Luxury Fashion Brands Shifting Focus to Male Shoppers

Source: Bidness Etc

Today when I walked up in to my office, I gave stealing looks to my crush, a guy from the other department. Bald, average heighted and dark complexion guy, I wonder what it is which makes him so handsome and breathtaking. I probed in to my thoughts and finally concluded that it is his perfect sense of dressing, attracting fragrance and cool accessories which enhances his personality and make him so attractive. This led me to other thought that now young urban men are now more conscious about their looks and styling than back in 90’s. Gone are the days when only women used to pamper themselves with shopping spree, men of this era also enjoy wearing brands with good cuts, cosmetics to shield complexion and luxurious accessorize to distinguish themselves with others.  

Fashion industry is currently foreseeing a shift in demand from woman to man. Fashion industry used to be women-centered with only little attention to male shoppers. However, now all the big names like Prada, Gucci, Michael Kors, have shifted their focus towards the menswear.They have strategic change to move in to the men clothing line with separate stores devoted men considering the shift in male demographics and change in style preference. According to research, “Henry”- High earnings, not rich yet, type men prefer marrying later in their lives which leaves them with ample amount of money to spend on themselves. These are the men who would cover the loss posted due to decrease in demand of female products. It is reported that the man share in global luxury market is 40% which is expected to grow in future, this motivated Prada to expand its man stores from 30 to 80 stores to target the emerging male target market. Michael Kors has also split its fragrance segment in to half to cater both male and female. It also expects to increase its revenues from men’s section to $1 billion. Coach however has reached the target by increase in revenues from men section from $100 million in 2010 to $700 now.  

Male fashion industry is on its way to uphill and most of the big luxurious brands would benefit from it as most of the male demographics is changing, except for China, where female still remain to be dominant in shopping. 

Success Story of Charles Schwab!

Charles R Schwab is a founder of Charles Schwab Cooperation, a discount brokerage House, in 1971 which later became one of the best discount brokerage firms. Charles Schwab is a part of many investment companies like he is the Chairman of Charles Schwab & CO and Charles Schwab Bank and trustee of many investment firms such as Schwab Capital Trust, Schwab Investment, Charles Schwab Family of Funds, Schwab Annuity Portfolios.

The great entrepreneur was born in 1937 in Sacramento. He had secured his degree in Bachelors of Arts from Stanford University, majoring in Economics in 1959. In 1961 he completed his Master’s in Business Administration from Stanford Graduate School of Business. He currently lives in San Francisco with his wife and five children.

The Charles Schwab Corporation was incorporated in 1986 and Charles Schwab has been its Chairman and Director since its inception. He had been CEO of Charles Schwab& CO on and off like from 1986 to 1997 he had been Firm’s CEO. Then he served as Co-Chief Executive Officer from 1998 to 2004. He resumed as CEO in 2004 till 2008.

Charles is also involved in the charity work through various volunteer programs and non-profit activities. He was diagnosed with dyslexic, a reading and learning disorder, when he was 40 years old. Through him it was transferred to his son as well. This is the reason he co-founded a Charles Helen Schwab Foundation along with his wife; and organization is responsible for supporting education, human services, poverty prevention and health. He is also Chairman of a San Francisco Museum of Modern Art.

The net worth of Charles is $5.8 billion dollars and this Business Tycoon was named as President’s Advisory Council on Financial Literacy by the ex-President of US, George W. Bush. He has written many books with his daughter, Carrie Schwab. Books are named Pays To Talk, Charles’s Schwab Guide to Financial Independence and You’re Fifty- Now What?

Fred Turned C Graded Business Plan of University into Reality as FedEx

Fred Smith is one of the best entrepreneurs who had the guts to follow his dream and class paper to make realize the company which earns in billions. The great man was born in Mississippi in 1944 and after four years of his birth, his father died. Fred had a birth defect namely Legs-Calved-Perth’s Syndrome but this guy got over the crippled disease at the age of ten.  Fred was enrolled in Yale University in 1962, at the age of eighteen. He graduated in 1966 with his majors in Economics. During his studies he did a class paper in which he designed a business plan for overnight delivery services. It is rumored that he got C in the paper however this C graded business plan turned into reality later in form of FedEx corporation.

