>>> Ralph Lauren beats by $0.11, reports revs in-line; guides Q1, FY18 revenue a

Ralph Lauren beats by $0.11, reports revs in-line; guides Q1, FY18 revenue and margins (72.75)
  • Reports Q4 (Mar) earnings of $0.89 per share, excluding non-recurring items, $0.11 better than the Capital IQ Consensus of $0.78; revenues fell 16.4% year/year to $1.56 bln vs the $1.56 bln Capital IQ Consensus. FX pressured the fourth quarter revenue growth by ~100 basis points. The fourth quarter revenue decline was in line with the guidance of a mid-teens decline. The decline was driven by our initiatives to improve quality of sales and reduce excess inventory, as well as challenging traffic trends. International revenue in the fourth quarter (consistent with the change in our reportable segments), declined 9% while North America revenue was down 21% to last year. Excluding the impact of foreign currency and on a 13-week to 13-week basis, international revenue was down 2% to last year, with negative currency impact of 300 basis points of the difference.
  • On a 13-week to 13-week basis in constant currency, wholesale revenue was down 15% and comps fell 11%.
  • Co issues guidance for FY18, sees FY18 revs down 9.5-10.5% to ~$5.95-6.02 bln vs. $6.07 bln Capital IQ Consensus Estimate. For Fiscal 2018, net revenue is expected to decrease 8-9%, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have ~150 basis points of negative impact on revenue growth in Fiscal 2018. The Company expects operating margin for Fiscal 2018 to be 9.0-10.5%, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to pressure operating margin for Fiscal 2018 by 50-75 basis points.
  • In the first quarter of Fiscal 2018, the co expects net revenue to be down low double-digits, excluding the impact of foreign currency. Based on current exchange rates, foreign currency is expected to have ~225 basis points of negative impact on revenue growth in the first quarter of Fiscal 2018. Rev was expected to fall ~12% in Q1. Operating margin for the first quarter of Fiscal 2018 is expected to be about 9.5-10.0%, excluding foreign currency impacts. Foreign currency is estimated to pressure operating margin by ~75 basis points.

>>> US Early premarket gappers


Early premarket gappers

Gapping up: GLYC +33.7%, CYTR +14.7%, PLCE +10.8%, INCY +8.6%, P +8.4%, SSI +8.4%, SHPG +7.3%, JNS +7.2%, NSPR +5.1%, LB +5%, SNAK +4.9%, SQM +3.3%, IMGN +2.5%, WMT +2.5%, SNPS +2.3%, AU +1.5%, AUPH +1.4%, VRTX +1.4%, CCL +1.2%

Gapping down: ASNA -33%, RPRX -24.6%, SMRT -23.5%, ELGX -18.3%, GGB -15.4%, ITUB -14.7%, PBR -14%, ABEV -10.8%, GMED -10.5%, VALE -9.7%, GFA -9.5%, CSCO -7.7%, ZTO -7.5%, MYGN -6.9%, FCAU -4.7%, BRFS -4.4%, SAN -4.1%, GLPG -3.2%, MT -3.1%, AKS -3.1%, WYNN -3%, LVS -3%, BKE -3%, MZOR -2.9%, ING -2.7%, DL -2.6%, FSLR -2.2%, BMY -2.1%, STM -2.1%, SBGL -2.1%, AMD -2.1%, FLO -2.1%, CLF -1.9%, RIG -1.7%, BUD -1.7%, MGM -1.6%, LTM -1.6%, SHOP -1.5%, JNPR -1.5%, SIRI -1.5%, FCX -1.4%, X -1.3%, CS -1.3%, GM -1.3%, CHK -1.3%, BIDU -1.2%, SWN -1.1%, NBL -1.1%

