Latest news with #DavidSwartz
Yahoo
7 days ago
- Business
- Yahoo
Dick's is buying Foot Locker for 'a very fair price': Analyst
Amid its $2.4 billion deal to acquire shoe retailer Foot Locker (FL), Dick's Sporting Goods (DKS) is maintaining its full-year profit forecast. Morningstar senior equity analyst David Swartz comes on The Morning Brief to weigh in on Dick's recent stock activity and share his thoughts on the retailer's acquisition of Foot Locker. Also catch David Swartz weigh in on department store Macy's (M) progress in its turnaround plan. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. In your notes, you mention and given your star rating on the firm, I can tell that you have questions about the valuation. How does the Foot Locker acquisition impact how you're thinking about the valuation of Dicks going forward? Yeah, it's hard to say because it's still early. The Foot Locker deal was just announced last week and people are still trying to assess how it's going to impact Dicks in the short term and the long term. Uh, I was probably one of the few that actually thought that Dicks was quite overvalued when it was over $200 a share. I thought it was worth closer to $160. Um, so when the stock fell after the Foot Locker deal, to me that was partly because Dick's stock was overvalued to begin with. I understand why Dick's stock was at such a high level because Dicks has been performing extremely well in the last few years. Uh, the business has really transformed and it's been outperforming everybody, certainly including Foot Locker. And so a lot of people are very unhappy that Dicks is combining with Foot Locker, which realistically is an inferior business, but I think that Dicks is buying it for a very fair price at about two and a half billion dollars for Foot Locker. The Foot Locker stock price has been weighed down. And so, even though Dicks is paying a premium over where the stock had been trading, uh, they're still, I think, buying it at a fair price, at only about six times depressed EBITDA. And I think from Dick's management's perspective, they're able to buy Foot Locker here for a very attractive valuation. All right. We are going to be watching closely as that deal looks to close. David, thanks so much. Appreciate it.
Yahoo
7 days ago
- Business
- Yahoo
Macy's certainly is 'troubled': Analyst on store's turnaround plan
Department store chain Macy's (M) topped first quarter estimates on its top and bottom lines, posting revenue of $4.6 billion (vs. estimates of $4.46 billion) and adjusted earnings of $0.16 per share (vs. estimates of $0.14). On top of its quarterly results, Macy's cut its full-year profit outlook, citing tariff pressures and a more cautious consumer. Morningstar senior equity analyst David Swartz comes on The Morning Brief to talk more about the store's progress in its turnaround plan. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Macy's is cutting its full-year profit outlook as tariffs and higher promotions hit the business. Still, the retailer topping first-quarter expectations as it moves forward with its turnaround strategy. Joining us now, David Swartz, Morningstar's senior equity analyst. David, going into the report, I know that you had a $24 price target on the stock. I am curious, though, you say in one of the headlines of your recent notes that Macy's lacks competitive edge. Is the strategy to focus on successful stores going to be enough for Macy's and how are you viewing the results now? I do think that the stock has undervalued, as you mentioned, my fair value estimate is $24. So actually, I think it's trading at about half of what it's worth. But Macy's certainly is a troubled company and that's reflected in the valuation right now. Uh Macy's is in the process of closing a large number of stores, um closed a lot last year, closing more this year, we'll close more next year uh to focus on the stores that are performing better. Now, we're not really seeing positive comps from those stores. So um it's certainly at this point uncertain that uh Macy's can really turn it around. Uh but Macy's does have some things that are working. Uh Bloomingdale's and Blue Mercury are both performing much better than Macy's. They've both had consistent positive same-store sales growth. Uh while some of the Macy's stores are performing okay, um others are definitely dragging down the total numbers. And so, I think at this point, um Macy's is maybe uh not even halfway through its turnaround plan and so it's hard to know if it's going to work in the long run. Should investors believe in this turnaround plan, Dave? I think at this point the stock is so cheap that you don't necessarily have to believe in it to own the stock. Um I I know that there's a lot of skepticism about the department store model. It's a model that doesn't work anymore realistically. And Macy's is dealing with a business that was built for a completely different retail environment, and Macy's is having to transform how it operates and having to downsize considerably to um to work in this market. And it's not clear that those will be enough, those actions will be enough to really turn it around. But I do think that there's value in Macy's in that there's value in the stock right now and that there