It is surprising for many that at the time when Fred left his university, he was hired by the US Marine Corps. Three years later in 1969 Fred was retired with the rank of Captain with all due respect and number of honors. He got married also in 1969 to Linda.

The success timeline of Fred continues when he bought controlling share in Ark Aviation Sales in 1970. In 1971 Fred utilized $4 million inherited from his father with additional $90 million raised as capital to for Federal Express. In a decade FedEx (FDX) had been spread in 115 cities and by 1983 its sales were around $1 billion.

Apart from running a FedEx, Fred had been involved in many activities like playing a role in movie “Cast Away” and endorsing Re-Election for Bush. He had been the member of Skull and Bones Society with Bush and John Kerry. Fred had also gambled $5000 on blackjack to save the company. As a CEO of FedEx he receives $10,434,589 as compensation.

Price to Earnings multiple for our Newbie Investors!

Have zero IQ about valuation techniques? No idea how to evaluate your investment options? Trying to figure out the best stocks to invest in? Here let us guide you to one of the famous method of stock valuation which would help you in making your investment decisions.  We have already discussed Discounted Cash flow Method as investment valuation tool in our earlier post; let’s now focus on another widely used valuation technique, Price to Earnings ratio or multiple. Earnings multiple have always been handy when choosing a stock for investment.

Price to earnings ratio defines how much price an investor is willing to pay for $1 earning. Usually current stock price is divided by past twelve month’s earnings per share to determine trailing price to earnings multiple. However sometimes one year forward, that is next twelve month projected earnings are used to determine one year forward price to earnings multiple.  Many people would wonder why this ratio is called multiple; it defines how many times investor is going to pay for the earnings from his/her investment.

This multiple is not used alone; it is a relative metrics used in reference to the company’s competitors and industry average P/E. Investor may compare the multiples of two companies belonging to the same industry or with past trend of company’s P/E. The low P/E indicates low growth in company’s earnings when compared to high P/E, which indicates high earnings growth for that company.

So for making investments in future, do consider this earning multiple to evaluate your investment options.

.

Two Superheroes from the Corporate World

Fond of watching superhero movies full of supernatural powers and miraculous script? Ever wonder where from these writers get the idea of a strong powerful man who can do almost everything to save mankind from some disastrous situation or brutal monster. These superheroes sacrifice their love for lady over their duty. For all those who love supernatural characters, have patience! Let us tell you the real life counterparts of these characters from the Corporate World.

Reed Hasting as Flash

Our first superhero Flash, of DC comics Universe, has a real life imposition of Reed Hasting. Reed was born in Boston MA, aged 53 and had been CEO of Netflix since 1999. The stock price performance of the company under his regime is 4307%. Netflix Inc – NFLX is a popular internet Television Company incorporated in 1998. This company was formed by Reed after he got furious for paying heavy amount of late fees as a rent for film. Company started off as a film rental service with low rates of DVD and videos mail delivering. Reed reaped the benefits of growth in internet and broadband by expanding business and offering online streaming. It went public in 2002. In 2011 company was struck with extensive criticism by its customers due to hike in prices for subscribers. The increase in price was a result of splitting Online streaming segment from DVD rental segment.

Howard Schultz as Green Lantern

This guy started his career as a salesman and was hired by Starbucks in 1981. Howard Schultz is 60 years, born in Brooklyn, NY and completed his studies from Northern Michigan University.

Having aptitude of doing great business, Schultz was impressed by coffee bars in Europe and suggested the management of Starbucks to follow the trend. His idea was rejected by the company and he quit establishing his own coffee bar with the name of II Giornale. Later with the help of few investors he took off the Starbucks and merged it with his own company. With its reins in hands of Schultz, Starbucks flourished vigorously. 90’s decade was the time when Starbuck was known as a famous brand with its presence on international level. Schultz resigned in 2000 and rejoined Starbucks in 2008 as a President and CEO of Starbucks because company reported great loss and decline in brand recognition in his absence. Turnaround strategy of Starbucks formed by the Schultz was shutting off some of the stores as they were difficult to manage. He chose some of the strategic international location for Starbucks. The competitive edge of the company is it’s owning of its all the stores instead of franchising them. In his regime Starbucks stock returns were 322%. 

