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Lululemon cuts 4Q outlook on weak January sales

Written By Unknown on Selasa, 14 Januari 2014 | 00.33

NEW YORK — Lululemon Athletica Inc. is lowering its fiscal fourth-quarter forecasts below analysts' estimates due to declining traffic and sales in January.

The yoga-inspired clothing company's stock dropped almost 17 percent in trading Monday morning.

Lululemon now foresees quarterly earnings between 71 cents and 73 cents per share on revenue in a range of $513 million to $518 million. Its prior guidance was for earnings of 78 cents to 80 cents per share on revenue of $535 million to $540 million.

Analysts polled by FactSet predict earnings of 79 cents per share on revenue of $541.2 million for the period ending Feb. 2.

Lululemon also anticipates sales at stores open at least a year to decline by a low- to mid- single digit percentage rate. The company's previous outlook was for the metric to be flat on a constant-dollar basis.

This figure is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.

Chief Financial Officer John Currie said in a statement that since the start of January Lululemon's sales and traffic slowed "meaningfully." He said the company was lowering its quarterly guidance based on the recent performance and the assumption that the slowdown would continue through the rest of the month.

Lululemon is trying to bounce back from a series of embarrassing issues. In the spring it pulled a line of its popular yoga pants from shelves after customers complained they were too sheer, which it blamed on production problems.

Then the Canadian company's founder, Chip Wilson, angered some people with his comments during a television interview that suggested larger women's bodies were to blame for some quality complaints. He said some women's bodies "just don't actually work" for the company's pants and said thigh rubbing over time would cause pants to wear out too quickly. Last month Lululemon said that Wilson would step down as chairman. It also named a new CEO, Laurent Potdevin, former head of Toms Shoes. He replaces the company's popular CEO Christine Day.

Lululemon is expected to report final fourth-quarter financial results on March 27.

Its stock fell $9.80, or 16.4 percent, to $49.80 in morning trading Monday after falling as low as $49 earlier.


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Fiat-Chrysler CEO to stay at least through 2016

DETROIT — Sergio Marchionne will lead a merged Chrysler and Fiat at least for three more years, Fiat's chairman said Monday.

Speaking to reporters after the unveiling of a new midsize Chrysler car at the Detroit auto show, John Elkann told reporters that he has a deal with Marchionne to stay at least through 2016.

Italian automaker Fiat SpA announced Jan. 1 that it reached a deal to acquire the remaining shares of Chrysler from a union trust fund for $3.65 billion. Fiat had previously owned 58.5 percent of the U.S. automaker.

Elkann says Marchionne built the two companies into one and has made sure they work together. "I think what we are going to see now that the two companies are finally together forever, they're going to build on that strength into a much stronger sole company," he said.

Marchionne, 61, who spends much of his life on a corporate jet shuttling between Italy and Michigan, said during the summer of 2011 that he planned to retire around 2015 or 2016. The new deal with Elkann would extend that time frame somewhat. Marchionne said his eventual successor likely would come internally, from his management committee.

Also Monday, Marchionne told reporters that the Fiat board will discuss where to locate the newly merged company when it meets on Jan. 29.

Fiat SpA is headquartered in Turin, Italy, while Chrysler is in Auburn Hills, Mich. Where to place the corporate headquarters is a major decision.

Fiat got control of Chrysler after the U.S. government bailed the company out of bankruptcy protection. But Fiat is Italy's largest private employer and a source of national pride, so moving the headquarters out of the country would be difficult.

"The question is domicile and what it does going forward," Marchionne said.

Marchionne also said there will be no initial public stock offering of the new company because Fiat stock is already publicly traded. But Fiat shares, now traded in Italy, may have to be moved to a U.S. exchange if the company locates in Michigan.

Marchionne said Monday that the next challenges for the new company are to re-launch its premium brands, Alfa Romeo and Maserati; continue work upgrading U.S. manufacturing operations; and to quickly turn Jeep into an international brand.


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Aluminum Revolution: Ford introduces a new F-150

DEARBORN, Mich. — Ford pickups have been doing the country's work for 66 years. They've hauled grain, towed logs and plowed snow. They've cleared debris after tornadoes and pulled floats in the Rose Bowl parade.

They've shouldered those loads with parts forged from steel. Until now.