is a place for Macy's in retail. Uh this is a company that has a very large e-commerce business, for example, doesn't get much credit for it because people still see this as largely a brick and mortar business, but Macy's does something like $7 billion a year in online sales. Um so Macy's does have a reason to exist, in my opinion. I think the stock is so cheap that it's worth looking at. As a digital first business, if they are able to make that transition, knowing that some of the elements of this turnaround plan mean, to your point, looking across the retail footprint that they do have, brick and mortar, and saying, okay, what's profitable, what's unprofitable, where do we need to shrink square footage size so we have less overhead that we have to account for. A lot of that sounds like a Sears playbook as they were in their peak slippage years. And so all of that considered and seeing exactly what took place, how is this essentially going to avoid being a similar case as Sears while they make that digital transformation? Well, one thing you can say is that Macy's still exists and Sears doesn't. So I guess you could say that Macy's did survive. And we have seen a lot of other department stores go under too, including Bon-Ton, for example, Lord & Taylor, and Gordmans, and others that have gone out of business in the last 10 years. And we're probably going to see more. I mean, for example, JC Penney probably doesn't really have a future. And so, you know, Macy's I think does stand out. It does have a large number of private label brands that do very well. Uh it does have a good selection of merchandise. Uh and Macy's does reach a large large number of consumers. It has um a large customer base, has millions of credit card holders, um and is still the anchor in a lot of malls. And so, you know, I do think that Macy's um can survive where others have disappeared. It's going to be a smaller company. Macy's will never get back to its peak revenues, which I think it hit about 10 years ago. Um so this is going to be a smaller company, but there are successful retailers that have far smaller uh revenue bases than Macy's does and they maintain their profitability. I think Macy's can also be consistently profitable uh after it does this downsizing and these remodeling uh actions that it's making right now. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
7 days ago
- Business
- Yahoo
Dick's is buying Foot Locker for 'a very fair price': Analyst
Amid its $2.4 billion deal to acquire shoe retailer Foot Locker (FL), Dick's Sporting Goods (DKS) is maintaining its full-year profit forecast. Morningstar senior equity analyst David Swartz comes on The Morning Brief to weigh in on Dick's recent stock activity and share his thoughts on the retailer's acquisition of Foot Locker. Also catch David Swartz weigh in on department store Macy's (M) progress in its turnaround plan. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
7 days ago
- Business
- Yahoo
Macy's certainly is 'troubled': Analyst on store's turnaround plan
Department store chain Macy's (M) topped first quarter estimates on its top and bottom lines, posting revenue of $4.6 billion (vs. estimates of $4.46 billion) and adjusted earnings of $0.16 per share (vs. estimates of $0.14). On top of its quarterly results, Macy's cut its full-year profit outlook, citing tariff pressures and a more cautious consumer. Morningstar senior equity analyst David Swartz comes on The Morning Brief to talk more about the store's progress in its turnaround plan. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Hill
01-05-2025
- Business
- The Hill
Tariffs on Vietnam could dampen the NBA playoffs' team spirit
As the NBA playoffs captivate millions of basketball fans across the United States, demand for athletic shoes and gear is rising and projected to surge over the next decade. The playoffs aren't just a showcase of pro basketball talent; they are also a massive marketing opportunity for such sportswear giants as Nike and Adidas, whose products dominate the courts. Yet even as these brands enjoy heightened visibility, their supply chains face a looming crisis. President Trump's tariff hike of 46 percent threatens Vietnam, the key manufacturing hub for these brands. Despite the pause on some reciprocal tariffs announced last month, as the primary producer of high-performance basketball shoes and apparel, Vietnam's booming footwear industry now faces a significant financial strain that could disrupt both the industry and U.S. consumers. Vietnam has been a major beneficiary of shifting supply chains, particularly as companies moved operations out of China to avoid previous tariffs. Today, over half of Nike's footwear production and a significant share of Adidas's manufacturing take place in Vietnam. However, Trump's aggressive tariff policy could drastically increase costs for these companies, forcing them to either pass price hikes onto consumers or look for alternative production sites, both of which would create significant disruptions. Higher tariffs could also stifle investment in Vietnam's factories, potentially causing layoffs and reducing economic growth in a nation that has become one of the U.S.'s key economic partners. With sportswear brands deeply embedded in