TheChek News Flow

From cinemas to gold mines, foreign companies expand into challenging Greek market

An open-air cinema with a natural backdrop of twinkling city lights and the inky Aegean Sea is the latest attraction for shoppers at One Salonica, a mall in the Greek port of Thessaloniki.

The new screen is the eighth that Cineplexx, an Austrian investor, has opened at the mall in a low-income neighbourhood since the company came to Greece two years ago. Christof Papousek, chief financial officer and a partner in Cineplexx, says the investment has worked out well.

“We’re profitable there, we feel in a very comfortable position and we’re ready to expand in the Greek market,” he says.

Such confidence might seem barely conceivable. Greece has been gripped by economic crisis for years: indeed Cineplexx arrived in mid-2015 just as the country was falling off Europe’s investment map. Capital controls had been imposed, the leftwing Syriza government was locked in a dispute with international creditors and Greeks were bracing for an involuntary exit from the euro.

But companies that are willing to embrace risk say that after years of shrinking investment and deep wage cuts, Greece offers opportunities rarely found in central and south-east European markets.

Despite falling back into recession in the first quarter, the economy is projected to expand this year by 1.8 per cent, and 2.4 per cent in 2018. And the International Monetary Fund and other Greek creditors are drawing closer to a deal over the country’s €86bn bailout programme, following parliament’s approval of additional pension and tax reforms.

Prinzhorn Holding, an Austrian recycling and packaging group, also arrived in 2015, buying Viotyk, a Greek family-owned packaging company as part of a regional expansion that included Romania and Turkey. “We saw the opportunity in Greece and we liked it. It’s a challenging market but by potential I give it a chance of higher growth than any other market [we work in],” says Cord Prinzhorn, chief executive.

Viotyk this month completed an investment in a packaging unit to triple output at its plant near Athens. It will cater for local subsidiaries of multinationals as well as Greek companies that began to focus on exports when domestic consumption slumped in the crisis.

“As soon as people export they think of packaging,” Mr Prinzhorn says. “We see healthy demand . . . Our core market is food and beverages and Greece will continue to export olive oil, sesame seeds, honey and wine.”

Both companies have thick skins. Cineplexx is present in several western Balkan countries including Albania, Macedonia and Kosovo, and so has plenty of experience of a volatile business environment and frequent political upheavals. Family-owned Prinzhorn takes decisions “with a 20-30 year horizon in mind”, Mr Prinzhorn says.

The largest recent investment by a multinational company is by Philip Morris International, which is spending €300m to transform Papastratos, its Greek subsidiary, from a traditional cigarette manufacturer into a producer of “smokeless” tobacco sticks that are heated in a handheld electronic device.

Christos Harpantidis, chief executive of Papastratos, says the project will create 400 jobs at its plant in Aspropyrgos, a town near Athens with an unemployment rate of more than 30 per cent.

The new product uses a higher percentage of strongly flavoured Oriental tobacco, produced in Greece, than traditional cigarettes, which is one reason PMI chose Papastratos for the venture. The company has a three-year deal to buy tobacco from 30,000 local growers.

Greece remains a risky proposition. Critical issues such as debt relief, Greece’s inclusion in the European Central Bank’s quantitative easing programme and the date of a return to the international capital markets have still to be settled with the EU and the IMF.

And even the most bullish companies struggle with numerous other obstacles in Greece — which dropped another three places to 61st in the World Bank’s 2016 “ease of doing business” report.

Getting a permit is one issue. Mr Harpantidis recounts a difficult experience of chasing the official permits needed to upgrade the Papastratos plant.

Another investor complaint is the slow enforcement of contracts through the Greek courts. Capital controls, though loosened, constrain business activity.

One recent high-profile case involves Eldorado Gold, a Canadian company developing a €1bn gold mine in northern Greece. The Syriza government revoked several permits issued to Eldorado, stalling progress for more than a year. Syriza officials also backed a vocal anti-mining campaign by local hard-left politicians.

The mining project is back on track following a policy reversal by Alexis Tsipras, the prime minister. Yet George Burns, Eldorado’s chief executive, says permits are still being approved “more slowly than we’d like.”

Mr Tsipras’s speeches stress that foreign investment will be critical to economic recovery. Privatisations have been part of recovery plans: a German-Russian consortium agreed to pay €230m for a majority stake in Thessaloniki’s port, while Fraport of Germany paid €1.2bn for a 40-year concession to run Thessaloniki airport and another 13 regional airports.