On Monday, Ford unveils a new F-150 with a body built almost entirely out of aluminum. The lighter material shaves as much as 700 pounds off the 5,000-pound truck, a revolutionary change for a vehicle known for its heft and an industry still heavily reliant on steel. The change is Ford's response to small-business owners' desire for a more fuel-efficient and nimble truck — and stricter government requirements on fuel economy. And it sprang from a challenge by Ford's CEO to move beyond the traditional design for a full-size pickup.

"You're either moving ahead and you're improving and you're making it more valuable and more useful to the customer or you're not," Chief Executive Alan Mulally told The Associated Press in a recent interview.

Ninety-seven percent of the body of the 2015 F-150 is aluminum, the most extensive use of aluminum ever in a truck. And this isn't just any truck. F-Series trucks — which include the F-150 and heavier duty models like the F-250 — have been the best-selling vehicles in the U.S. for the last 32 years; last year, Ford sold an F-Series every 41 seconds.

The key question for Ford, and the people who sell its trucks, is: Will customers embrace such a radical change? Dealers who have seen the new F-150 say they expect to encounter some skepticism, but the change had to be made.

"We're aggressive, stretching the envelope," said Sam Pack, owner of four Ford dealerships in the Dallas-Fort Worth area. "I think you have to do that. If you don't, then you get into that predicament of being a 'me too' vehicle."

Still, it's a big risk. Ford makes an estimated $10,000 profit on every F-Series truck it sells, making trucks a $7.6 billion profit center in the U.S. alone last year. And the company has had some quality issues with recent vehicle launches, adding to dealers' worries. The 2013 Escape small SUV has been the subject of seven recalls.

The 2015 F-150 goes on sale late this year. While aluminum is more expensive that steel, Ford truck marketing chief Doug Scott says the F-Series will stay within the current price range. F-Series trucks now range from a starting price of $24,445 for a base model to $50,405 for a top-of-the-line Limited.

It's difficult to calculate how much more aluminum costs, since there are different grades of aluminum and steel. Pete Reyes, the F-150's chief engineer, said Ford expects to make up the premium by reducing its recycling costs, since there will be less metal to recycle, and by slimming down the engine and other components, since they won't have to move so much weight.

Aluminum was used on cars even before the first F-Series went on sale in 1948. It's widely used on sporty, low-volume cars now, like the Tesla Model S electric sedan and the Land Rover Evoque. U.S. Postal Service trucks are also made of aluminum.

Ford has spent decades researching the metal. Twenty years ago, the company built a fleet of 20 all-aluminum experimental sedans. Later, it used aluminum on exotic cars from Aston-Martin and Jaguar, brands it used to own. But up to now, Ford limited the aluminum on its trucks to the hoods and used steel for the rest.

New government fuel economy requirements, which mandate that automakers' cars and trucks get a combined 54.5 miles per gallon by 2025, are speeding the switch to aluminum. Chrysler's Ram is currently the most fuel-efficient pickup, getting 25 mpg on the highway. The current F-150 gets as much as 23 mpg. Ford won't say what the new truck's fuel economy will be, but says it will trump the competition.

That could be an especially important incentive for landscapers, carpenters and other small business owners focused on their bottom line.

"I think that's going to outweigh the aluminum part of it," said Brian Jarrett, a Ford dealer in Winter Haven, Fla., who hasn't yet seen the new truck.

Improvements in aluminum are also driving the change. Three years ago, for example, Alcoa Inc. — one of Ford's suppliers for the F-150 — figured out a way to pretreat aluminum so it would be more durable when parts are bonded together. Carmakers can now use three or four rivets to piece together parts that would have needed 10 rivets before, Alcoa spokesman Kevin Lowery said.

And Ford is able to take more risks. When the F-150 was last redesigned, in the mid-2000s, Ford was losing billions each year and resources were spread thin. But by 2010, when the company gave the green light to an all-aluminum truck, Ford was making money again. CEO Alan Mulally, a former Boeing Co. executive who joined Ford in 2006, encouraged his team to think bigger. After all, it was Mulally who led early development of Boeing's Dreamliner, which replaced aluminum with even lighter-weight plastics to be more efficient and fly further.

"Everything becomes more efficient once you take the weight out," Mulally says. He expects aluminum to be used across Ford's model lineup in the future.

Ford is convinced truck buyers will accept the change. The company says the new truck will tow more and haul more, since the engine doesn't have to account for so much weight. It can also accelerate and stop more quickly. Aluminum doesn't rust, Ford says, and it's more resistant to dents.

Reyes says the company planted prototype F-150s with three companies — in mining, construction and power — for two years without revealing they were aluminum. The companies didn't notice a difference.

