Darden (DRI) Fiscal 2017 Q1 Earnings Call

Darden (DRI) CEO Gene Lee said there are too many restaurants and he’s hoping a few may shut down to draw some capacity out of the system

“I’m hoping that more inventory will come out of the system.  We’ve seen some big announcements of closures lately, and I also think that if you drive down the road you’re starting to see more restaurants closed. You also see more restaurants opened, but we could use some inventory to come out. That would be helpful.”

Doesn’t foresee the restaurant industry outlook improving substantially from these levels

“I would say that as we think about the industry, we prepare our plans, and we assume the industry is going to stay where the industry is going to stay.  We’re not assuming the industry is going to get a whole lot better.”


SK Additions:

Restaurants have to invest in experience

“I think the consumer environment, it continues to be difficult. I think there’s a lot of choices the consumer has with their discretionary income. And I think restaurants are competing against a lot of those other choices, not just restaurants. I think restaurants today have to stay — they have to stay relevant, and they need to continue to invest in the experience.”

Maybe some inflation in the second half of our year

“We still expect commodities to inflate in the back half of the year, more towards the fourth quarter. But we do expect commodities to be flat to low single digits unfavorable for the year. And, as I said, this quarter we had 150 basis points of commodity deflation. So, you would see that we’d have some inflation in the back half of the year. What does that mean to pricing? We still believe that we have the pricing strategy that’s correct for us. Overall inflation for us, when you include labor and other things, is still going to be 1.5% to 2%”

3% wage growth as market continues to tighten

“I think that your 3% assumption for wage rate in the back half of the year is probably the right assumption. The market continues to tighten.”

Average check is higher online

“Let me deal with the first one and hopefully I’ll remember the second one. We believe that it’s important to move as many people as we possibly can over to online ordering. We’ve talked about the importance of that because the average check is much higher when someone orders online and we can prompt them through that order.”

Don’t believe people aren’t eating out because groceries are cheaper

“I just have a hard time, when you think about our brands, that, where they’re experiential, that people are trading out and staying home because they can get their groceries a little bit cheaper. I’m just having a hard time with that.”

I’m not sure it’s really so promotional out there

“People say it’s promotional. I’m not so sure that the consumer believes it’s promotional because they’re still paying 2.5% more.

Nike (NKE) Q1 2017 Earnings Call

Nike (NKE) CEO Mark Parker said fashion trends are currently smiling upon them as individuals continue to buy activewear

“The activewear market continues to outpace the overall apparel and footwear market, which itself continues to outpace global GDP growth.”

Nike (NKE) CEO Mark Parker said athletes wearing the company’s gear dominated the Olympics 

“Everywhere you looked in Rio, you could feel NIKE’s support of the athlete. Over 1,500 Olympians from 60 countries won 189 metals wearing our latest innovations. If NIKE were a country, we would have stood atop the medal count leaderboard.”

E-commerce was a massive driver of growth

“On a constant currency basis, DTC revenue for Q1 was up 22% with the Nike.com business leading the way at 49% growth.”

Basketball player Lebron James’ shoes continue to sell well even in Asia

“LeBron continues to build after his incredible dominance in the Playoffs and his very successful visit to China. And the LeBron Soldier 10 is seeing very strong sell-through in the United States and China, our two largest basketball markets.”

The Chinese are hungry for more American basketball players shoes

“And finally, in Greater China, we continue to see great results with revenue growing 21% for the quarter. We are leveraging consumer sports moments such as the Olympics and the athlete visits by LeBron, KD and Russell Westbrook this summer.”

China passed the United States as the largest retail market

“Just recently, the China retail market became the world’s largest market eclipse than the United States.”

Focused on shorter product cycles

“For us, this is about getting product to the consumer faster, it’s about lowering our product cost as we talked about, really trying to drive greater labor productivity, less waste in the system, new design capabilities.”

Automation is delivering tangible savings across the enterprise 

“The tangible results that we’re seeing today are primarily driven by automation and being closer to market. In terms of automation specifically, we’re seeing greater yield in terms of our use of materials. So less waste means lower cost and we’re also improving the throughput in our manufacturing lines; in other words, improving labor productivity. I guess in short I’d say we’re increasingly confident the Manufacturing Revolution now across both footwear and apparel will have a significant impact on both revenue and margin long term. And as you know, as you start to see returns on your investment that starts to build momentum. So we remain bullish on that opportunity.”

