Andrew Sohn Notes: URBN, CSIQ, GSI

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Andrew Sohn, a junior at Columbia University, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Andrew has read this week.

 

 

 

Traffic down, prices are up

 

“Negative comp store sales, resulted from decreased transactions and units per transaction, partially offset by higher average unit selling prices.” –Urban Outfitters (URBN)

 

Not quite sure why

 

“our store sales have started out slower than what we planned and where we finished the second quarter. There are many factors that could be impacting our store performance and there is too little data at this time to draw any solid conclusions.” –Urban Outfitters (URBN)

 

Sales in Europe are strong

 

“We’ve seen particular strength in Europe, where our London team has doubled their business by improving operational execution and developing domestic relationships” –Urban Outfitters (URBN)

 

Mobile shopping still growing at incredible rate

 

“Meanwhile, the mobile migration we’ve been witnessing in the DTC channel has continued, with mobile devices now accounting for over 55% of our visitors and nearly 30% of our sales.“–Urban Outfitters (URBN)

 

Lots of in-store improvements coming

 

“In July, the team tested a prototype store with the new floor set and a number of category shop-in-shops…In addition to better category distortion, the brand is working to increase selling space in existing stores by shrinking the back-of-house, hold less back-stock in stores, create a supply chain that requires less time to flow new product into our distribution channels and integrate more digital capabilities into the store experience….At this time last year URBN unveiled its Vision 2020 strategy at our investor day conference. For those who attended you may recall our growth strategy was expand the number of products our brands offer, grow all of our distribution channels across all geographies and allow them to accommodate a larger product assortment, and improve operational capabilities and become more efficient.” –Urban Outfitters (URBN)

 

 

 

 

 

 

Lower store traffic an anomaly, maybe a result of weather?

“Now there are a number of categories that are working and working nicely, and I don’t think it’s significantly different than the categories that we’re working in a — toward the end of the second quarter, and so it sort of begs the question as why would the stores be down and not the direct business. And the only things we can come up with and the factors are the calendar shift where the Labor Day holiday is a week later this year and they have something to do with weather, because it’s so hot on the East and West Coast, maybe people are taking more time away and going on vacations, therefore shopping online rather than in stores.” –Urban Outfitters (URBN)

Solving inventory problems

 

“I might add that the inventory management at Urban has improved dramatically and one of the biggest problems the brand had over the last year and a half 18 months was poor inventory management. And we expect the inventories to continue to improve. The weeks of supply will continue to decrease slightly as we put more operational efficiencies into the mix and when that happens, we believe that we have an opportunity to decrease our markdowns even further.” –Urban Outfitters (URBN)

 

 

Yieldcos still the preferred way

 

“The YieldCo continues to be the preferred way to securitize our utility-scale solar portfolio in low risk OECD countries such as U.S., Canada, Japan and UK.” -Canadian Solar (CSIQ)

 

Today’s yields are down but still accretive

 

“At the yields of the YieldCos that serve OECD countries and have strong projects. Today’s yields are still value accretive. However, they’re not in a range you would hope to have robust YieldCo launched in it. If they remain elevated for long periods of time we do have alternatives, we believe that they are going to return to more of lower level and a more normal level within the next six months or so and that lines up with our timing.” -Canadian Solar (CSIQ)

Energy saving is profitable in China

 

“In fact, we believe that the more an organization moves upstream towards energy saving and environmental protection solutions, the higher would be its return on investments and sustainability.” -General Steel Holdings (GSI)

 

 

Repeat of how California environmental problems impacted companies

“The government now is fully aware of the impact from fossil-fuel pollution and is therefore putting more and more money and resources into environmental protection solutions. Actually this situation is not unique to China. And in fact back in the 1970 in Los Angeles, California also had air pollution problem due to excessive emission. This required California state government to require all the cars to install catalytic converters that employ the latest catalyst reduction or we call it SCR technology to substantially reduce NOx emission which subsequently improved the air quality.” -General Steel Holdings (GSI)

 

 

Still looking tough for steel

 

“The second quarter of 2015 has proven to be even tougher than the first quarter for the steel mills in China. China steel industry has entered into a new phase of retrenchment due to slowing infrastructure investment and a sluggish housing market. This is partially because the central government has shifted away from investment led growth to a consumption driven economy.” -General Steel Holdings (GSI)

 

Might get better though

 

“But in the near-term, we think that the challenge for the steel sector will likely linger. But we believe the dynamics in the second half won’t be as tough as the first half of the year.” -General Steel Holdings (GSI)