June 13, 2007 at 2:20 am · Filed under macroeconomy
Is it time for Pier 1 Imports (http://www.businessweek.com/ticker/) shareholders to break out the candy-colored champagne glasses? Investors starved for any piece of good news on the unprofitable home-furnishings retailer—which has been beset by steady declines in same-store sales and shrinking margins—seized on an upgrade of the stock by Goldman Sachs Group (http://www.businessweek.com/ticker/) to bid the shares higher on June 12.
Goldman analyst Adrianne Shapira and her team upgraded Pier 1 to buy from neutral and added the stock to the firm’s Americas Conviction List. Goldman raised its price target on the stock by $3, to $10.50. Optimistic Forecast
Any glimmers of hope are welcome at Fort Worth (Texas)-based Pier 1. Recent results have been discouraging. The company posted a loss of 14 cents per share in its February quarter, vs. a loss of 4 cents one year earlier, on an 11% drop in same-store sales amid a difficult environment for home-furnishings merchants. Pier 1 is changing its merchandise mix to lure shoppers back into its stores, but will also be closing some stores and cutting staff.
Shapira took an upbeat tone in a June 12 Goldman research note: “After years of expensive [market] share losses dragging down EBITDA [earnings before interest, taxes, depreciation, and amortization], we believe a critical inflection point is being ushered in by (1) a new management team armed with a turnaround plan and (2) increased shareholder vocalism.”
Investors reacted positively to the Goldman note, and the stock moved up by 8.8% on June 13, to $8.50—near its highest level in the past year.
Goldman is more optimistic than the rest of the Street that Pier 1 can improve its results. The firm’s forecast for fiscal 2007 EBITDA of a $50 million loss and a loss per share of 68 cents is better than the Street consensus forecast of losses of $81 million and $1 per share, respectively. “We believe incremental cost savings across PIR’s labor and supply chain exist,” Shapira writes in the research note.
Goldman notes that first-quarter results are scheduled to be released on June 21, ahead of the company’s shareholder meeting on June 28, and it expects the stock to react positively as the company clears excess inventory and perhaps makes further cost-cutting announcements in the first quarter. Goldman also thinks the company may ease up on marketing spending and could sell its headquarters in the second half of the fiscal year. In fiscal 2008, the firm thinks same-store sales could stabilize and merchandise margins begin to improve. S&P Expects Volatility
Standard & Poor’s Equity Research takes a dimmer view of the shares. In an April research report, S&P said that despite Pier 1’s “slightly encouraging” February quarter results, “we believe the company’s turnaround will be lengthy and will include several hiccoughs along the way.” S&P thinks Pier 1 is having problems driving traffic due to difficult macroeconomic conditions and an increasingly competitive retail environment.
Despite the negatives, S&P believes that Pier 1 could be acquired, and it expects the shares to be volatile over the near term. S&P has a hold rating and an $8 price target on the shares. (S&P, like BusinessWeek, is a unit of The McGraw-Hill Companies. (http://www.businessweek.com/ticker/)).
June 13, 2007 at 2:20 am · Filed under macroeconomy
May 25, 2007 — BetonSports has pleaded guilty to racketeering and conspiracy and will face no further criminal prosecution as long as it cooperates with probes of former company officers, including founder Gary Kaplan, a government official said.
Kaplan last week pleaded not guilty to racketeering and conspiracy charges stemming from the British online gambling company’s acceptance of wagers from U.S. bettors.
The company’s plea “should put an end to the BetonSports illegal gambling empire,” U.S. Attorney Catherine Hanaway said yesterday in St. Louis.
The deal may end the London-based company’s legal troubles in the U.S. Last July, prosecutors unsealed a 22-count indictment against the company and 11 individuals, including Kaplan and then-Chief Executive Officer David Carruthers.
In November, the company consented to a ban on its U.S. operations, ending a parallel civil lawsuit by the government.
BetonSports’ attorney Jeffrey Demerath didn’t return a call.
The plea was entered before U.S. District Judge Carol Jackson in St. Louis, Hanaway’s spokeswoman Terri Dougherty said. The company was accused of violating U.S. laws barring the electronic transmission of wagers across state and international borders. It also charged the individuals with racketeering conspiracy.
Kaplan, 48, entered his plea earlier this month in St. Louis federal court, 10 months after U.S. prosecutors unsealed their indictment. He was apprehended at a hotel in the Dominican Republic in March.
June 13, 2007 at 2:20 am · Filed under macroeconomy
The case of the cricket coach, the hotel room and the broken hyoid bone finally ended yesterday with the prosaic admission by the Jamaican police that Bob Woolmer was not murdered.
All talk of match-fixing, poison, and killers waiting in the shadows was dismissed by Lucius Thomas, the Jamaican police commissioner, and Mark Shields, the British police officer who is his deputy.
After three months, acres of newsprint and rampant speculation, Mr Thomas announced that Woolmer, an overweight man in his 60s with diabetes and heart problems, had suffered what perhaps was always a far more likely fate: death by natural causes.
