Gap raised its earnings-per-share outlook for the year
yesterday after its summer lineup helped boost second-quarter results and
advanced its turnaround push. The higher guidance was short of Wall Street expectations,
but the company also hiked its annual dividend by 20 cents, or 33 percent, to
80 cents per share. Its shares rose 1 percent to $42.43 in aftermarket trading.
Over the past year, the stock is up 21 percent. Gap owns Banana Republic, Old Navy, Piperlime, Athleta and
Intermix stores, in addition to its namesake chain. Gap’s more upbeat outlook
represents a bright spot in the broader industry. Major retailers including
Walmart, Target and Macy’s have lowered their expectations for the rest of the
year, citing the uncertain economy.
Friday, August 23, 2013
Koch Industries Not Buying Tribune Newspapers
Koch Industries will not be buying the Tribune Company’s
eight newspapers, which include the Chicago Tribune and the LA Times, The Daily
Caller has learned. Sources with knowledge of the business proceedings told The
Daily Caller that Koch Industries, after conducting its due diligence, has not
been interested in buying the newspapers for “a couple months.” The company
determined that purchasing the newspapers was “not economically viable” and
that both parties walked away from the negotiations, they said.
Zinio App Offers 3 Mags $5/Month
Magazine junkies on a budget, you might just flip over this.
The Zinio app – which lets you read more than 5,500 digital magazines on any
platform – is now offering a subscription model that costs $5/month for any
three of your favorite magazines. Not bad, considering many of the magazines
cost $4.99 for a single issue, such as T3, Car and Driver, PC Gamer, Rolling
Stone, Esquire and National Geographic. Some magazines cost less -- such as
$3.99 per issue for Cosmo, Us Weekly, Wine Access and TV Guide -- but $5 a
month for three magazines is still a deal. Called "Z-pass," you can
select which three magazines you want and change them up each month, if
desired. You don't need to commit for a certain amount of time to get the deal,
and the first month is free. You can access your Zinio magazines on virtually
all smartphones, tablets and computers (we reviewed the app on an iPad mini).
Magazines are downloaded to read offline, so you're fine if there's no Internet
connection when you want to read (such as on an airplane).
Thursday, August 22, 2013
AF&PA Reports P & W Shipments
The American Forest & Paper Association has released its July 2013 Printing-Writing
Paper Report. According to the report, total printing-writing paper shipments
were within 1 percent of the comparable shipments of July 2012, with total
inventory levels increasing 3 percent from June.
June coated free sheet (CFS) papers shipments of 322,600
tons brought the year-to-date CFS shipments essentially flat compared to 2012.
U.S. imports of CFS papers increased 21 percent year-over-year in June. Uncoated
free sheet (UFS) paper shipments increased 2 percent year-over-year in July.
For the year, shipments are down 3 percent in 2013. Imports of UFS were flat
compared to June 2012, with exports of UFS up 10 percent. July uncoated
mechanical (UM) paper shipments decreased 3 percent when compared to July 2012,
with year-over-year imports through June up 6 percent. UM exports are up 11
percent in 2013 compared to the first six months of 2012. Coated mechanical
(CM) shipments in July decreased 6 percent, the sixth consecutive month of
year-over-year decreases. Shipments of CM are down 12 percent for the year,
with imports down 3 percent year-over-year in June.
The complete report with detailed tables, charts, and
historical data can be purchased by contacting Caroline Nealon at
Statistics_Publications@afandpa.org or 202-463-2448.
Metsä Fibre Announces Price Increases
Metsä Fibre increases the price of Botnia Nordic Pine
(Northern Bleached Softwood Kraft) in Europe, effective 1 September 2013. The
new price is USD 880 per tonne, CIF Metsä Fibre’s frequently used European
ports of destination.
Metsä Fibre increases prices of Botnia Nordic Pine and
Botnia Nordic Strong (Northern Bleached Softwood Kraft pulps) in China,
effective 1 September 2013. The new price of Botnia Nordic Pine is USD 710 per
tonne and Botnia Nordic Strong USD 720 per tonne.
G-P/Buckeye Merger Could Cost Memphis Jobs
Assuming the Federal Trade Commission approves the merger of
Memphis-based Buckeye Technologies Inc. with Atlanta-based Georgia-Pacific LLC,
the company could see an infusion of capital on its manufacturing side. The
future of certain employees may not be as bright.
On Aug. 15, more than 84 percent of Buckeye’s shareholders
voted in favor of the deal, which was valued at about $1.5 billion, and will
pay shareholders around $37.50 per share. The original deal was announced as a
potential acquisition in April, but changed to a merger in late June.