(ZH) The Germans Are Coming... And Their Groceries Will Cost Up To 50% Less Than

Back in February we reported that as America's deflationary wave spread through the grocery store supply chain, the scramble for America's bottom dollar was on, and it prompted America's largest low-cost retailer Wal-Mart to not only cut prices, but to squeeze suppliers in a stealthy war for market share and maximizing profits, a scramble for market share which is oddly reminiscent of the OPEC 2014 price fiasco and is certain to unleash a deflationary shock across wide portions of the US economy.
As Reuters reported at the time, Wal-Mart had been running a "price-comparison" test in at least 1,200 U.S. stores and squeezing packaged goods suppliers in a bid to close a pricing gap with German-based discount grocery chain Aldi and domestic rivals like Kroger. Citing vendor sources, Reuters said that Wal-Mart launched the price test across 11 Midwest and Southeastern states such as Iowa, Illinois and Florida, focusing on price competition in the grocery business that accounts for 56% of the company's revenue.
Notably, while Wal-Mart was considering cutting prices to match its competition, the near-monopoly retailer was also seeking offseting cost cuts from its own vendors, in what could lead to a deflationary shock that would ripple across the entire US grocery store supply-chain, with dropping prices leading to margin collapse inside the entire industry, and eventually a default domino effect.
And, as we also reported, as part of the relentless competition among the largest grocers Wal-Mart would have no choice but to proceed with even more aggressive price cuts in the future. The reason for this is that Germany-based discount grocer Aldi had emerged as one of the relatively new rivals quickly gaining market share in the hotly competitive US grocery sector, which already boasts Kroger, Albertsons Cos Inc and Publix Super Markets as stiff competitors on price.
A second Germany-based discount grocer, Lidl, was planning to enter the U.S. market this year, which together with German Aldi would pose a serious threat to Wal-Mart's U.S. grocery business.
Now, thanks to a follow up by Reuters, we can safely assume that the upcoming grocer price war is about to turn nuclear because the abovementioned German discount grocery chain Lidl, which is opening its first U.S. stores this summer and is eager to capture US market share at all costs, said its products would be up to 50% cheaper than competitors... which are already caught up in a margin-crushing price war.
"This is the right time for us to enter the United States," Brendan Proctor, chief executive officer for Lidl U.S., told Reuters at a media event in New York late on Tuesday. "We are confident in our model. We adapt quickly, so it's not about whether a market works for us but really about what we will do to make it work."
And as first order of business, what Lidl will do is generate huge losses by massively undercutting prices in hopes of capturing market share from established names like Walmart, Kroger and Albertsons. Think Uber but for grocery stores.
There is already a case study of what happenes next, should the two German invaders prove successful. Lidl, which runs 10,000 stores in 27 countries, and German rival Aldi Inc have already upended Britain's grocery retail market, hurting incumbents like Tesco Plc and Wal-Mart Stores Inc's ASDA supermarket chain.
Looking ahead, Lidl said it would open its first 20 U.S. stores in North Carolina, South Carolina and Virginia, starting on June 15. Eighty more will follow in the United States within the first year, which Procter said would create 5,000 jobs. Analysts cited by Reuters estimate the company will have more than 330 U.S. stores by 2020.
The stores will be 20,000 square feet in size and have only six aisles. The retailer's in-house brands will account for 90 percent of the products.
And while the latest German invasion may lead to dramatic changes within the hierarchy of established US grocers, one thing is certain: the US consumer is about to be the biggest winner yet again, as prices for (subsidized) groceries are about to plunge across the nation.

>>> JPMorgan Raises 2017 S&P500 EPS Est. to $130, Keeps 2,400 Target

JPMorgan Raises 2017 S&P500 EPS Est. to $130, Keeps 2,400 Target
Fundamentals remain supportive, JPMorgan strategists including Dubravko Lakos-Bujas and Marko Kolanovic write in note.
  • 2017 EPS est. for S&P500 raised to $130 vs $128 on better than expected 1Q earnings, guidance
  • If political crisis deepens and elevated volatility
persists, equities could see further weakness in the short-term
  • See limited room for expansion of equity multiples unless there’s further progress on U.S. pro-growth agenda