Costco (COST) Q4 2016 Earnings Call

Costco (COST) CFO Rich Galanti said certain departments in their business are experiencing deflation

“I had mentioned earlier we have recently seen a little pickup in the level of deflation overall. Some categories in the low to mid single-digits – in the low to mid single-digit range and several fresh food categories, notably meat and pork and things like that in the 5% to 10% range in some cases. Overall though, we are seeing net increasing deflation, but not in those levels and some non-food levels as well – non-foods as well.”

Despite a rough start, they believe they’ve successfully converted most members to the new Costco Visa credit card

“A few basic stats on the new card, approximately 11.4 million American Express co-branded cards, representing about just under 7.5 million accounts were transferred over to Citi during the conversion. Nearly 85% of those cards what we considered active, that is the card had been used for purchases over the previous 60 days. Currently, over 85% of the accounts transferred over have now been activated with Costco. And since June 20 and just the past many weeks, 1.1 million members have applied for the new card and over 730,000 new accounts have been activated or a little over 1 million additional Citi Visa cards in circulation. It’s still early. We launched only 14 weeks ago, but so far, we are beating our initial expectations in terms of conversion, usage and new sign-ups to the card.”

Their business model is about relentlessly trying to figure out ways to drive costs down so they can share the savings with customers

“simplest answer is that just like when we buy a physical product better lower we can buy whether it’s lower freight, greater purchasing power or greater production efficiencies or whatever we figure out with our supplier, we generally wanted 80% or 90% of that, the vast majority of it given back to the customer in terms of lower price because that’s what drives us and drives our business. And if we do it more next year, we will give 80% or 90% of that back. That will drive value to that member and loyalty to us and also more business to us.”

They believe Amazon is affecting their business yet are combating that by trying to get more people in their stores 

“The internet in general is going to take its percentage of different categories. It’s going to impact different categories and different retailers of such categories at different levels. I read the reports that some of you have written about that we and maybe one or two other retailers out there that are unique are Amazon proof or Internet proof. We don’t buy that for a minute. We do believe that we do rely and we do expect we are going to be impacted loss. We also don’t believe we have to go crazy on the other side, but we want both. But our value proposition is best served for us when it’s in-store getting members to come in and buying when they can see everything there that we have.”


Ross Stores (ROST) Q2 2016 Earnings Call

Ross Stores (ROST) CEO Barbara Rentler called out specific geographies as areas of strength

“During the quarter, California and the Midwest were the strongest regions, while shoes and home were the best-performing merchandise categories at Ross. We also made some progress improving the assortments in our ladies’ apparel businesses, where we struggled during the spring season.”

Ross Stores (ROST) CFO Michael Hartshorn said the company’s costs are increasing due to higher wages

“Selling, general and administrative expenses during the period increased by 10 basis points due mainly to higher wages.”

Ross Stores (ROST) CFO Michael Hartshorn cited the retail environment as promotional 

“As we look at the back half, we think we continue to face an increasingly uncertain macroeconomic, political and retail environment. And I would say that the retail environment we’re expecting is likely going to be promotional, given relatively poor performance levels that been reported recently and also some store closure announcements that have been made.”


Weight Watchers (WTW) Q2 2016 Earnings Call

Weight Watchers (WTW) CEO Jim Chambers said they plan on maximizing their relationship with celebrity Oprah Winfrey now that she’s on the board of directors and fully engaged

“Our partnership with Oprah Winfrey has accelerated our transformation by amplifying the impact of our new Beyond the Scale program. For example, the now famous Bread ad telegraphed to audiences that the new Weight Watchers food plan is livable, not restrictive, and still delivers weight loss. Consumers felt Oprah’s joy and connected with her, and with Weight Watchers. Going forward, I believe for the Oprah Winfrey Weight Watchers partnership the best is yet to come. From our earliest conversations with Oprah, our strategic priority has been on maximizing our potential for winter 2017 and beyond.”

Won a large contract with the city of New York and they are hoping to win more large organizations like this

“One significant recent win in this area is our partnership with the City of New York, the largest local government in the United States. Weight Watchers is now available to City of New York employees, spouses, domestic partners, dependents and retirees as part of the City’s and its municipal union’s commitment to improving the health of its workforce. Early response has been highly encouraging demonstrating this population’s interest in Weight Watchers.”

