House & Home
House and Home
House and Home
Fri, December 10, 2010
Thu, December 9, 2010
Fortune Brands, Whole Foods Market, Kroger Company, Supervalu and Starwood Hotels
CHICAGO--([ BUSINESS WIRE ])--Zacks.com Analyst Blog features: Fortune Brands Inc. (NYSE: [ FO ]), Whole Foods Market, Inc. (Nasdaq: [ WFMI ]), Kroger Company (NYSE: [ KR ]), Supervalu Inc. (NYSE: [ SVU ]) and Starwood Hotels & Resorts Worldwide Inc. (NYSE: [ HOT ]).
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Here are highlights from Thursdaya™s Analyst Blog:
3-Way Split for Fortune Brands
Fortune Brands Inc. (NYSE: [ FO ]) announced its intention to split the company into three separate parts, giving investors pure plays in golf, home products and alcoholic drinks.
The company revealed that it would spin off its home and security business to shareholders in a tax-free transaction. Fortune Brands also plans to either spin off or sell its golf business. The home and security business earns revenue from products such as Moen faucets and Master locks while the golf division owns brands like Titleist.
Consequent to the spin-off, the company will continue to subsist as a publicly traded manufacturer of distilled spirit. This unit has parented brands like Jim Beam bourbon, Courvoisier cognac and Sauza tequila.
The radical separation has been the outcome of four years of strategic evaluation conducted by Fortunea™s board and management. The declaration comes just after two months of an activist investor, William Ackman, disclosing its double-digit stake in the company. William unveiled an 11.0% stake in the company on October 8, 2010. He owns 16.7 million shares of Fortune Brands, which he bought for a total price, including brokerage commissions, of $764,757,471 and 603,486 notional shares underlying swaps.
Fortune Brands looks forward to clinching its strategic restructuring plan, which includes a spin-off or sale and any other related issue for each one of the concerned businesses, within the next several months.
Whole Foods Re-establishes Dividend
Buoyed by a healthy financial position and robust outlook ofWhole Foods Market, Inc.a™s (Nasdaq: [ WFMI ]), the companya™s Board of Directors has reinstated the quarterly dividend after a hiatus of more than two years. The Board approved a quarterly dividend of 10 cents a share.
Management said that the dividend will be paid on January 20, 2011 to shareholders of record as on January 10, 2011, and will amount to approximately $17 million on a quarterly basis or approximately $69 million annually.
Austin, Texas-based Whole Foods, suspended its dividend in August 2008 to better manage its liquidity in the wake of a challenging economic environment. The company had at that time witnessed a 31.4% drop in its third quarter earnings per share.
Whole Foods, which faces stiff competition from other supermarket operators such as Kroger Company (NYSE: [ KR ]) and Supervalu Inc. (NYSE: [ SVU ]), hinted that its recent strong financial performance and disciplined capital expenditures have helped in generating healthy free cash flow consistently, which aided the company to reinstate the dividend payout. This was quite evident from its fourth quarter and fiscal 2010 results.
During fiscal 2010, Whole Foods generated operating cash flows of $585.3 million and incurred capital expenditures of $256.8 million, which resulted in free cash flows of $328.5 million.
Starwood Reaffirms 2010 Outlook
Starwood Hotels & Resorts Worldwide Inc. (NYSE: [ HOT ])reaffirmed its fiscal 2010 guidance and providedlong-term outlook in the investor day meeting held recently in New York.
Starwood continues to expect its fourth quarter adjusted earnings per share to be in the range of 36 cents to 38 cents, with the RevPAR increasing 7% to 9% in constant dollars. Adjusted EBITDA is expected to range from $230 million to $235 million.
For fiscal 2010, the company forecasts earnings to remain in the range of $1.09 to $1.11 per share with an increase in RevPAR between 8% and 9% in constant dollars. Adjusted EBITDA is expected to range from $840 million to $845 million.
Additionally, the company expects annual RevPAR rise of 7% to 9% over the next three years, which would result in annual earnings per share growth in the 35% to 42% range and annual EBITDA growth in the range of 14a"18%. The company also expects excess cash flow to come in at $1.7 billion to $2.2 billion over the same period.
Starwood remains optimistic regarding its guidance, aided by an increase in demand for hotels, particularly in the emerging market and due to slower supply growth in the overall market.
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