With Papastratos’s new plant set to begin operating in January, Mr Harpantidis is realistic about Greece’s problems but confident his company can still carve out a substantial regional market.

“The situation [in Greece] isn’t good. There are issues with bureaucracy, excessive taxation and the banking system. That’s the reality,” he says. “But the country has potential and comparative advantages we are building upon.”

The airline must show that it deserves its privileged position

People can be remarkably tolerant of long travel delays when they are clearly unavoidable, clearly communicated and accompanied by practical efforts to limit the inconvenience and help those affected make alternative plans. None of these mitigating features was in evidence at Heathrow or Gatwick on Saturday, when a computer system crash forced British Airways to cancel all its flights out of London on one of the busiest weekends of the year.

Instead, thousands of passengers were left stranded without information, many of them unable to retrieve their luggage or even leave the terminal. BA staff were conspicuous by their absence. When the airline’s chief executive, Alex Cruz, eventually donned a yellow high-vis jacket to issue an apology posted on Twitter, his message amounted to: “We’re really sorry, but please don’t come to the airport, and please, please don’t try to call customer services.” On Sunday, he offered further apologies, acknowledging many families had endured a “horrible experience”, but Heathrow remained crowded and chaotic, with about a third of BA flights still cancelled.

On the scant information available so far, there appears to be no good excuse for the crippling IT failure. Mr Cruz said there was no evidence of a cyber attack and that the root cause seemed to be a power supply issue — the same reason given by Delta, the US airline, when IT problems forced it to ground planes around the world last summer.

This is an entirely inadequate explanation. Whatever back-up systems BA had in place, they are woefully deficient if they cannot withstand a power cut. No chief executive today can afford to underestimate the threat posed by either cyber attack or more mundane IT glitches. Equally inexcusable, though, was BA’s failure to look after families left in limbo. Those executives responsible for such errors should be held to account. Mr Cruz must be ruthless with subordinates who dropped the ball, but his own management of the crisis should be equally scrutinised.

The GMB trade union was swift to blame the disruption on BA’s decision to outsource some of its IT functions. Given their natural bias, this claim needs substantiation. But BA has been more aggressive than other legacy airlines in cutting costs to compete with low-cost carriers and new challengers on its long-haul routes. It has irked customers by trimming frills, from the flowers in first-class toilets to economy-class leg room. This incident will prompt questions as to whether it is also scrimping on essentials.

If so, it will be entirely self-defeating. BA has two big advantages over its rivals. One is its brand. There is an enduring perception that the former flag carrier offers higher standards, better customer service and is intrinsically more trustworthy than the low-cost upstarts. This perception will not survive many more such debacles.

BA’s other huge asset, though, is its dominant position at Heathrow, a hub for the most lucrative long-haul routes used by business travellers, where it holds more than 50 per cent of take-off and landing slots. This is partly due to astute dealmaking: BA gained new slots as a result of its parent IAG’s takeovers of BMI and Aer Lingus. But it is largely a legacy of its days as a flag carrier: BA has “grandfathered” rights to its existing slots and can keep them so long as it uses them. Although slot trading is allowed, the severe capacity constraints at Heathrow mean that very few new slots are made available.

Under the current regulatory regime, this makes BA’s advantage a formidable one. It is increasingly questionable whether the airline deserves its privileged position.

Airline struggles to tackle cancellations and delays on peak travel weekend

British Airways passengers around the world were struck by a second day of cancellations and delays on Sunday as the airline struggled to regain control after a computer system failure caused chaos during one of the busiest travel weekends of the year in the UK.

Nearly a third of BA flights departing from Heathrow, Britain’s busiest airport, had been cancelled by Sunday afternoon, while inbound fights from destinations such as New York and Austin, Texas, were also scrapped, leaving passengers stranded. 

Aviation experts predicted the disruption would spill over into the week as BA fought to recover from the major IT crash, which forced it to cancel all flights out of London on Saturday.

It was one of the worst IT failures to strike a global airline. Last year when Delta Air Lines suffered a similar outage. 2,300 flights were cancelled and delays took three days to clear.

“Coming after a spate of other issues, the bad PR and potential reputational aftermath will probably hit future revenues” at BA, which is part of the IAG airlines group, said Damian Brewer, analyst at RBC Capital Markets.

