A roundup of some of the North American equities making moves in both directions today
On the rise
Gap Inc. (GPS-N) soared almost 21 per cent in mid-afternoon trading on Friday after announcing it has entered into a “multi-year partnership” with rapper and fashion designer Kanye West to create a Yeezy line of clothing.
Aimed at young shoppers, the Yeezy-Gap line, which will offer items such as hoodies, basics, T-shirts and joggers, is expected to appear in Gap stores and on Gap.com in 2021, the two parties said. West will keep sole ownership of the Yeezy brand.
Financial details were not disclosed, but Gap said Yeezy would receive royalties and potential equity based on sales results. Yeezy said the brand is valued at US$2.9-billion.
German sportswear company Adidas also partners with West, selling Yeezy footwear designed by West.
San Francisco-based Gap, which owns Banana Republic, Athleta and Old Navy, was among non-essential retailers forced to temporarily close stores to curb the spread of coronavirus. Gap, which operates nearly 2,800 stores in North America, recently withdrew its full-year targets, suspended its dividend, furloughed employees and drawn down its existing credit lines.
Virgin Galactic Holdings Inc. (SPCE-N) was up 0.5 per cent after celebrated the second successful glide flight of its spaceship over Spaceport America in southern New Mexico on Thursday.
Unlike the first glide test in early May, the pilots flew at higher speeds to help evaluate the ship’s systems and performance in preparation for the next stage of testing. That will involve rocket-powered flights.
“Our focus for this year remains unchanged on ensuring the vehicles and our operations are prepared for long-term, regular commercial spaceflight service,” Virgin Galactic CEO George Whitesides said in a statement.
While the company is in the midst of final testing, officials have yet to offer a date for the start of commercial flights. Officials said the data from the latest flight has to be analyzed. Other steps include making final modifications to the spaceship’s customer cabin and completing detailed inspections.
Ebay Inc. (EBAY-Q) jumped 3.5 per cent after an equity analyst at Deutsche Bank upgraded its stock, expecting “further appreciation” as online shopping grows.
“eBay’s shares have appreciated materially since the lows in March on the back of strong core Marketplace growth since the lockdown started as well as the expectation that Classifieds transaction value could come in at the high-end of expectations,” said Kunal Madhukar. “We believe there is scope for further appreciation over the mid-term given:our dbDIG survey suggests new buyers on the platform have had a positive experience, with over 40 per cent stating they are ‘very likely’ to make a purchase over the next 6 months, and another 20 per cent saying they are ‘somewhat likely’; Street estimates seem extremely conservative, implying largely a flat 2H20, and for the longer term, implying only about 20-per-cent retention of the incremental 2Q gross merchandise volume.”
On the decline
Corus Entertainment Inc. (CJR.B-T) dropped 15 per cent after reporting before the bell it lost $752.3-million in its latest quarter as it took a one-time impairment charge related its to broadcast licenses and goodwill.
The media company, which includes Global Television, says the loss amounted to $3.61 per diluted share for the quarter ended May 31 compared with a profit of $66.4-million or 31 cents per share in the same quarter a year earlier.
Revenue totalled nearly $349-million in what was the company’s third quarter, down from $458.4-million a year earlier, as advertising revenue plunged amid the COVID-19 pandemic.
The most recent quarter included $786.8-million in broadcast license and goodwill impairment charges and $2.6-million in integration, restructuring and other costs.
Excluding those charges, Corus says its adjusted profit for the quarter amounted to nearly $19-million or nine cents per share, down from an adjusted profit of $66.1-million or 31 cents per share a year ago.
The average analyst estimate had been for an adjusted profit of 15 cents per share and $377-million in revenue, according to financial markets data firm Refinitiv.
Before the bell, the Montreal-based specialty pharmaceutical company said revenue came in at $45.8-million, an increase from $3-million a year ago. Analysts were expecting revenue of $55.6-million, according to S&P Capital IQ.
Its net loss for the period was $9.5-million or a penny per share compared to net income of $5.2-million or 4 cents a year ago. Analysts were expecting a loss of 4 cents.