Chinese Growing Economy Gives High Exposure for Investors

China is the world’s largest population country with the number of people is 1.354 billion. Chinese economy is the second largest in the world GDP of $8.32 trillion. It’s a good business avenue but conducting trade in business in China has various barriers and obstacles due to cultural and linguistic difference. However in 2013 there was a 5/3% growth in country’s foreign direct investment which grew over year to be $117.6 billion. And it could be concluded one can get a vast excess to the country’s stock market and corporations by investing in Chinese ETFs and Chinese ADRs.

Warren Buffet, World’s best business specialist said that “The 19th century belonged to England, the 20th century belonged to the US, and the 21st century belongs to China. Invest accordingly.” Here listed are the ways through which on can invest in Chinese Market.        

Chinese Large-Cap ETF

Start with investing in iShares China Large-Cap ETF (FXI), which tracks the performance of 25 companies of Chinese Equity Market. This exchange traded fund was established in 2004 with the name of FTSE/Xinhua China 25 Index (ETF). This ETF consists of five sectors namely, Financial Services, Telecom, Technology, Energy and Basic Materials with the total assets value of $4.92 billion and it charges management fee of 0.73%. The fund could be traded through FirsTrade and TD Ameritrade with free commissions.

In recent year this ETF has underperformed S&P 500 ETF by 0.08%. The companies being traded in in this index have low price multiples but in terms of dividend payment they have high profile as it has the dividend yield of 2.89%. The five-year price to earnings multiple of index is 9.94%. Recent P/E multiple of index is 7.25% and S&P 500 index P/E multiple is 15.52x.

ETF of Internet Companies

The second ETF is internet companies of China which are worth investing. The China Internet ETF is KraneShares (KWEB). Management fee of ETF is 0.68%. With the dividend yield of 0.29% this fund pays dividend semiannually and main sectors are technology, consumer discretionary, consumer staples and industrial. The total value of assets in fund is $77.7 million. The ETF was constructed ion August 2013 and has assets oiver $80 million. It has outperformed S&P 500 by 0.242% since its inception. This ETF gives a high exposure of investment for investors as China has a large internet market which has been penetrated only 40%.

Chinese ADRs

Third option of investing in Chinese stock market is through investment in Chinese ADRs. Here are the three top high performing Chinese Companies with ADRs, an alternative approach for investors who do not wish to invest in exchange traded funds.

• China Mobile Ltd ADR

China’s largest mobile services provider company, China Mobile Ltd ADR recorded $48.9 billion in its topline with compounded annual growth rate of 13% in sales for last three years. With 740 million subscribers, company is growing its subscribers 8.5% on annual basis. Company’s stock is trading at P/E multiple of 11.6x which is discounted to its competitors Unicom and China telecom which are trading at price to earnings multiple of 13.6% and 19.4% respectively.

• Baidu ADR

Baidu ADR is a Google of China as it serves as the largest platform of internet search. Company recorded $5.2 billion in revenues and trades at price to earnings multiple of 26x. The stock is rated as buy by 26 analysts and 9 analysts rate it as hold.

• Perfect World ADR

Perfect World Co ADR is China’s fourth largest gaming platform which is involved in numerous online games. The revenue of the company has grown at the compounded annual growth rate of 10.8% for three years and currently stands to be $496.6 million. Perfect world stocks are trading at one year forward P/E ratio of 9.25x and its earnings per share (declined in last three years) are expected to grow by 15.6% in next three years. 10 analysts have rated stock as buy whereas 4 have rated it as hold.

 

 

Elon Musk is an Iron Man of Real Life

Iron Man has been watched by almost everyone and Tony Stark’s character became everyone’s favorite. It would come as a surprise to people who do not know that the role of Tony Stark was inspired by a real life character, youngest billionaire of US, who believes that failing is an option and if one is not failing then he is not innovating much. The man has been behind many innovations incorporated in real life in last decade. Yes we are talking about a real life Tony Stark, Elon Musk, founder of Tesla, X.com, SolarCity, who has not only invented techy things but his success lies in making those inventions commercially viable for users and profitable for him.