BA had been hoping to resume a “near normal” service out of Gatwick airport on Sunday and operate a “majority” of scheduled flights from Heathrow but passengers at the latter reported lengthy queues and over-crowding. Passengers at Heathrow were forced to wait outside terminal buildings until 90 minutes before their flight was due to depart, as airport and airline staff desperately sought to deal with the congestion.

“There are huge queues everywhere,” said Simon, a passenger waiting for his BA flight to Japan for a holiday. “People are queueing to deal with cancelled flights, there’s another queue for lost bags, and then there’s long queues to get into the departures terminal.”

Alex Cruz, chief executive of BA, blamed the IT meltdown on a “power supply issue” but the carrier would not provide further details on why all of its systems, including back-up systems, had failed. It said simply on Sunday that it was “continuing to work hard to restore all of our IT systems”.

Bill Curtis, senior vice-president at IT analytics firm CAST, questioned why a back-up system had not kicked in. “It [the back-up system] should have been on a different power supply with a replicated database. You would usually lose a few transactions but not the entire operation of the airline,” Mr Curtis told the Financial Times.

The IT meltdown is likely to provoke a further row over cost-cutting at BA, which has come under pressure from unions over its decision last year to outsource several hundred IT jobs to specialists supplied by India’s Tata Consultancy Services. 

It has also been criticised in the past year for money-saving measures such as replacing free food and drink on short-haul flights with M&S sandwiches for which customers are required to pay. 

Mr Cruz, who was chief executive of budget Spanish carrier Vueling before taking the top job at BA in April last year, has been trying to overhaul the UK airline's cost structure so it can better compete with low-cost companies such as Ryanair and easyJet, as well as the Gulf airlines.

Mick Rix, national aviation officer at GMB, the union, claimed the IT problems “could have all been avoided”.

“BA in 2016 made hundreds of dedicated and loyal IT staff redundant and outsourced the work to India,” he said. 

BA denied the claim, responding: “We would never compromise the integrity and security of our IT systems. IT services are now provided globally by a range of suppliers and this is very common practice across all industries.”

BA’s management is also likely to face questions over staffing and communication, particularly on Saturday when passengers complained of a lack of information from airline staff.

Pat Oldham, a supply chain manager who was intending to travel to Seoul on Saturday but found himself stuck at Heathrow’s Terminal 5, complained he had “no contact with anyone from BA”.

Italian infrastructure company Atlantia [BIT:ATL] has signed a EUR 16.3bn financing deal with a pool of banks to fund its public offer on Spanish counterpart Abertis Infraestructuras [BME:ABE], Italian-language daily Il Sole 24 Ore reported. The report cited a joint statement by Atlantia's legal advisor on the matter Gianni Origoni Grippo Cappelli & Partners and Latham & Watkins, which provided legal advice to the 24 banks that make up the financing pool.

Under pressure to cut bills, utility companies diversify to safeguard profits

Enter the home of the future. As well as solar panels on the roof and a heat pump providing hot water, an electric car is in the drive, plugged into a charging point. When the battery is full, an app suggests you discharge some of the electricity to use in the house when you need it most.

The app also detects that your heating is too high and asks if you want it turned down; and points out your boiler is inefficient and offers to arrange an engineer.

This is the vision of Engie, the French utility company that believes energy providers will switch from passively supplying electricity and gas to actively managing customers’ homes.

At a time when UK policymakers are seeking to clamp down on what they describe as “rip off” energy bills and homeowners are interested in generating their own electricity through solar panels, utility groups are having to diversify to safeguard their profits.

Wilfrid Petrie, head of Engie’s business in the UK, likens the transformation to the telecoms industry. “The value is less on the landline itself but how to use it as best as possible,” he said at a recent launch of the company’s household energy service in the UK.

In other words, energy companies are starting to go down the same route as telecoms groups, which bundle together a range of services such as broadband and pay-TV with the basic provision of a landline. Core energy supply is expected to become a low margin activity but value will be added through ancillary services. 

Centrica, the UK-listed owner of British Gas, has long had a sizeable services business that offers products such as boiler repair. In the past few years it has been developing other services around the idea of a “connected home”, where digital devices such as smart thermostats help households better manage their energy usage.

It has developed a “Hive” smart thermostat, which allows users to control their heating and hot water via their mobile phones. For an extra monthly fee, subscribers are offered a range of products, including smart plugs that can be switched on or off via a mobile and motion sensors that alert them if a window or door has been opened.