Even though the vote was favorable, Georgia-Pacific still
has to wait on the FTC to review it through the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
David Braun, CEO of Capstone Strategic, an industry analyst,
said the deal probably will be finalized, but Georgia-Pacific will most likely
have to divest some existing facilities, similar to what Memphis-based
International Paper Co. did when it finalized its acquisition of Temple-Inland
in early 2012.
“(The federal government) will want to make sure they’ve got
local competition in some of those areas to keep everything honest in terms of
supply and local manufacturing,” Braun said.
The review process could be done in the next 60 days, but
there’s no set timetable.
When, and if, the merger is finalized, Georgia-Pacific will
have a foothold in the specialty fibers industry. And the company’s history is
to invest and improve its manufacturing operations. However, as the integration
of Buckeye into Georgia-Pacific begins, there will inevitably be some
elimination of office positions. When it released its fiscal fourth quarter and
2013 earnings last week before the vote, Buckeye reported a 4 percent decline
in sales for the fourth quarter and a 17 percent decline in income to $92
million. “The corporate folks have a right to be nervous,” Braun said. “The
financials for Buckeye haven’t been good for the last few years. Who is the
best owner? A parent company like Georgia-Pacific is favorable.”
Media Growth Up
Total media growth is now up nearly 10% through the first
six months of the year in terms of advertising revenue -- and up 2% in July --
with national cable TV still commanding the highest share and healthy gains. The
Standard Media Index, which culls data from media agencies amounting to an
estimated 60% of total agency spend, says national cable networks grew 5% in ad
revenues versus the same time period of a year ago. For the first half of the
year, spot TV is 2% higher (an 8.1% share), syndicated TV is flat (a 2.2%
share), and local cable 9% is higher (a 1.9% share). Overall, all of U.S. TV is
4% higher in ad revenues, with a 60.1% for the first half of 2013. SMI also says
that overall media spending in July was up 2%. Digital media continues to drive
upward -- adding 13% in July and 23% for the first six months of the year. It
commands a 24% share of media -- second only to national TV cable networks,
which have a 25.8% share. Broadcast TV has a 21.3% share -- in third place
overall from January to July 2013. Other media show continued strong results for the first six
months of the year: magazine revenues grew 15% (a 5.5% share); Radio was 7%
improved (a 4.8% share); out-of-home was 12% higher (a 3.8% share); and
newspapers grew 15% (a 1.5% share).
MagNet Releases Newsstand Stats
After a devastating newsstand sales environment during the
first quarter, 2013, second quarter numbers were improved, but were still down
compared to the same period in 2012. Second quarter sales were helped by the
fact that there were over six hundred more releases in the second quarter 2013,
compared to second quarter, 2012. While the AAM
estimated first half sales down 10.6% in dollars, MagNet's numbers,
which include sales of all titles sold at retail, including the over 300 titles
tracked by the AAM, has dollar sales down in the US by 9.25%, and by 9.4% in
the US and Canada combined. Our numbers include book-a-zine titles, which
continue to perform well, and aren't tracked by the AAM. Several other titles
performed well in the first half 2013, including Sport's Illustrated, HGTV,
Woman's Day, Shape and Vogue. Many gun titles performed well also, as reflected
in the Outdoors subject category sales jump of 13.7% compared to 2012.
US/Japan Show Growth In Q2 Printer Shipments
According to the latest results from the International Data
Corp. (IDC) Worldwide Quarterly Large Format Printer Tracker, the market showed
a year-over-year decline of -4.2 percent, with nearly 73,000 units shipped in
the second quarter of 2013 (2Q13). Shipment value also experienced a
year-over-year decline of -3.2 percent to $781 million. However, for the first
time since the fourth quarter of 2010, two of the four largest large-format
printer (LFP) markets posted year-over-year growth in this period. The United
States and Japan posted 5.0 percent and 4.2 percent growth in unit shipments in
2Q13. "While the worldwide LFP market is mature, we do see
pockets of growth opportunity that can be very lucrative in the eco-solvent
based printers segment," said Phuong Hang, program manager, Worldwide
Large Format Printer Tracker. "We expect vendors to introduce new products
soon to target these emerging markets."
U.S. Digital Ad Spending Forecast Upward
U.S. digital ad spending will reach $42.26 billion this
year, up 14.9% over last year's spending, according to a new forecast from
eMarketer Inc. The projection is up slightly from a June forecast of $41.94
billion. eMarketer made the adjustment largely due to a revision in its mobile
ad spending forecast, which is now set at $8.51 billion for the year, up from a
June projection of $7.65 billion.