But none of the men responsible for launching the costly murder inquiry, involving scores of police officers taking hundreds of statements, DNA samples and fingerprints, resigned from their posts yesterday. Neither Mr Thomas nor Mr Shields would concede that the affair had been embarrassing for the Jamaican police service. “I don’t know what is embarrassing about it,” said Mr Thomas.
But Inzamam-ul-Haq, the Pakistan cricket captain during the World Cup, condemned the Jamaican police’s handling of Woolmer’s death. Inzamam, who was questioned at length by the police investigating what they thought was murder, told the Guardian: “We were convinced from the start that it was a natural death. I feel that the Jamaican police and the doctors misrepresented the investigation. At an international level in cricket this should never have happened.
“It’s not a matter of me wanting an apology. Nothing could diminish the tension and hassle I suffered.”
Mr Woolmer was found dead in his hotel room by a chambermaid on March 18, the day after his team were knocked out of the cricket World Cup by Ireland in the biggest shock of the tournament’s history.
Mr Shields, the former Met officer who led the inquiry, said it was not the police’s job to publicly second-guess the written findings of a pathologist, in this case that of Dr Ere Seshaiah, the government pathologist who stated that Woolmer had been strangled on the evidence that the hyoid bone in his neck was broken.
Mr Shields admitted that it was he who had stated early on he was “100% sure” that Woolmer had been murdered because there was evidence in the hotel room pointing to that conclusion. But he said that was no reason for him to step down.
“I would ask why?” he said. “We conducted a thorough, professional investigation. We were given facts in the beginning which we took at face value. We had to conduct an investigation. We cannot publicly second-guess a pathologist and his opinion, our job is to investigate.”
Asked to account for his comments about the compelling evidence in the room, he said he was referring to a pillow in the room which could have been used during the strangulation and would have accounted for the fact there were no marks on Woolmer’s neck. Other evidence found included a pool of vomit.
Mr Shields said the fact that the Jamaican police set up a review by Met officers and called in second and third opinions from the British Home Office pathologist Dr Nat Carey and two other experts showed they were being thorough.
Although the pathologists involved did not conduct a second postmortem examination, digital photographs and X-rays of the first analysis and the hyoid bone in question were sent to Dr Carey and the other experts. “They all formed the opinion that the bone was not fractured,” Mr Shields said. “We have stated today that his [Dr Seshaiah’s] report was incorrect.”
Asked if it would not have been better to keep the initial findings private until further investigations were made, he said in an ideal world that might have been so. “But I had to consider the circumstances … every step of the inquiry became the subject of media speculation.”
The decision to reveal the findings of the pathologist’s report was a “collective” one. He added that withholding the information would undoubtedly have led to accusations of a cover-up.
Mr Thomas said his officers had investigated allegations that match-fixing had been at play, and found no evidence. There was also no evidence that Mr Woolmer had been poisoned. After releasing Dr Seshaiah’s findings - that Mr Woolmer had been asphyxiated by strangulation - police launched a murder inquiry. But behind the scenes they sent the results to Dr Carey in the UK, and two other experts, one in South Africa and one in Canada, all of whom disputed the findings and said the death was as a result of natural causes. The last expert gave their findings last week. Dr Seshaiah was not available for comment last night. An aide in his office in Kingston said: “Dr Seshaiah is not here, he is carrying out a postmortem at the moment. We don’t know whether he wants to say anything or not.”
Neither Mr Shields nor Mr Thomas would comment on Dr Seshaiah’s credibility. They referred all questions to Gilbert Scott, permanent secretary in Jamaica’s department for national security. Mr Scott was contacted but made no comment.
In South Africa, Mr Woolmer’s wife, Gill, and her two sons, said they were relieved to learn that no foul play had been involved. Mrs Woolmer thanked the Jamaican police and Mr Shields in person for the way they had treated her family and asked to be allowed to grieve.
Additional reporting by Ross Sheil in Kingston
Timeline: The murder that wasn’t
March 17: Ireland beat Pakistan in Jamaica. Bob Woolmer tells a press conference: “I’d like to sleep on my future as coach of Pakistan.”
March 18: Early in the morning Woolmer emails his wife in Cape Town. 10.45am: Woolmer is found unconscious in his hotel room by a chambermaid. Midday: Woolmer is pronounced dead
March 19: First post mortem results inconclusive. Police say they are treating the death as suspicious
March 22: Jamaican police question and fingerprint every member of the Pakistan squad as reports that a broken bone has been found in Woolmer’s neck. Jamaican police commissioner says tests showed the cause of death as asphyxia as a result of strangulation
March 23: Speculation that Woolmer was involved in match fixing
March 31: Jamaican police accept an offer of help from the UK police
April 3: UK officers and a senior British pathologist arrive in Jamaica
April 29: BBC’s Panorama programme claims Woolmer was poisoned as well as strangled
May 4: Woolmer’s remains are cremated in South Africa
May 15: Dr Nat Carey, a British Home Office pathologist concludes that Woolmer died of heart failure
June 4: Jamaican police say they are awaiting the results of a third pathology report into Woolmer’s death
June 12: Jamaican police announce Woolmer was not murdered