“The margins on all of these services are much higher [than energy supply],” says Iain Conn, chief executive of Centrica. “Energy supply is not a high margin business in the first place. Last year we made a margin of £52 on an average energy bill, which is £1,044 in our case.

“Will bundled services be part of the future? Absolutely.”

Newer “challenger” energy companies are muscling into the market. Ovo Energy this year bought Corgi HomePlan, a company that offers services such as boiler maintenance. Others, such as First Utility, have branched out into broadband.

Big technology groups are also active. A rival to British Gas’s Hive thermostat is Google’s “Nest”.

However some analysts are yet to be convinced that these ancillary services will be sufficiently profitable to make up for the loss of margin on energy supply, particularly if price restrictions are introduced.

Both the Conservative government and the opposition Labour party have pledged a cap on the most common energy tariff.

“What is unproven at the moment is the monetisation of that,” says Martin Brough, utilities analyst at Deutsche Bank. “British Gas has been at the forefront at least in residential of coming up with Hive thermostats and apps and has had some very good feedback from customers. They like it. What isn’t yet proven is if they are willing to pay ongoing subscription-type revenue.”

Centrica has sold 900,000 connected home products, according to its most recent trading update, but that division made an adjusted operating loss last year of £50m.

It is still in “start-up mode”, says Deepa Venkateswaran, analyst at Bernstein. “That business should be profitable [in future], yes, but is it going to be a £300m, £500m business? I doubt it.”

Mr Conn admits these newer parts of the business are still relatively small but they are “growing rapidly”.

Julian Critchlow, a partner at Bain & Company, stresses that in the immediate future at least, most utility companies will need — and will continue — to make money on basic energy supply. Until more homes move “off grid” by installing their own solar panels and batteries that can store excess electricity, energy supply will remain a core activity.

He points out that companies will probably need to radically cut costs to protect profit margins under any price cap.

Utility companies have warned that a cap could hamper investment, including in areas such as technology.

“Until we get batteries . . . more locally and domestically, I am still going to end up being connected to the grid and I am still going to have — especially if I have an electric vehicle — a relatively noticeable consumption and somebody is going to have to supply that,” says Mr Critchlow.

Utility companies have diversified before — into areas as disparate as financial services — but have since withdrawn, Mr Critchlow points out. “These waves of thinking come through the industry every decade,” he says. “Is the energy supply business dead? I don’t think it is dead but it is going to have to evolve.”

Deal will allow a €5bn state-backed capital increase and wider restructuring

Brussels is expected to approve the takeover by French state-controlled utility EDF of the reactor business of Areva this week, clearing the path for a state-backed rescue deal that will reshape France’s nuclear industry.

Brussels antitrust watchdog is likely to sign off the deal on Monday, according to two people familiar with the situation, a green light that is needed before the French state can carry out the wider restructuring of Areva.

Once Areva’s reactor business is acquired by EDF, what is left of Areva, mostly a uranium mining and nuclear fuel business, will then need only a sign-off of its new reactor in Flamanville in France to unlock a €5bn state-backed capital increase scheduled for June.

EDF has agreed to acquire a majority stake in Areva NP, which designs, manufactures and services nuclear reactors, in a deal valuing the business at about €2.5bn.

The deal will unite two of the companies responsible for building the UK’s Hinkley Point C nuclear plant, the country’s first new atomic power station for a generation, in a move executives say should help to avoid the kind of costly delays that have beset similar projects.

Areva’s EPR reactor — the technology being used in Hinkley Point — has run into problems. The Flamanville III EPR reactor in France is still under construction, six years behind schedule and €7bn over budget. The other in Europe — in Olkiluoto, Finland — is nine years late and €5bn over budget.

Areva, which is 87 per cent owned by the government, was brought to the brink of collapse last year after racking up huge losses over half a decade. The group suffered from a drop in the uranium price since 2011 and weak reactor sales, but also struggled with the costly delays in key projects.

The shake-up at Areva is part of a wider upheaval in the global nuclear industry as European, US and Japanese reactor makers struggle with weak order books, strained finances and rising competition from Russian, Chinese and South Korean companies.

The EU approval will come just weeks after the election of French president Emmanuel Macron, who appointed celebrity documentary film-maker and green activist Nicolas Hulot as energy minister responsible for overseeing the French nuclear sector.