This year, 22.1% of all U.S. digital search spending will be
on mobile devices, according to eMarketer. By 2017, U.S. advertisers will spend
59.6% of all digital search dollars on mobile, it projected.
Source Interlink Deleverages' Business
Source Interlink has reached an agreement with investor
GoldenTree Asset Management to recapitalize the company. The deal
"significantly deleverages" each of the company's core business
units, Source Interlink Media and Source Interlink Distribution, while
increasing GoldenTree's stake in the group. "The tremendously improved capital structure will
provide both Source Interlink Media and Source Interlink Distribution with the
ability to maximize transformational opportunities across their respective
industries," says Michael Sullivan, president and CEO of Source Interlink,
in a statement. "This transaction will put both businesses in better
positions to strengthen strategic partnerships and make investments to enhance
their position in their respective industries." "This is a very
typical move that most media companies that were acquired by private equity
firms in the past 5-7 years are making," says Reed Phillips, CEO and
managing partner of investment firm DeSilva + Phillips, in an email to Audience
Development. "Most of these buyouts were overleveraged and can no longer
support the level of debt that was originally put on the businesses, and are
thus being restructured. That simply means that debtholders take equity in
exchange for reducing the debt load on the company and the equity holders see
their positions shrink to the point where many are no longer in control of the
business. The net result is that this is very good news for the company because
they can start to run their businesses without the constraints they had when
the company was overleveraged."
Chris McLoughlin Moves Over To Rolling Stone
It was just last month that we were writing about the
strategic alliance between Wenner Media’s Fitness and Men’s Journal. And how
that deal quickly came together through the efforts of respective publishers
Eric Schwarzkopf and Chris McLoughlin. This week, McLoughlin is on to bigger
and better Wenner things. A year and a
half after being appointed publisher of Men’s Journal, the magazine industry
vet is moving over to Rolling Stone in the same capacity. From this afternoon’s
announcement: “We’re thrilled to see Chris apply the strategic thinking he
displayed at Men’s Journal as he assumes his new role at Rolling Stone,” said Jann
Wenner, chairman of Wenner Media. “Chris’s sales and marketing expertise will
further redefine and expand the Rolling Stone brand as we increasingly engage
and grow our audiences in both the print and digital space.” McLoughlin arrives
at RS on the heels of a devastating piece by Matt Taibbi about the looming,
disastrous potential bursting of the American student loan bubble. Prior to
joining Wenner Media, McLoughlin was most recently associate publisher of
Redbook and executive director of golfdigest.com
J. Crew Pinterest Debut For Fall Cat
The first look at J. Crew’s fall catalog isn’t reserved for
the glossy pages of a traditional mailer anymore. This year, the fashion
retailer is getting hip to glossy (and matte) displays of another sort: any
device with access to Pinterest. On
Monday, J. Crew unveiled its fall catalog board on Pinterest, giving loyal
followers an early glimpse at the collection and the opportunity to preorder
new styles. The effort is a social media marketing first for any fashion brand
on the virtual pinboard site. It’s a
fresh move for J. Crew, which just last year didn’t have even a smidge of
social media presence. The board features all the women’s looks for fall. No
mere coincidence there: The overwhelming majority of Pinterest’s 70 million
users are women. We’ve seen Nordstrom integrate the social scrapbooking site in
a novel way, but this is the first time a brand has debuted a full catalog on
Pinterest. As fashion magazines release
their biggest September print issues to date, J. Crew’s Pinterest strategy
leads the retailer’s oncoming digital marketing sprint, which includes a Style
Guide campaign on Instagram, as well as a new online video series.
Skateboarder Mag to Cease Publication
Skateboarder Magazine killed most of its print circulation
to try a digital-first approach in May, but the experiment was short-lived. The
49-year-old title, operated by Source Interlink Media's enthusiast GrindMedia
division, is ceasing regular publication after the release of its current
issue. All platforms will be shut down by October 15. Norb Garrett, senior vice
president and group publisher at GrindMedia, explained the rationale for the
decision in a video on the brand's website. Garrett blames the skateboarding
market rather than the performance of the digital magazine itself.
Despite the challenges posed by the industry however,
GrindMedia will continue to publish TransWorld Skateboarding. Garrett hinted at
the possibility of special collaborative projects between the two titles in the
future. It's the third time Skateboarder Magazine has shut down—once in late
1960s before coming back in 1975, and then again in the 1980s before returning
in 1999.