Vietnam's economy, these tariffs risk undermining a vital segment of the global supply chain at a time when demand is surging. The punitive tariff imposed by Washington on Vietnam threatens to strain ties between the two nations at a critical moment, just as they mark 50 years since the fall of Saigon this week. As strategic comprehensive partners, the U.S. and Vietnam have built a relationship centered on economic cooperation, regional stability and shared security interests in the Indo-Pacific. However, such a steep tariff risks disrupting supply chains, weakening trust and pushing Vietnam to seek alternative economic alliances, potentially undermining U.S. influence in the region at a time when geopolitical stability is paramount. The White House's draconian position is buttressed by the $123.5 billion trade deficit with Vietnam, making it the third largest behind only China and Mexico, claims Morningstar analyst David Swartz. In response, Vietnam officials have been attempting to negotiate their way forward even before being handed this onerous tariff levy. These diplomatic concessions and pledges include supporting the repatriation of Vietnamese nationals detained in the U.S. The increased tariffs targeting Vietnam will primarily be paid by multinational companies that employ hundreds of thousands of workers in the country. However, these costs are likely to be passed down the supply chain, ultimately affecting American consumers. For instance, the price of a pair of Nike shoes, like the Nike Air Force 1, which are largely manufactured in Vietnam, is expected to rise from an average cost of $115 to more than $150 as a result of these new tariffs. Most economists agree that tariffs function as a tax on businesses, but in practice, companies typically offset these costs by raising prices, reducing profit margins or shifting production elsewhere. In the case of Vietnam, the impact extends beyond corporations — it also affects the country's workforce, which relies on foreign investments and manufacturing jobs to sustain livelihoods. For instance, Nike employs more than 130,000 Vietnamese citizens in factories manufacturing Nike-branded products, and a significant proportion of these workers are women. In its 2024 fiscal year, Nike produced 50 percent of its footwear and 28 percent of its apparel in Vietnam. Nike's extensive manufacturing presence in Vietnam has created significant employment opportunities, particularly for women, who make up approximately 80 percent of the workforce in its factories. Many of these women come from poor rural areas in the central and northern provinces, seeking better wages and financial stability. With at least 75 contracted factories across the country, Nike has become a key driver of economic activity and job creation. By employing a vast number of women, Nike has contributed to increasing female workforce participation, helping many to achieve financial independence and support their families. For many of these workers, employment in Nike's factories represents their first experience in the formal economy, granting them access to steady incomes, legal protections and opportunities for skill development. Beyond financial benefits, Nike's employment of women in Vietnam has also played a role in fostering social and economic empowerment. Steady wages enable women to invest in their education, healthcare, and families, breaking cycles of poverty that have persisted for generations. Moreover, working in industrial settings provides them with skills and experiences that can translate into broader career opportunities. Many of these women become role models within their communities, inspiring younger generations to pursue work and education. Meanwhile, U.S. consumers will face higher costs for everyday goods, particularly in industries heavily dependent on Vietnamese exports, such as footwear, electronics and textiles. Frank Lavin, former undersecretary of Commerce for International Trade, has publicly criticized Trump's 'scattershot' tariffs strategy for causing contradictory outcomes, hurting the U.S. economy, while increasing volatility. As the U.S. becomes a less reliable trading partner, he sees other nations and businesses seeking opportunities elsewhere. Trump's tariffs on key trading partners such as Vietnam occur at a time when the global economy is, and continues to be, highly interconnected. In an era defined by globalization, such protectionist measures not only disrupt complex supply chains but also strain diplomatic and economic relations. This marks a broader shift toward a more fragmented and recalibrated global order — a 'rewired' world where cooperative frameworks are increasingly undermined, resulting in adverse consequences for a wide range of stakeholders across both developed and developing economies. Still, as the NBA playoffs play on through the championships, sports fans may soon see higher prices and limited athletic apparel options. What seems like economic protectionism could ultimately backfire, hurting U.S. consumers and straining a vital trade partnership between the U.S. and Vietnam. James Borton is a senior fellow at Johns Hopkins-SAIS Foreign Policy Institute and the author of 'Dispatches from the South China Sea: Navigating to Common Ground.'