Mulally says Ford's customers have already shown a willingness to adopt new technology. Forty percent of the F-Series trucks sold last year had Ford's more efficient EcoBoost engines, for example, which were introduced just three years ago. And Mulally says owners trust Ford.

Ford will still have a tough time wresting customers from the competition, mainly Chevrolet, GMC and Ram, says Jesse Toprak, an independent auto industry consultant in Los Angeles.

"Movement between brands in the full-size truck segment is extremely minimal," Toprak says. "It's the strongest loyalty of any segment."

Still, about 20 percent of pickup buyers traditionally are open to jumping from brand to brand based on features or price, Toprak said. The company with the newest, most advanced truck has the advantage in getting those customers, plus those who are new to the market, Toprak says.

Some steel remains on the truck. The frame beneath it is built primarily of high-strength steel, which Ford says will make it tougher and stiffer than the current frame. There's also steel in the front dashboard, because Ford thought steel was better at dampening nose from the engine.

In all, a four-door F-150 has 660 pounds of aluminum, or nearly double the average use of aluminum per vehicle used now, according to Drive Aluminum, an aluminum industry Web site. If the Ford truck is a success, use of aluminum could expand rapidly at the expense of steel.

"People are beginning to truly understand the value that aluminum can bring to the table," Lowery said.

Ford is expecting some issues with the design or the manufacturing as it makes the change, Mulally said. But the company is working hard to troubleshoot.

"I think the attitude is, expect the unexpected and expect to deal with it," he says. "Sometimes I think our core competency is scrambling. That's not unique to Ford."

Mulally, who grew up driving an F-150 on his family's farm in Kansas, particularly likes the new truck's front windows, which dip down 2 inches for better visibility.

"That's just an unbelievable innovation. You're sitting up there and you need to know where you are," he says. "I think that is absolutely a laser focus on what the customer wants and values."


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Video game players can check out Toyota concept

DETROIT — Video game players will get a chance to try out a virtual version of Toyota's new concept sports car that was unveiled in Detroit as a symbol of the automaker's design future, the company said Monday.

The Japanese automaker took the wraps off the FT-1 during press previews at the North American International Auto Show. The company said the "FT" in the red, rear-wheel-drive FT-1 stands for "Future Toyota" and the number represents "the ultimate."

Technical details of the vehicle aren't being released, but it's billed as a powerhouse. The prototype's engine is in the front, with a window in the hood to showcase what's underneath.

"This provocative concept truly captures the passion, excitement and energy of the Toyota we are evolving into," said Kevin Hunter, president of Toyota's Calty Design Research facility in Newport Beach, Calif., "and embodies elements of the emotion and performance."

The vehicle's development started two years ago, and the car was devised first in the Sony PlayStation Gran Turismo game environment. Starting Tuesday, the automaker says FT-1 will be available as a downloadable vehicle for PlayStation 3 Gran Turismo 6.

With a free online update, an event featuring the FT-1 will be made available to players. With a bronze or better in the FT-1 challenge at Laguna Seca, players get the virtual car. Drivers also will be able to purchase the virtual vehicle without completing the event.

The physical car, meanwhile, represents a change in Toyota's product development strategy from heavy reliance on consumer studies with an aim at pleasing everyone and taking fewer risks. Hunter said. The car is designed to stir emotions and push limits with Toyota design.

___

Follow David Runk on Twitter: http://twitter.com/runkdavi


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US probes NJ's $25M post-storm marketing effort

TRENTON, N.J. — Federal officials are taking a closer look at how New Jersey Gov. Chris Christie's administration spent $25 million to promote the Jersey shore after Superstorm Sandy.

Democratic U.S. Rep. Frank Pallone Jr.'s office says the inspector general at the Department of Housing and Urban Development will audit the campaign, which featured commercials showing the Christie family.

The inspector general conducted a basic review last year at Pallone's urging. Pallone says the office found enough evidence to justify a full audit.

The administration chose a politically connected public relations company over another firm that had bid $2 million less. The winning bidder proposed using Christie in the ads, while the other did not.

Christie spokesman Colin Reed says the federal government approved the campaign and that the administration expects a review will find it was effective.


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Dunkin' Brands plots further expansion in 2014

CANTON, Mass. — Dunkin' Brands said Monday that its franchisees and licensees plan to open 685 to 800 new Dunkin' Donuts and Baskin-Robbins locations globally this year.