Cenveo In Agreement to Purchase National Envelope
Cenveo, Inc. today announced that it has entered into a definitive agreement to
acquire substantially all of the operating assets of National Envelope In conjunction with Cenveo's
agreement, Hilco Receivables has agreed to acquire substantially all the
accounts receivable and Southern Paper has agreed to purchase the inventory of
the Company. Cenveo's purchase price is expected to consist of approximately
$20 million of cash and $5 million of Cenveo common stock. The closing is
subject to Bankruptcy Court approval and customary closing conditions. Cenveo
expects that the acquisition of National will deliver approximately $300
million in incremental annual sales and $30 million of incremental EBITDA when
the integration of the two companies is complete. Cenveo expects the
acquisition will better position it for continued revenue growth through an
enhanced portfolio of products and services, increased geographic presence, and
improved financial stability. Cenveo also expects to benefit from overhead cost
actions and facility consolidations, as well as implementing and investing in
manufacturing efficiencies and best practices. The transaction is expected to
enhance Cenveo's credit profile and be accretive to earnings and cash flow per
share. National Envelope filed Chapter 11 on June 10, 2013 in order to
facilitate a sale. Pursuant to the definitive agreements with Cenveo and its
partners, the Company will request the US Bankruptcy Court for the District of
Delaware to authorize the Company to proceed with the sale on September 13,
2013. National and Cenveo assure its customers that a smooth integration is
expected and that orders will continue to be produced and shipped in the normal
course of business.
Ratios Show Printing Ind Profits Increasing
North American printers are learning to improve their
profitability even as top-line challenges in sales remain. Printers
participating in this years’ Ratios Survey attained average profit rates of 2.7
percent on sales—up from 1.8 percent last year. This is the highest level in
the past six years, but it is still not back to the pre-recession level of 3.1
percent in 2008. Profit leaders—printers in the top 25 percent of
profitability—saw profits increase slightly to 9.9 percent compared to 9.6
percent last year. This rate of profit brings profit leaders to their highest
level since before the recession in 2007. According to our 2013 survey results,
materials accounted for the largest single cost category for the typical
printer—approximately 36 percent of sales. Total materials expenses increased
slightly in 2013 from their previous level of 35.5 percent in 2012. Paper alone
consumed more than one-in-five sales dollars last year. Other major costs
incurred by printers last year included factory payroll (24.6 percent of sales)
down from 24.8 percent in 2012, factory expenses (16.9 percent of sales) down
from 17.6 percent in 2012, and administrative and selling expenses (19.3
percent of sales) down from 19.6 percent in 2012. Sales per employee for all printers stood at $155,348.
Profit leaders’ sales per employee were significantly higher at $171,153.
J.C. Penney's 'Turnaround'
Dismal second-quarter results don't suggest the company is
on the mend. However, is the department store chain really doomed? Retail and
turnaround experts make the case for J.C. Penney's comeback.
"The company still has brand equity among its core
consumer, "says Michael Appel, president of Appel Associates, a turnaround
and performance improvement consulting firm. " Appel believes that although J.C. Penney has
tough competition, there's nothing to suggest the company can't right itself.
"In the moderate price point there's so much competition," Appel
said. "That doesn't mean with the right management and the right strategy
and positioning and right product they can't do it."
J.C. Penney reported a worse-than-expected net loss of $586
million, or $2.66 a share, chock full of extraordinary charges pulling the
number down. Net sales slumped 12% year-over-year, and gross margin fell to
29.6% in the quarter. The company plans to end the year with $1.5 billion of
cash.
CEO Myron 'Mike' Ullman noted on the company's earnings call
that the reversal of initiatives by its former chief executive Ron Johnson will
take time - and money. Essentially reversing initiatives to reinstate things
like sales and promotions instead of the everyday pricing, clearly identifiable
staff and checkout stations as well as a newly launched home section that
already was not resonating well with customers and needs modification all
requires investment.
Admitting Mistakes In Retail, Ackman Remains Feisty
With his billion-dollar bets on J.C. Penney and Herbalife
situated far south of where he expected them to be, it has been increasingly
clear that Pershing Square Capital Management honcho William Ackman would have
“some splainin to do,” as Ricky used to say to Lucy. Yesterday he did so in a
23-page letter to his shareholders replete with disclaimer and notes. “Clearly,
retail has not been our strong suit, and this is duly noted,” he said,
referring not only to Penney, from whose board of directors he “voluntarily”
resigned earlier this month after yet-another spat in public with other members
over the performance of a sitting CEO, but also to past failures Borders and
Target. “He said he may exit Penney, where he owns 39 million shares
and is the company’s biggest investor, but would not say when. At Target, he
stuck it out for 19 months after losing a bitter and expensive proxy fight, he
reminded investors,” reports Reuters’ Svea Herbst-Bayliss.
