation is never far from the gum line in this industry -- but rather arising out of the earthquake itself. This morning the 28-year-old Pennsylvania outfit announced a key Japanese supplier representing roughly 9% of overall revenues is located in an evacuation zone and hence will be out of commission for an indeterminate amount of time. CEO Bret W. Wise went on to say “the negative impact of the situation in Japan is difficult to quantify at this early stage. As such we are withdrawing our previously issued earnings guidance for 2011 until more information is available.” Wall Street can abide almost anything except uncertainty, which is why shares slumped 5% at one point before recovering slightly in tandem with the overall market. Accordingly S&P Equity cut its rating to Hold from Buy on the company, whose wide product range includes teeth whiteners, crown and bridge materials, 3D digital implantology, and orthodontic appliances. A few points to prevent any undue gnashing of teeth. There is no structural damage to the supplier’s facility and DENTSPLY can call upon ample inventories on hand, roughly 100 days worth of supplies at last count. Meanwhile its two manufacturing plants in Tokyo and Nasu are a respective 137 miles and 70 miles away from the epicenter and emerged unscathed. Although the rescinding of earnings guidance is undeniably unsettling, the fact that key competitor Danaher Corp. (DHR) recently reported its best quarter since 2008 indicates industry fundamentals remain relatively healthy.
Please see Top 10 US Cities With the Worst Dental Hygiene, Medical Tourism: Your Guide to Fun, Sun, and Cheap Surgery, and Last Possible Monetizable Thing Related to Winston Churchill Auctioned Off.
Bernie Madoff was the kiss of death for the Lipstick Building on New York’s nondescript Third Avenue but a few blocks (and a world) away on fancy Fifth Estee Lauder Companies Inc. (EL) has done much to subsequently put the smile back on the face of the cosmetic industry. Admittedly, the beauty behemoth has seen its shares slide by about $6 from an all-time high of $95.55 on Valentine’s Day. The stock is off about 2.07% again today and in the immediate earthquake aftermath on Friday analyst Connie Maneaty at BMO Capital Markets said it may see a “minor impact” on current quarter earnings due to events in Japan, where it derives roughly 4% of sales. Such a stock reaction is especially understandable on an equity arguably overdue a breather anyway, but this cosmetics giant still looks to be on firm foundations. Estee Lauder recently reported impressive organic sales growth of 11%, its second successive quarter of double-digit gains, with Travel Retail (+45% annually), China (29%), and Russia (25%) fast growing categories demonstrating particular strength. For 2012 and 2013 it should also benefit from a lower tax rate and its fixed costs leverage is the envy of the industry especially in an inflationary era. The company’s better known brands also include Aramis, Aveda, Bobbi Brown, Bumble and bumble, Clinique, and Origins, while Smashbox and Flirt! -- that’s what Heather Morris will be wearing on Glee tonight -- offer appeal to an up-and-coming demographic. Shares are still trading well above peers, however, so look for a more attractive entry point, even if none other than Gwen Stefani has No Doubt that daily makeup helped her 14-year marriage be unblemished by a single breakup.
Why Consumers Still Spend on Beauty and Up-and-Coming Retailers: E.L.F. Cosmetics have related research.
“Well when you’re tired you take a napa you don’t move to Napa.” So said Sex and the City‘s shoe-loving Carrie Bradshaw. Aside from the fact that she’s a day late if not a dollar short -- National Napping Day was 24 hours ago -- our first stock showed that Sonoma, not Napa is where it’s at. Regardless, shares in Brown Shoe Co. Inc. (BWS) are in the valley, slumping 19.61% to a half-year low after the St. Louis footwear outfit founded in 1878 announced disappointing fourth-quarter earnings. Wholesale gross margins tumbled to 26.6% of net sales from 34.6% 12 months earlier and although sales rose 15%, this was still short of the company’s own expectations for a gain of 20%. The firm, which counts Factory Brand Shoes and Via Spiga among its labels, cited “increased delivery costs” according to CFO Diane Sullivan, though she assured investors they are now “much closer to…historic shipping efficiency.” Long-term reasons for bullishness include a management team that has traditionally placed high emphasis on stock buybacks and enhancing shareholder value. But that matters not a jot on an afternoon such as this. Celebrated songwriter Hugh Martin, who died on Friday and composed both "Meet Me In St. Louis" and "Best Foot Forward," deserved a better send off.
Also check out Quick Hits: Rubber Shoes Get the Boot and Quick Hits: Flyweight Shoe Widens Nike’s Footprint.
Lasting through the end of March, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
No positions in stocks mentioned.
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