This iron man guy was born in 1971 in South Africa but later in 1988 acquired Canadian citizenship from his mother. His credits were transferred to the University of Pennsylvania where he completed his degree with two majors, economics and physics. He got enrolled in Stanford University in 1995 for further studies but he quit in two days for testing his own entrepreneurial skills. He started Zip2 which provided a platform to media companies for publishing content. This was sold to the Compaq four years later in exchange of amount over $300 million, $22 million of the total deal was earned by the Musk himself. Same year in 1999 X.com was started by Musk which offered financial services or internet bank more precisely. Xcom bought Confinity, known for PayPal in 2000 and in the same year Musk tied knots with Justin Musk. In next two years Musk sold PayPal to EBay for $1.5 billion through which Musk earned $160 million stocks of EBay. So fond of doing things simultaneously, Musk started another company SpaceX, Space Exploration Company.

Our real life Tony Stark founded Tesla Motors Inc. (TSLA), electric car company, in 2004 and Musk himself designed the model. The first car was produced in 2006 and Time Magazine titled it to be the Invention of the Year. In 2012 the most popular and successful model of Electric Cars was introduced, named Model S. Musk went beyond electric cars and established SolarCity (SCTY) with his cousin; company provides solar power to many building and is a largest player in solar industry.

Elon Musk got separation from his wife, after eight years of marriage having five boys and married a British Actress two years later.  Our celebrity entrepreneur, Elon Musk has been in meeting with Barrack Obama several times and many of his inventions were integrated into the government policies.

This guy believes that America is the place to make things possible and dreams about creating residential colony in Mars. Business Champion has a vision which could be achieved by the Genius only. 

McDonald’s a Brief Analysis of the Company

McDonald’s which sells 75 hamburgers per second is the most dominant company in US fast food industry. Yes we are talking about none other than McDonald Corp – (MCD) which has been cheering us since our childhood by happy meals and toys along with good food. Company contributes a large portion of US fast food industry in terms of revenues and its outlets are spread in around 119 countries with 34900 outlets around the world. McDonalds distributes more than 1.5 billion toys per year with its happy meal. The major competitors of company are Yum!, Burger King and Wendy’s. 

Background

In 1940 a barbecue restaurant was opened by McDonald brothers who later transformed into a hamburger joint. Then Ray Kroc initiated the first franchise proposal and after some time he bought the whole company. McDonald’s high brand value is because of Kroc, who had put a lot of efforts to make McDonalds what it is today.

Industry Analysis

McDonalds belong to the financial sector of Consumer Discretionary with main industry and sub industry includes Hotels, Restaurants and Leisure and Restaurants, respectively. US restaurant industry can be classified into two categories, Full service restaurants for fine dining and casual dining such as chili’s, Applebee’s, the steak house and others. Other category is of Services restaurants for fast foods such as McDonalds, KFC, Subway and others. The contribution of US Restaurants to the overall US Food revenues has increased from 25% in 1995 to 50% in 2012 and in figures; the total spending on food in US is $1.14 trillion of which $600 billion is generated by US restaurants. This indicates the growing market for dining out.  Revenues from the US Restaurant industry have appreciated exponentially from $42.8 billion in 1970 to $635.8 billion in 2012. The Fast Food revenues share to the total US restaurant revenues is $120 billion out of $600 billion.

Competitors Analysis

McDonalds leads the US Fast Food industry by 26% shares to the overall market whereas its rivals Yum!, Wendy’s and Burger king stands on the market share of 13%, 2.4% and 1.9% respectively. Though Yum has the greater number of stores among all the major players in the industry, but in terms of earnings per shares and operating margin, McDonald’s leads the category. However the compounded annual growth rate of three years for McDonalds’ revenue is lower than Yum and Wendy’s with Burger King’s revenue growth to be in negatives.

Business Model

McDonalds’ has a franchised based business model and according to September, 2013 statistics, 81% of its outlets are franchised. These franchises contribute around 33% of McDonalds’ overall revenues. This franchising model is referred as ‘three-legged stool’ as it involves owner or operator, supplier and employees. The process for franchising normally includes the selection of the willing candidates pursuing franchise, 25% down payment by the nominated candidate while 75% is paid by the financial institutions and process ends on the continual fees payment in form of fixed monthly rent as well as service fee related to number of sales per month.