Reuters - EXCLUSIVE-Trump campaign had at least 18 undisclosed contacts with Rus

EXCLUSIVE-Trump campaign had at least 18 undisclosed contacts with Russians - sources - Reuters News
18-May-2017 10:14:21
Repeats without changes to additional subscribers
By Ned Parker, Jonathan Landay and Warren Strobel
WASHINGTON, May 18 (Reuters) - Michael Flynn and other advisers to Donald Trump’s campaign were in contact with Russian officials and others with Kremlin ties in at least 18 calls and emails during the last seven months of the 2016 presidential race, current and former U.S. officials familiar with the exchanges told Reuters.
The previously undisclosed interactions form part of the record now being reviewed by FBI and congressional investigators probing Russian interference in the U.S. presidential election and contacts between Trump’s campaign and Russia.
Six of the previously undisclosed contacts described to Reuters were phone calls between Kislyak and Trump advisers, including Flynn, Trump’s first national security adviser, three current and former officials said.
Conversations between Flynn and Kislyak accelerated after the Nov. 8 vote as the two discussed establishing a back channel for communication between Trump and Russian President Vladimir Putin that could bypass the U.S. national security bureaucracy, which both sides considered hostile to improved relations, four current U.S. officials said.
In January, the Trump White House initially denied any contacts with Russian officials during the 2016 campaign. The White House and advisers to the campaign have since confirmed four meetings between Kislyak and Trump advisers during that time.
The people who described the contacts to Reuters said they had seen no evidence of wrongdoing or collusion between the campaign and Russia in the communications reviewed so far. But the disclosure could increase the pressure on Trump and his aides to provide the FBI and Congress with a full account of interactions with Russian officials and others with links to the Kremlin during and immediately after the 2016 election.
The White House did not respond to requests for comment. Flynn's lawyer declined to comment. In Moscow, a Russian foreign ministry official declined to comment on the contacts and referred Reuters to the Trump administration.
Separately, a spokesman for the Russian embassy in Washington said: “We do not comment on our daily contacts with the local interlocutors.”
The 18 calls and electronic messages took place between April and November 2016 as hackers engaged in what U.S. intelligence concluded in January was part of a Kremlin campaign to discredit the vote and influence the outcome of the election in favor of Trump over his Democratic challenger, former secretary of state Hillary Clinton.
Those discussions focused on mending U.S.-Russian economic relations strained by sanctions imposed on Moscow, cooperating in fighting Islamic State in Syria and containing a more assertive China, the sources said.
Members of the Senate and House intelligence committees have gone to the CIA and the National Security Agency to review transcripts and other documents related to contacts between Trump campaign advisers and associates and Russian officials and others with links to Putin, people with knowledge of those investigations told Reuters.
The U.S. Justice Department said on Wednesday it had appointed former FBI Director Robert Mueller as special counsel to investigate alleged Russian meddling in the U.S. presidential campaign and possible collusion between Trump’s campaign and Russia. Mueller will now take charge of the FBI investigation that began last July. Trump and his aides have repeatedly denied any collusion with Russia.

'IT'S RARE'
In addition to the six phone calls involving Kislyak, the communications described to Reuters involved another 12 calls, emails or text messages between Russian officials or people considered to be close to Putin and Trump campaign advisers.
One of those contacts was by Viktor Medvedchuk, a Ukrainian oligarch and politician, according to one person with detailed knowledge of the exchange and two others familiar with the issue.
It was not clear with whom Medvedchuk was in contact within the Trump campaign but the themes included U.S.-Russia cooperation, the sources said. Putin is godfather to Medvedchuk’s daughter.
Medvedchuk denied having any contact with anyone in the Trump campaign.
"I am not acquainted with any of Donald Trump's close associates, therefore no such conversation could have taken place," he said in an email to Reuters.
In the conversations during the campaign, Russian officials emphasized a pragmatic, business-style approach and stressed to Trump associates that they could make deals by focusing on common economic and other interests and leaving contentious issues aside, the sources said.
Veterans of previous election campaigns said some contact with foreign officials during a campaign was not unusual, but the number of interactions between Trump aides and Russian officials and others with links to Putin was exceptional.
“It’s rare to have that many phone calls to foreign officials, especially to a country we consider an adversary or a hostile power,” Richard Armitage, a Republican and former deputy secretary of state, told Reuters.