In 2013 franchisees and licensees opened a combined 790 new Dunkin' Donuts and Baskin-Robbins worldwide.

Dunkin' Brands Group Inc. Chairman and CEO Nigel Travis said in a statement that it is still on pace for a 5 percent annual development rate for Dunkin' Donuts in the U.S. There were 371 new Dunkin' Donuts restaurants opened in the U.S. last year. The company anticipates that franchisees will open 380 to 410 new Dunkin' Donuts locations in the U.S. in 2014.

Baskin-Robbins opened four new locations in the U.S. in 2013. The company expects franchisees and licensees to open five to 10 new Baskin-Robbins locations in the U.S. in 2014.

Dunkin', whose doughnut shops are common sights on the East Coast, is working to expand in the western U.S., where it is thinly represented. The company said it has deals to open nearly 100 locations in California and is now working to sell franchises in northern California.

Overseas, Dunkin' Donuts opened 138 new restaurants abroad in 2013. Baskin-Robbins opened 277 new locations outside the U.S. last year. In 2014 the company expects to open 300 to 400 new Dunkin' Donuts and Baskin-Robbins restaurants outside the U.S.

Dunkin' Brands, based in Canton, Mass., had almost 11,000 Dunkin' Donuts and more than 7,250 Baskin-Robbins restaurants at fiscal 2013's end. The company's stock fell 62 cents to $46.33 in morning trading.


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US stocks are little changed; Lululemon drops

NEW YORK — Stocks were mixed on Monday as investors wait for the pace of company earnings reports to pick up this week. Energy stocks fell as the price of oil declined.

KEEPING SCORE: The Standard & Poor's 500 index fell one point, or 0.1 percent, to 1,840 as of noon Eastern time. The Dow Jones industrial average fell 17 points, or 0.1 percent, to 16,419. The Nasdaq composite rose two points, or less than 0.1 percent, to 4,177.

OIL SLUMP: Energy stocks held the market back. The price of crude oil fell 60 cents, or 0.6 percent, to $92.12 a barrel. Oil is falling as traders assess that that global crude supplies will remain plentiful even if demand picks up. Exxon Mobil was down $1.16, or 1.1 percent, at $99.37.

SLOW START: The stock market is getting the year off to a slow start after an exceptionally strong performance in 2013. The S&P 500 is down 0.4 percent so far this year, after climbing almost 30 percent last year. A weak December jobs report that was released Friday has left investors feeling cautious about the economy.

BIG BANKS AND OTHERS: JPMorgan Chase, Wells Fargo and Bank of America are among the big banks that will report fourth-quarter earnings this week. Best Buy and the UnitedHealth group are among the non-financial companies that will report earnings.

EARNINGS WATCH: "The market will take its direction from how well, or how poorly, corporate earnings season is unfolding," said Phil Orlando, chief equity market strategist at Federated Investors. "I think we're setting up for a positive surprise."

GROWTH FORECAST: Analysts expect fourth-quarter earnings to rise by 5.8 percent for S&P 500 companies, according to S&P Capital IQ. That would be a slight increase from the 5.7 percent rate in the previous quarter and the highest since the fourth quarter in 2012.

DOWNWARD-FACING SALES: Lululemon Athletica fell $9.59, or 16.1 percent, to $50.05 after the yoga apparel maker said sales have dropped off in January and its fourth-quarter results will be lower than expected.

NO DEAL: Scripps Networks slumped $3.88, or 4.7 percent, to $78.13 after the Wall Street Journal reported that talks about a merger between the cable network operator, which owns HGTV, and Discovery Communications had ended.

MIXED DRINKS: Beam, the maker of Jim Beam, Maker's Mark and other liquors jumped $16.15, or 24.1 percent, to $83.12 after the company announced that it had agreed to be acquired by Japan's Suntory for $14 billion.

TREASURYS AND GOLD: The yield on the 10-year Treasury note fell to 2.85 percent from 2.86 percent from Friday. Gold rose $3.60, or 0.3 percent, to $1,250.50 an ounce.


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US carbon pollution up 2 percent in 2013

WASHINGTON — A new government report says energy-related carbon dioxide pollution increased slightly last year after declining for several years in a row. The 2 percent increase was largely due to a small increase in coal consumption in the electric power sector.

Coal, long the dominant source for U.S. electricity, has regained some market share in recent months as natural gas prices have increased following historic lows in 2012.

A report by the Energy Information Administration says American cars and factories spewed 5.38 billion tons of carbon dioxide in 2013, up from 5.27 billion in 2012. Carbon dioxide is the chief man-made global warming gas.