Adjusted earnings were $6.4-million versus $4.6-million a year ago.
Ford Motor Co. (F-N) was down 2.8 per cent after it unveiled the next generation of its F-150 pickup in an online event, showing a truck with a familiar look but that incorporates the automaker’s new strategy for profiting from software and connectivity.
The new F-150 and the soon-to-launch Mach-E electric SUV will be the first Ford vehicles equipped with electronic systems that allow for extensive over-the-air software upgrades. Rival Tesla Inc pioneered the use of smartphone-style updates to improve vehicles and generate revenue long after the sale. General Motors Co has launched comparable technology on several vehicles.
Now the F-150, part of the best-selling line of vehicles in the United States with annual sales equivalent to Tesla’s current volume, will bring upgradeable, fully connected vehicle technology to the mainstream market. Ford will offer a hybrid version of the F-150. An electric model is expected within two years.
Amazon (AMZN-Q) shares dipped 0.4 per cent in the wake of agreeing to buy California-based self-driving startup Zoox Inc in a deal reported to be worth more than US$1-billion that gives it options to use autonomous technology in either ride-hailing or its delivery network.
The world’s largest online retailer has stepped up its investment in the car sector, participating in self-driving car startup Aurora Innovation Inc’s US$530-million funding round early last year.
While Amazon and Zoox did not disclose the financial terms of the deal, the Information said on Thursday, citing sources, that Amazon had agreed to pay over US$1-billion to buy Zoox. The report did not mention the exact purchase price.
System-wide sales fell to $37.2-million in the quarter from $43.2-million during the same period a year ago.
The Toronto-based company said it has since seen a consistent week-over-week improvement in same-store sales into the second quarter.
Nike Inc. (NKE-N) dropped 7 per cent on Thursday after it reported an unexpected quarterly loss - its first in more than two years - hurt by closures of department and retail stores due to lockdowns spurred by the COVID-19 pandemic.
The wholesale business, through which Nike sells merchandise to other retailers, came to a halt amid the health crisis. That led to a 50-per-cent fall in shipments, increased inventory and higher costs due to order cancellations.
As a result, gross margin fell 820 basis points in the fourth quarter, when company-owned stores and other retailers were closed for nearly eight weeks.
However, Nike’s investments in its digital platform over the years helped it record a 75-per-cent rise in online sales, as many consumers shopped for activewear and sneakers from the comfort of their homes.
Chief Executive Officer John Donahoe told analysts the company is now accelerating focus on its online presence, and expects its overall business to reach 50-per-cent digital penetration. Online sales accounted for 30 per cent of total revenue in the quarter.
Microsoft Corp. (MSFT-Q) was lower by 1.3 per cent after it said on Friday it would close its retail stores and take a related pre-tax asset impairment charge of US$450-million in the current quarter.
The Redmond, Washington-based software giant said would continue to serve customers online, with team members working remotely from corporate facilities.
It was not immediately clear if Microsoft’s move would lead to any layoffs.
The company also said it will rethink other spaces that serve all customers, including operating Microsoft Experience Centers in London, New York City, Sydney, and Redmond campus locations.
Facebook Inc. (FB-Q) slid 6.9 per cent in the wake of Verizon Communications Inc. (VZ-N) on Thursday it was pausing advertising on the site in July, in support of a campaign that called out the social media giant for not doing enough to stop hate speech on its platforms.
Verizon is the biggest yet to join the advertising boycott, which has gained the backing of dozens of U.S. companies, and its announcement was a blow to Facebook’s efforts to contain the growing revolt.
Unilever PLC said on Friday it will stop advertising on Facebook, Instagram and Twitter in the United States for the rest of the year, citing “divisiveness and hate speech during this polarized election period in the U.S.”
The consumer goods company, which owns brands like Dove Soap and Lipton tea, joins a growing advertising boycott against Facebook as part of the “Stop Hate for Profit” campaign started by U.S. civil rights groups after the death of George Floyd. The effort called on Facebook, which owns Instagram, to do more to stop hate speech and misinformation.
Twitter Inc. (TWTR-N) shares were down 7.6 per cent
With files from staff and wires