FLYNN FIRED
Beyond Medvedchuk and Kislyak, the identities of the other Putin-linked participants in the contacts remain classified and the names of Trump advisers other than Flynn have been “masked” in intelligence reports on the contacts because of legal protections on their privacy as American citizens. However, officials can request that they be revealed for intelligence purposes.
U.S. and allied intelligence and law enforcement agencies routinely monitor communications and movements of Russian officials.
After Vice President Mike Pence and others had denied in January that Trump campaign representatives had any contact with Russian officials, the White House later confirmed that Kislyak had met twice with then-Senator Jeff Sessions, who later became attorney general.
Kislyak also attended an event in April where Trump said he would seek better relations with Russia. Senior White House adviser Jared Kushner, Trump’s son-in-law, also attended that event in Washington. In addition, Kislyak met with two other Trump campaign advisers in July on the sidelines of the Republican convention.
Trump fired Flynn in February after it became clear that he had falsely characterized the nature of phone conversations with Kislyak in late December - after the Nov. 8 election and just after the Obama administration announced new sanctions on Russia. Flynn offered to testify to Congress in return for immunity from prosecution but his offer was turned down by the House intelligence committee.

WWD : Talking Shop With Lauren and Louvet

Talking Shop With Lauren and Louvet
The chairman and incoming ceo discuss experiential retail, staying focused and the future of department stores.

In the wide-ranging and exclusive interview with WWD about the appointment of Patrice Louvet as Ralph Lauren Corp.’s new chief executive officer, founder Ralph Lauren and his incoming ceo talked about a variety of topics beyond Louvet’s job. Sitting in the living room of Lauren’s home in Bedford, N.Y., the executives touched upon such issues ranging from see-now-buy-now to department stores to Louvet’s own fashion tastes.

Here, excerpts from their conversation.

CHATTING WITH RALPH LAUREN

On continuing with See-Now-Buy-Now:

It’s working for us, and it’s doing something. I don’t know if it will work forever. The more people that are not in it doesn’t boost the concept. I think it has its good points and its bad points. I always know when I try something out, you try to be a little bit adventurous in creating newness and you have to try some things, and it may not work. You had to try it out, and we had a lot of good success with it. At the same time, maybe it shouldn’t be that way.

On retaining focus:

You want to take advantage of what you did. I’ve had brands that are part of Ralph Lauren, whether it’s Polo or Purple Label. In the world of Polo, there are beautiful suits and ties and chinos. We build complete concepts that really work: The Polo store, the Polo restaurants, sheets and towels. All these things have to be nurtured. Sometimes when you have too many brands, you start to spread out in too many places. You have to make sure you’re not doing that and are clear in your vision. Who are we and what do we stand for? You have to tighten up. There is the matter of what’s happening in the world. You have to focus more.

On pioneering experiential retail:

Our company opened the mansion (on East 72nd Street in Manhattan) and had home furnishings, we had room settings, we had children’s, men’s. I saw families go upstairs and shop and that’s an experience. You have a life, you’re living with clothes, living with furniture and creativity in your life. It’s fun to shop. I’m a big believer in product. You have to have the vision of who you are and what you stand for. Then you have to experiment — open a restaurant, open a coffee shop. I did that a long time ago. There’s talk about creativity, direction and leadership. You know, I’ve been there. These last few years have been tougher in the retail business in the large stores, and it’s been that way for everybody.