As for Borders, Pershing “took a $200 million bath,” as the
New York Post’s Mark DeCambre puts it, when it went belly-up in 2011. “Borders
was a big mistake on the buy,” Ackman told “CNBC producer and Wall Street
insider” Maneet Ahuja for the “hedge-fund tome,” The Alpha Masters: Unlocking
the Genius of the World’s Top Hedge Funds, DeCambre reports. “Retailing is for
retailers. It’s not for hedge fund managers,” Erik Gordon a law and business
professor at the University of Michigan, tells Herbst-Bayliss. “Successful
retailers have spent their whole lives in the business. Ackman finally figured
that out.”
Las Vegas Papers Go To Court To Prevent Monopoly
Another newspaper joint operating agreement is coming under
pressure in Las Vegas, where one partner in the JOA -- the Las Vegas
Review-Journal -- wants to dissolve the JOA and then stop printing and sharing
advertising revenue with the other partner, the Las Vegas Sun. The Sun’s
publisher and editor, Brian Greenspun, is suing Review-Journal owner Stephens
Media to stop the dissolution of the JOA, according to the Sun. As in other cities, the JOA was agreed by the
newspapers at the behest of the U.S. Department of Justice, with the goal of
keeping both newspapers viable and thus ensuring continued diversity of
reporting and opinion, as well as competition for readers and advertisers in
the Las Vegas market. Greenspun is arguing that the dissolution of the JOA
would allow Stephens Media to force the Sun out of business, leaving the
Review-Journal with a de facto monopoly. The story becomes
more complicated because several of Greenspun’s own siblings, who co-own the
Sun, agreed to terminate the JOA in return for receiving ownership of the
valuable lasvegas.com URL. Until now, the Greenspun family has been paying
Stephens Media $2.5 million a year for the right to use the URL. However, Brian
Greenspun contends that his siblings have no right to dissolve JOA, as doing so
would violate federal antitrust laws.
Mag+ and Appboy Partner
Mag+ announced its partnership with Appboy Wednesday,
bringing a new management platform to the company’s various digital publishers
looking to deepen reader relationships on mobile.
Mag+, a publishing platform for creating content optimized
for mobile, counts magazines like The Atlantic and New York Magazine and
international corporations among its customers. These publishers will now have
access to Appboy’s mobile relationship management (MRM) platform to build their
businesses through mobile. “Monetization
and engagement are the biggest challenges of digital publishing today,”
contends Mike Haney, Mag+ co-founder and chief creative officer, in a
statement. “Appboy helps companies by offering deep insights about their
readers and targeted communications to segments of those readers.” In a rapidly
evolving mobile ecosystem, the partnership between the two companies will help
Mag+’s nearly 1,500 apps build a long-term, sustainable mobile business,
contends Mark Ghermezian, CEO of Appboy. “By bringing sophisticated marketing tools to
mobile, the platform empowers digital publishers to derive more value from
their apps,” says Haney.
Xulon To Offer Free Publishing For Faith Titles
Xulon Press, one of the leaders in Christian
self-publishing, has announced what it is calling a first-of-its-kind free book
publishing program for the faith-based market. Through
FreeChristianPublishing.com, writers will be able to prep their manuscripts for
print and e-book publication at no charge. Xulon will make its money from the
new venture through printing copies to order, and up-selling such other
services as marketing and promotion. The website will go live next month, with
print-ready PDFs being accepted for automated checking and processing. A
do-it-yourself system that will guide writers through formatting their
manuscript for production—including access to a selection of free stock
covers—will follow later in the year, or early in 2014. “We have been talking
about this concept for a while,” said Chad Nykamp, Xulon v-p and general
manager. “Xulon has a long life as a high-end, high-service, high-touch
publisher, where we serve a certain segment, but there were a lot of authors we
just couldn't help because the price was out of their range.” The new service
will enable Xulon to break out its existing packages—which range from $1,699 to
$4,999—into a la carte options. In addition to printing and distribution, Xulon
services include editorial help, press releases, and video trailers. While free
formatting options exist in the general market, until now there has not been
anything available for the faith-based market. The process “not only provides
(authors) the ultimate level of control over their publishing journey, but also
dramatically lowers the cost of bringing a book to market,” said Nykamp. Xulon
is on track to publish around 3,000 titles this year.
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