The government has insisted that it remains supportive of the nuclear industry, which provides about 75 per cent of the country’s electricity and employs about 200,000 people. Mr Macron was the economy minister when the EDF/Areva deal was being put together.

But shares in EDF, which is 85 per cent government-owned, fell sharply following the appointment of Mr Hulot amid fears that he could make the government take a harder line on the sector.

The first stage for the Areva restructuring deal was cleared in January, when the European Commission said the proposed package of French government state aid was in line with rules.

This was on the condition that EDF won antitrust approval for the deal, and that one of its showcase nuclear reactors in Flamanville achieved a positive test result from the French Nuclear Safety Agency.

There has been criticism from rivals, however. Nuclear power producer TVO, which owns the Finnish project, is concerned that after the EDF takeover, Areva might neglect Olkiluoto in favour of the EDF-led projects in Flamanville and Hinkley Point.

The Finnish company is also facing the awkward balancing act of co-operating with Areva to finish the project while simultaneously pursuing the French company and its former partner, Siemens, for billions of euros in compensation for the delays.

A TVO spokesperson said: “TVO is conscious of the importance of the restructuring of the French nuclear industry, but is concerned about the effects of vertical integration on competition in the markets for nuclear technology, fuel and services. TVO would have preferred vertical integration in these markets to have been avoided.”

She takes over as Amazon looks to supercharge its apparel business.

Christine Beauchamp is taking the reins at Amazon Fashion, WWD has learned.

An Amazon spokeswoman said: “We’re thrilled to have Christine Beauchamp join as president of Amazon Fashion. She will be leading our fashion business and we look forward to having her on-board next month.”

Beauchamp brings to the e-commerce giant a wealth of fashion knowledge. Most recently she’s been working with The Boston Consulting Group, but before that, she was global brand president of Lauren, Chaps, American Living and Ralph at Ralph Lauren Corp. and ceo of Victoria’s Secret Beauty at L Brands Inc. She has also been a visiting professor in fashion business at New York University.

At Amazon, she takes over from Cathy Beaudoin, who left the company recently having helped build it into a powerhouse.

The e-commerce giant has been keenly focused on fashion, launching a number of private label brands, introducing a live-streaming style show that looks something like HSN and working generally to reinvent the category for the digital age.

Amazon, which research has shown is the starting point for 55 percent of all product searches on the web, is also looking further afield and has the power and desire to change shopping.

The company in April introduced the Echo Look, an artificially intelligent style assistant that takes voice commands and has a hands-free camera. Amazon has also been peering into the future with an eye toward automation and has received a patent for on-demand apparel manufacturing.

Good Dividend Bets Among Automotive Stocks

GM and Ford offer fat yields; Genuine Parts is raising its dividend by 3%.

Ford (ticker: F), which replaced its CEO last week, has been a disappointment for stockholders. Its shares are down 15% in the past year, partly owing to concerns about how the auto maker is positioning itself in coming technologies, such as autonomous and electric vehicles.

Still, the No. 2 U.S. car maker sports a 5.5% yield, the highest among the six automotive companies in the table below. General Motors (GM) yields 4.6%, though its stock has outpaced Ford’s, returning 10.3%.

“Investors have a long memory, and they remember what difficulties auto makers had during leaner times,” says Brian Sponheimer, automotive analyst at Gabelli & Co. “Until we see a down cycle in the North American auto market, where investors can witness what these companies look like when demand and production inevitably get softer, then the stocks are unlikely to move materially higher.”

Ford last hiked its regular dividend in early 2015; GM did so in early 2016. Sponheimer doesn’t expect a significant near-term boost from either, “because it just doesn’t make any sense for companies to do so with yields where they are now.”

However, he says, both are in good financial shape, with solid cash flows and balance sheets. “As an investor, you can look at GM or Ford or other businesses in the auto industry with significantly more confidence from a dividend perspective” than a decade ago, he says. “The number of plants and factories shuttered during the 2008-10 period has changed the cost structure of these businesses.” Labor contracts, he adds, now “provide greater flexibility in the event of an inevitable cyclical change, particularly in North America.”

Genuine Parts (GPC), which has very strong cash flow and whose largest business involves selling auto parts, many in the aftermarket, has announced that its dividend is rising by 3%, to $2.70 a share—its 61st straight annual increase. “That cash flow that Genuine Parts is able to generate not only supports the current dividend, but also future dividend growth and selective M&A,” says Sponheimer.