Financial Outlook

McDonald’s full year revenues for 2013 increased by 2% from $27.6 billion reported in 2012 whereas operating income also increased by 2%. Earnings per share have been up by 4% from $5.37 in FY12 to $5.55 in FY13. Company has increased the shareholder’s value by returning $4.9 billion in form dividend payouts and share buybacks.

Company targets to add up 1500 to 1600 number of outlets around the globe in year 2014 and this will involve the $2.9 to $3 billion of capital expenditure. McDonalds is also committed to returning value to its shareholders and for 2014 it has planned to return $5 billion in form of dividends and share repurchase.

Summary

McDonalds leads the fast food chain in America with the highest revenues and operating margins. Employee base is around 1.8 billion in all over the world, with 34,900 outlets in 119 countries. Its most revenue generating geographical region in APMEA and company generates large portion of revenues from company owned outlets instead of franchised one, though franchising outlets is company’s Business Model. 81% of McDonald’s outlets are franchised and yields 33% of total revenues. Company is ranked 111 in Fortune 500 Companies. It trades in the consumer discretionary sector with restaurant to be its sub-industry and trades under the Ticker MCD.

Solar Stocks a good investment

Source: Bidness Etc

Solar Stocks have been largely applauded by the solar investors in 2013 as they have proved to be a very profitable investment. By the end of third quarter of 2013, individual solar stocks have been up by 50% whereas they have shown another 15% growth in last quarter. This makes it a 60% annualized return on an average solar stock.

The rise in solar stock performance in 2013 has been associated with number of factors which range from investment in the solar energy sector to the individual performance of a particular Solar Company. Solar energy systems leasing company, SolarCity, had been recently financed $500 million by Goldman Sachs Group Inc. (GS) which it has planned to use for generating 110 Megawatts Solar power projects. Chinese Solar Industry has been exposed to various duties charged for antidumping by the European Union, however this has been settled now and there would be quotas use for Chinese solar panels instead of tariffs. The earnings for Chinese Solar companies have also been improved because of wider margins and improved prices of solar panels.

It is believed that Solar stocks will keep outperforming in the long run because it is expected that photovoltaic production cost will keep declining whereas solar financing options will be enhanced, enabling installation of solar products on a small scale, for example, and household utility. The Solar technologies are maturing which keeps the segment strong. These are the factors which makes the solar stocks a lucrative investment for the investors seeking long-term profitability.

However solar industry has some setbacks too as it could remain volatile for some reasons, such as electric prices are falling due to energy generated from natural gases, which are low cost production. Moreover it is most likely Chinese photovoltaic producers would be consolidated which could limit the growth. Solar sector is also affected from the Government’s complex support for renewable energy.

For making Solar stock a most yielding investment, it is suggested to create a diverse portfolio, which includes various stocks from the sector differentiating on size, location, technology, etc.

Trading became Easier with Online Brokerage

In 1994 the trading industry was revolutionized when K. Aufhauser & Company introduced an online trading platform. This has enabled the traders to invest by just one click. The idea of online trading gained popularity in very short period, as before every trade had to involve broker but the online trading saves trader with calling of broker again and again. Online trading became essential due to low commission involved, timely order placement and various important trading tools offered with online trading.

The trend was adopted by all the brokerage firms gradually and the most client satisfying services are offered by the US firms like Scotttrade, Charles Schwab & Co. and Vanguard whereas online trading firms which offer lower satisfactory services to client are Merrill Edge, ShareBuilder and Wells Trade. This was concluded in customer satisfaction study held in 2013 and factors used in the study for survey was interaction, account offerings, trading charges and fees, account information, problem resolution and information resources.

Online Broker Reviews

For investors and traders the most important thing to look in online broker is to get maximum value against money paid. The main things to look on when selecting an online broker are customer service, trading platform, hidden fees and commissions and this call for a detail search on the internet.

So here we have a list of fee schedule and other services offered by renowned brokerage firms in US such as Scottrade, Charles Schwab, Fidelity, TD Ameritrade, etc. New investors can look in to the online brokerage fees and decide where to open a stock account.

Source: BidnessEtc

Biznis Hot Potch will talk about everything related to business. Be it a company valuation to trading strategies for beginners or entertainment news related to these businesses and about their founders and leaders as well.