Liberty Media (LMCA) Q2 2016 Earnings Call

Liberty Media (LMCA) CEO Greg Maffei said he is not interested in getting into the music streaming business despite recent reports that the company was looking to buy Pandora

“Well, I think the overwhelming drive in the digital music space is that you have several in what we consider the stream subscription space is you have several big players who are entering and are likely to further commoditize the market. Spotify did something, like, for the last year, $3.54 of ARPU per month and had 82% or 84% content costs. That sounds like a very hard business to me. And that is with Apple, Amazon, Google entering more deeply and more strongly. And Apple appears to be doubling down on their efforts on music and being more aggressive and obviously have other ways to get paid for their music business through the sale of devices and iTunes and the like. And Amazon I think is a wholly unknown variable that fully hasn’t been realized, in the sense that Prime has an enormous amount of music if you are a subscriber that is embedded in that $99 annual fee. That is surely a commoditization of music. I’m not sure most Prime subscribers understand how much music they have, but as Alexa and Amazon Echo get further out there and that’s a music-discovery device I think that is another hugely disruptive influence on the market. And so, I think that subscription space is very hard. We watch it very carefully. We look at some of the entities that are playing. We look at ways that we can play.”

Optimistic on their stake in Charter TV and their various options to add value now that it has massively improved their scale and household penetration

“I think Charter is changed its permission dramatically from where it was when it was a 4 0.3 million cable video sub company to a 17-plus and 23 million streaming household company. And its ability to impact and drive new kinds of relationships with consumers, including around content, is very different. So I would expect not necessarily that Charter will go out and buy lots of cable networks, but that Charter will think long and hard and is thinking long and hard, about the attractive opportunities that having that scale will create for it. I think you’re going to see people look to always do exclusives and do things that are differentiated and weigh whether they have enough scale to make that work. Examples being DirecTV and the NFL, but there are others out there. And I suspect you’ll see Charter use its improved and scaled relationship with consumers to provide interesting new ways to look at content.”


Seaworld (SEAS) Q2 2016 Earnings Call

Seaworld (SEAS) CEO Joel Manby said macroeconomic and political volatility, particularly in the Latin America region, hurt visitors to their park

“Unexpected macro factors have weighed heavily on our recent performance. While our strategy is allowing us to make progress in markets outside Florida, the quarter was below the expectations we communicated to you in May, primarily due to accelerated declines during the quarter in Latin American guests at our Florida park locations and a broader downturn in the Orlando market, particularly in the latter half of June.”

Their announcement to soon get rid of killer whales at their parks helped their image

“First, after we announced the orcas currently in our care would be our last generation, our recent nationwide polls have confirmed continued positive public feedback. A fact, our recent surveys showed our announcement made the public more favorable about SeaWorld by an eight to one ratio which is even higher than the seven to one positive ratio we saw right after the announcement in March. And the announcement makes them more likely to consider visiting SeaWorld by a five to one ratio, and an increase from a four to one ratio that we reported to you right after the March announcement. We will continue to monitor this sentiment, but we believe this is a very good sign for the long term health of the business.”

Universal Studios Harry Potter hurting traffic to Seaworld park in California

“California is stabilizing and Texas is growing. In California, revenue is only down 2% year-to-date through June, an improvement compared to a decline of 8% in the previous year and a decline of 13% the year before that despite a lack of any new major attraction and increased competition this year from the new Harry Potter attraction at Universal Studios in Hollywood.”

Orlando tourism market is weak after the recent shootings there

“We are seeing data that shows year-to-date hotel occupancy in Orlando is down about 2%. Other tourism industry reports indicate attendance figures at theme parks are off across Orlando. We have also seen theme park competitors lifting blackout dates on their passes for the remainder of the year and some going back to non-peak pricing to attract guests.”

Seaworld (SEAS) CEO Joel Manby said they are focusing their incremental marketing dollars on attracting domestic visitors 

“So, as a company, we don’t want to de-emphasize it going forward, but the new money, the increases in marketing spend as we grow have gone entirely into that either an internet based strategy for domestic visitors, so anyone who’s vacationing will see us when they come to Orlando on the web and any traditional media is 300 miles and in. That strategy is clearly working. Our source of residency data says that in Tampa and in Orlando our local and drive-in overnight markets are up between 5% and 15% depending on the area and depending on the park.”

Seeing employee wage pressures

“On the OpEx side, wage merit, particularly minimum wage and competitive wage challenges and pressures in particularly Florida and California are built into that. Of course, we have some new attractions that cost us OpEx, but the majority of it is a wage pressure, rate wage pressure across the company in particular in California and Florida.”