IN OTHER NEWS, private-label credit-card issuer Synchrony Financial (SYF) plans to hike its quarterly dividend to 15 cents a share from 13 cents. Late last week, the stock was yielding 1.9%… Cracker Barrel Old Country Store (CBRL) declared a quarterly payout of $1.20 a share, a 4% increase. Yield: 2.9%. The company is also issuing a special dividend of $3.50 a share… Chubb (CB) has declared a quarterly dividend of 71 cents a share, up 3% from 69 cents. The insurer’s stock yields 2%… Southwest Airlines (LUV) announced a quarterly dividend of 12.5 cents a share, up from 10 cents. Yield: 0.8%…Chemical and plastics maker LyondellBasell Industries (LYB) is raising its quarterly payout by 6%, to 90 cents a share from 85 cents. Yield: 4.4%.

A Slowing Foot Locker

Cracks are appearing in this former growth stock. As online shopping grows, mall traffic is waning.

Lately, though, cracks are appearing in this former growth stock. As online shopping grows, mall traffic is waning. Perhaps more damaging for Foot Locker—though less recognized by investors—is that the half-decade-long high-end basketball sneaker boom might be over.

Consequently, Foot Locker’s recent woes could get worse before they get better, and that doesn’t bode well for the already weakened share price. The stock, down over 20% this month, to $59.82, is vulnerable to a further double-digit percentage decline.

Wall Street remains bullish: Nearly 70% of sell-side analysts rate the stock a Buy and none a Sell. Independent analyst Jonathan Hanlon, of Research 360°, however, calls Foot Locker a Sell and values its shares at $42, 30% below their current level.

Foot Locker has two strikes against it. First, more than 50% of its stores are in malls, where traffic is declining. Moreover, Hanlon says, “We are seeing basketball shoe sales roll over. That’s Foot Locker’s competitive advantage…especially high-priced and exclusive Nike products. Without it, same-store sales could go negative.”

In mid-April, Foot Locker guided Wall Street to earnings per share of $1.36 to $1.39 in its fiscal first quarter ended on April 30, significantly below the $1.47 consensus. Then, on May 19, the retailer compounded that initial disappointment by reporting EPS of $1.36, below the $1.39 that was both the year-ago EPS and the since-lowered analyst consensus. The company blamed the shortfall on a delay in income-tax refunds to its customers.

A more important reason, opines Hanlon, is that the bubble in basketball sneakers—once characterized by speculation and high prices in resale markets—is over. That segment drove roughly 75% of Foot Locker’s sales growth from fiscal 2012 to fiscal 2016, as well as its 7% same-store sales, he estimates, but that growth has slowed.

First-quarter comparable-store sales rose just 0.5%, while total sales edged up 0.7%, to $2 billion, the worst first-quarter numbers since fiscal 2010. Hanlon notes that in-store comps fell 1.2%, offset by a 12% rise in online sales.

He says that total comps might have been negative in the first quarter if Foot Locker hadn’t increased its promotional activity to drive traffic—at the expense of the gross margin, which fell to 34% from 35% in the year-ago quarter.

With growth slowing, several underlying problems are now more obvious, Hanlon says: poor execution in apparel; increasing online competition, especially from Nike (NKE); and declining mall traffic.

Investors, meanwhile, are missing the fashion risk with sneakers. “If kids decide to buy something else, the need to visit a Foot Locker is lessened,” says Hanlon.

Matt Powell, a sports industry analyst at NPD Group, says the weakest athletic-shoe category—performance basketball shoes—will continue to see growth shrink. Powell expects industrywide sales to grow 3% to 4% in the second half, compared with 4% over the past decade.

Hanlon uses a 10 times price/earnings ratio on his EPS estimate of $3.89 in fiscal 2018, which ends in January, for his $42-per-share target price. That includes $3 per share for Foot Locker’s cash net of debt and liquidity needs. The consensus expectation is $5.18. That’s a wide gap.

The company declined to respond to Barron’s request for comment. In its first-quarter conference call, Foot Locker was “optimistic” about a “second half” acceleration, without giving details. Hanlon calls that “wishful thinking.”

Foot Locker also noted that it’s “aggressively” reviewing and implementing expense cutting. That’s wise, but it should make investors less confident about a putative return to past levels of growth this year.

Barrons weekend summary: Positive cover story on new Ford CEO; positive on EV, IP