Even with the uptick, the EIA says overall U.S. carbon emissions remained 10 percent below 2005 levels.


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Mass. gas prices down 3 cents per gallon

BOSTON — The price of a gallon of self-serve regular gasoline in Massachusetts had dropped 3 cents in the past week.

AAA Southern New England reports Monday that gas has fallen to an average of $3.44 per gallon, which is still a penny higher than a month ago but and a penny higher than at the same time last year.

Despite the drop, the current price in Massachusetts is 13 cents higher than the national average.

The AAA survey found a 31-cent price range for self-serve regular, from a low of $3.29 a gallon to a high of $3.60.


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Newly jobless NJ casino workers try to cope

ATLANTIC CITY, N.J. — At a minute past midnight, Debra Wagner was suddenly unemployed.

A housekeeper for 23 years at the Atlantic Club Casino Hotel, she was one of 1,600 workers who lost their jobs early Monday when the struggling casino shut down, the victim of a glut of casinos in the northeastern U.S.

Just a few hours after a handful of remaining customers and last-shift workers counted down the casino's final five seconds, Wagner stood in line with hundreds of others at a union hall, hoping to score a $20 supermarket gift card and some help in filling out unemployment paperwork.

"I had planned to retire here," she said. "Right now I'll collect unemployment, and maybe in the spring somebody will start hiring. Hopefully."

But that seemed unlikely. With casinos popping up in states all around it, the Atlantic Club fell victim to the cold efficiency of the marketplace: Analysts have long said that in this region, there are too many casinos and not enough gamblers to keep them all afloat.

Two rival casino companies paid a combined $23.4 million to shut down the Atlantic Club and remove what they considered unneeded capacity from the market. Tropicana Entertainment bought the slot machines, table games and customer lists, while Caesars Entertainment bought an 801-room hotel it has no immediate plans for.

Wagner can't even turn to family for help.

"Both my sisters worked there, and so did my mom," she said. "We're all out of jobs, all four of us. We can't even help each other."

Once Atlantic City's top-earning casino, where then-owner Steve Wynn clowned with Frank Sinatra in commercials, bringing the legendary singer an armful of fresh towels, the Atlantic Club went out with a whimper. In the hours before the 12:01 a.m. closing, its restaurants and bars had all shut down, and many gamblers and employees had already left.

A few die-hards that stayed on the casino floor until the end, counting down its final five seconds as dealers who were suddenly unemployed burst into tears and hugged each other. Within moments, casino staff began stacking and counting chips and preparing to remove cash boxes from the casino floor.

"Where was our support?" asked Kathy Buonasorte, a cocktail server for 28 of the casino's 33 years. "They all left us. No politician helped us. No one came to save us."

On the sidewalk outside the casino, she hugged fellow server Beth DeLuccia, who she described as the first friend she made at the casino. Nearby, server Maureen Cohen had just finished her final shift.

"I served my last drink at 4 this afternoon," she said. "It was incredibly sad. Can you believe how pathetic it's going to be to come over (a nearby) bridge and see a closed casino?"

"It's a sad day," said David Rebuck, director of the state Division of Gaming Enforcement, who watched the shutdown process begin right after midnight. Dealers and security personnel set to work counting the take from the casino's final day. Overnight, workers were to read the meter on each of the hundreds of slot machines, empty the cash containers and secure them in the counting room. At some point on Monday, armored cars were to remove the remaining cash.

The hotel's safe deposit boxes had been emptied hours before the shutdown as the final hotel guests checked out, and front-desk cashier drawers were already removed, leaving gaping holes.

By Wednesday, crews from the Tropicana will begin removing the slot machines and table games. The casino floor will be bare by the end of the month, Rebuck said.

Guests helped themselves to souvenirs as well, digging up or ripping out potted plants and even six-foot-tall trees from planters on their way out the door.

It was the first casino closure in Atlantic City since the Sands shut down in 2006. But that was intended to make way for a bigger, better casino that Pinnacle Entertainment planned, but never actually built.

Struggling for years against newer, bigger casinos in Atlantic City and in neighboring states, the Atlantic Club sought a buyer for the last few years but was unable to attract one. It filed for bankruptcy in November.

Its owners, Colony Capital LLC, a Los Angeles hedge fund, paid more than a half billion dollars for it in 2005.

___

Wayne Parry can be reached at http://twitter.com/WayneParryAC


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