Time Warner (TWX) CEO Jeff Bewkes Interview

Time Warner (TWX) CEO Jeff Bewkes on what he views is the biggest threat to paid TV right now

“There’s a question of whether programming is being devalued. What is the economic sustainability of something that uses a lot of bandwidth and doesn’t pay for it and that runs a lot of expensive programming and essentially doesn’t have a profit? Think of Amazon or Netflix. The usual reason companies are funded or valued on the stock market for not having a current profit is because the investors believe there will be a future profit. That means they believe the market leadership position is going to turn into something that is unassailable enough—in other words, that does not have enough effective competition—that it can either cut costs or drive revenue and make a profit.”

Time Warner (TWX) CEO Jeff Bewkes on how he views Netflix competing with HBO

“I think the question is: How has the strategy of HBO created the strategy of Netflix? HBO is the original subscription video-on-demand company. We were repurposing first-run movies, and then we added original programming. We had a colleague in the industry, [Netflix Chief Executive Officer] Reed Hastings, who decided to do the same thing and put it over broadband. Since they’re on broadband, they can do it according to net neutrality without paying for the usage. And because broadband allows for two-way interactivity, you can get data on what people are watching and start a conversation. If you watched this, you might like that. That’s a great innovation. That’s exactly the kind of thing where you could take not just Netflix but all of Silicon Valley and harness those abilities to do global, at scale, distribution. That’s a tremendous boon to an industry producing more and more programming. If you don’t have a way to search and have recommendations based on other things you’ve watched, you couldn’t figure out what the hell to look at, because there’s too much! I think it’s going to reinvigorate the television industry.”

On what the cable-TV bundle will look like in 10 years

“There will still be the cable bundle we know now, which is the full monty with hundreds of channels, live news, sports, niche, etc. You’ll see for that big bundle and for the more focused bundles—whether it’s what interests you have or what price point you want to pay—you’re going to see the core channels represented across all of them, and you’re going to see full video on-demand and very good search recommendation and navigation engines, so consumers know what the programming is and where to find it.”

On the escalating costs of sports programming

“The cost of sports rights will continue to increase. The question is whether they increase at the same rate. They were increasing 15 to 20 percent in the last eight or nine years. Football has been the mainstay. That’s where a lot of the money is, and it mostly goes to the four big broadcast networks. The one that’s growing fastest globally and in the U.S. and in the young demographic is basketball, which is why we picked the championship pieces of the NBA and NCAA. Those were serious investments, but our affiliate revenue growth in relation to those sports costs is very positive, so it’s an increasing margin.”

On whether he would sell the company 

“It’s not up to me. The obligation of every ethical management is to make sure we optimize the long-term value of the company. We’re growing the company. We’ve grown the company at 25 percent a year in earnings for the last eight years. That’s a lot higher growth than the S&P. We’re essentially outperforming every other media company with the exception of CBS. When people talk about potential suitors showing up, that’s because there’s not a Sumner Redstone or Rupert Murdoch or [Comcast CEO] Brian Roberts who own the blocking shares. That’s why they talk about it. It’s not because there’s a performance issue. If somebody offers something to our shareholders that’s better than our earnings track, obviously we would try to consider what’s best for our shareholders. We’re a pretty big company. It’s expensive. I don’t anticipate being interrupted.”




Source: Bloomberg Interview http://www.bloomberg.com/news/articles/2016-08-02/jeff-bewkes-thinks-cable-s-future-is-fine

VCA Antech (WOOF) Q2 Earnings Call

VCA Antech (WOOF) CFO Tom Fuller said the company is executing

“So in recap, we have a great company and a wonderful, wonderful industry, demand is still very strong, consumer is getting strong, our economy is stable, and people just love their pets. We’re seeing a lot of strength in our hospital and lab business. Internal growth has remained strong and they’re actually increasing in the July, so we’re optimistic for the remainder of the year on our growth rates. Margins are great, 50 basis point improvement in consolidated operating margin.”

VCA Antech (WOOF) CEO Robert Antin said the company is enabling online appointment scheduling

“At some point, the home run’s going to be, we have online appointment book, so people can actually access through the website their own appointments and being able to make it.  Online, it’s one of the great places. One of the gatekeepers in an animal hospital is the appointment book. It’s the domain of the doctor. It’s protected by the desk. And now, just like when you go to a restaurant, you can do it.”

VCA Antech (WOOF) CEO Robert Antin on how they’re thinking about pricing their services

“I think we’ve had steady price increase. I’ve said before when we measure the client feedback through our Client Experience program, we do – there isn’t as much resistance to price increase, I would agree with that. In terms of what we’ve done, we – certainly, we have a number of different pricing grids and we allow the hospitals to have input into them on a local basis so that it reflects the competitive, but I haven’t seen an acceleration in pricing in our hospitals. That hasn’t been our strategy.”