On department stores:

I think department store leaders will have to find a way to bring people into the store. Some department stores don’t have a reason for being with outlet stores and discounters. But one thing you have to know, if something is great, if a store or a restaurant is great, they go into it.

On brick-and-mortar:

I think retail stores are still valuable. I find for our brands, the stores that are more special, the more we stand for something, the better we are. Quality is very, very important. As far as e-commerce, come back and see me in a year and tell me how good it is.

On teamwork:

I’m a big believer in teams. I love the people I work with. People who started out in their 20s have been with me 25, 30 years and are still young. I like relationships. To run a business and to build a company — it’s not one man who does it. If I didn’t have the people I have in my company, I’d never have gotten anywhere.

CHATTING WITH PATRICE LOUVET

On areas of growth at Ralph Lauren:

If you look at my profile, one reason I’ve been recruited is my global experience. I have worked in Japan, Europe, the U.S. I’ve run global businesses for many years now. Obviously we need to get the U.S. business back to growth. The European business is showing good signs of growth and there’s more to be done. And there’s the whole Asia space, the whole China space, that I think is relative white space at Ralph Lauren. China is not easy. If you look at what the Ralph Lauren brand stands for, how distinctive it’s positioning is, I think it’s incredibly relevant for the Chinese consumer.

On his fashion profile:

I’m not really a fashion guy. I really like that space. I had an opportunity during my career in P&G to lead our prestige division twice. It’s about a $3 billion business. I was in charge of beauty licenses for many fashion brands. Gucci — I got a chance to develop their fragrance line, I loved it. I worked with Hugo Boss, Dolce & Gabbana, Rochas, Lacoste, a great diversity of brands. I really enjoyed it.

On being a Ralph Lauren consumer:

I’ve always loved this brand. My interactions with Ralph Lauren go back decades, from the first store I discovered in Place de la Madeleine in Paris. The brand has been a go-to for me for gifting to my two twin brothers. Every Christmas they get a sweater or a shirt. I have a real fondness for it.

On his MBA from the University of Illinois:

I went to a business school in Paris and was really keen to study in an American university. I fell in love with the U.S. when [we lived here when] I was a kid. I was determined to come back, to spend some time at a U.S. college. My business school had an agreement with the University of Illinois. Originally it was for three months, but I liked it so much I stayed and went on through my master’s.

WSJ : China’s Housing Market Springs a Leak

China’s Housing Market Springs a Leak
China’s slowing property market could mean trouble for metal prices and debt problems

In southern China, it’s the season of “plum rains”, when wet weather helps the fruit ripen—but also causes severe flooding. This spring, China’s all-important housing market, which supports around a quarter of the economy and props up the price of commodities like iron ore and copper, is also looking leaky. Prices gains in top tier coastal markets weakened last month for the first time since January.

The ebbing of house price growth comes after two months of surprising buoyancy in the markets. Strong gains in February and March came as Beijing clamped down hard on money leaving the country, leaving more funds sloshing around inside China.


The consequent boost to speculative coastal housing markets like Beijing and Shanghai is now losing steam. So-called tier one housing prices rose just 0.3% on the month in April, half the speed of March.

More worryingly, the consumer debt explosion of 2016 which has underpinned the housing market is finally showing signs of rolling over. Growth in medium- and long-term lending to households slowed for the second month in a row in April, notes China Economist Julian Evans-Pritchard at Capital Economics, after a massive ramp up over the past 18 months. Other April consumer data was soft—retail sales growth slowed marginally to 10.7% and automobile and mobile phone production lost momentum too.

For sure, price gains in April still accelerated in the lower tier Chinese cities which account for about 60% of the market. That will help shore up construction in the short run and support steel demand. Steel and cement output growth both rose in April, defying the overall trend of slower industrial growth.


Still, amid the spring rains, more frugal consumers are washing away price gains in top-tier Chinese cities. If the weakness spreads to the multitude of inland cities which really drive China’s commodities demand and support growth, investors should brace for further weakness in metals and debt problems in the industrial sector.