The fallout begins. Seven West Media has finally acknowledged the 2011 merger between two of Kerry Stokes’ companies, Seven Network and West Australian Newspapers was a waste. In its 2014-15 results this morning Seven West booked a total impairment of $2.07 million (including $1.09 million booked at December 2014). The write-down cut the value of intangible assets in Seven’s accounts to $1.56 billion from $3.45 billion. It has debt of $874 million, down from $1.2 billion. Yesterday the company was worth just $1.23 billion.
And in the same announcement, Seven West Media put paid to any thoughts that the Australian TV industry could expect a stronger 2015-16, after experiencing such a miserable year to June 30 by downgrading its earnings outlook. Seven West expects its underlying earnings before interest and tax (EBIT) to be 5 to 10% lower than FY ‘15.
The outlook for free-to-air TV has worsened so much that the company no longer believes its existing TV, digital and print assets will earn as much in coming years. Despite that news, Seven West shares jumped more than 3% this morning in the general market rebound, moving away from the all-time low of 80.5 cents reached on Monday. But today’s news is recognition that the share price will not be going much higher for quite a while, and that Kerry Stokes is a diminished billionaire. — Glenn Dyer
Tales from the pumpkin patch. In the United States it’s the time of the Great Pumpkin Festival as summer approaches its end, autumn appears and Halloween beckons. And being America, naturally business sees the chance of turning pumpkins into profit — so we have pumpkin products galore. Yes, there are the old standards like soups, scones, pies, pasta, etc, etc. But there are more unusual offerings too, such as pumpkin beers from a number of craft breweries (they don’t sell very well past the end of October).
Dunkin’ Donuts is again going the whole pumpkin hog — this year it is offering pumpkin iced coffee, hot coffee, lattes, doughnuts, Munchkins doughnut holes and muffins, plus brew-at-home K-Cup and packaged pumpkin-flavoured coffees available in-store and on the web. And then there’s Starbucks (how could we forget that coffee-killing giant?). Its Pumpkin Spice Latte will finally be made with real pumpkin for the first time. In a blog post on Monday, Starbucks said it would add “real pumpkin” and take out caramel colouring from the sugar-ladened drink. The ingredient list will now include espresso, milk, pumpkin-spice flavoured sauce (containing the pumpkin), whipped cream, vanilla syrup and pumpkin spice topping. Enter at your own risk. — Glenn Dyer
Retailing shrink shock. Still in the US, Walmart, the world’s largest retailer by sales, shrank its full-year profit guidance overnight, despite another solid quarter in its key US domestic market overseen by the former senior Woolworths senior executive Greg Foran. It blamed the combination of rising US domestic costs (paying staff the higher minimum wage), the strong dollar, weak sales in markets such as Mexico and the UK and “ongoing shrink”. Walmart shares lost 3.4%, taking the fall so far this year to more than 19%. Total revenues in the quarter were up 0.1% at US$120.2 billion; net income fell more than expected to US$3.63 billion.
In the US domestic market, Walmart posted a 1.5% increase in same-store sales (despite the higher “shrink”, above the company’s expectation for 1% growth. That’s four quarters of sales growth in the US as the company, led by Greg Foran, who has moved to improve store operations by offering fresher produce and better customer service. Traffic at US stores grew 1.3%, the third straight increase after a long period of declines. — Glenn Dyer
….. Seven West booked a total impairment of $2.07 million (including $1.09 million booked at December 2014) ….in Seven’s accounts to $1.56 billion from $3.45 billion.
$2.07 isn’t an impairment. It’s a lunch tab.