Is Fitbit A One Hit Wonder ?

as Palm’s experience showed, one thing the world doesn’t need—not for long, at least—is a company that does only one thing.

When you strap a new Fitbit onto your wrist, it’s programmed to vibrate once you’ve taken ten thousand steps. From there, it keeps on counting. Fitbit can also track other aspects of your health—sleep patterns, calories burned, heart rate—and store the data in its software, so that you can track your progress over time. For Sedaris, who describes himself as “obsessive,” beating his own records becomes a kind of addiction: “At the end of my first sixty-thousand-step day, I staggered home with my flashlight knowing that I’d advance to sixty-five thousand, and that there will be no end to it until my feet snap off at the ankles,” he writes.

One man’s neurosis is another man’s business opportunity. By the end of last year, Fitbit Inc. had close to seven million active users and was nearing a billion dollars in annual revenue. On Thursday morning, the company went public, under the ticker symbol “FIT,” in an offering that initially valued it at 6.5 billion dollars. Fitbit’s most loyal users are a fervid crowd, but the company’s long-term success is far from guaranteed. It has, essentially, one line of products, with variations on the theme, and, while its product was novel in 2008, when it was first introduced, much larger companies have since noticed its success and started putting Fitbit-like features into their own products. In a filing with the S.E.C. in preparation for going public, Fitbit openly acknowledged that this presents a risk:


Many large, broad-based consumer electronics companies either compete in our market or adjacent markets or have announced plans to do so, including Apple, Google, LG, Microsoft, and Samsung. For example, Apple has recently introduced the Apple Watch smartwatch, with broad-based functionalities, including some health and fitness tracking capabilities.

The Fitbit I.P.O. comes right as Apple stores are beginning to sell the Apple Watch, which has underscored the question : Will Fitbit be able to compete with bigger and better-financed rivals—especially those whose products do more than just track their wearers’ health. (Why settle for just tracking your heart rate in an app, when you can also text your loved ones an image of a heart that pulses to the rhythm of your actual heart?)

Single-product companies have gone public before, of course. The most obvious cautionary tale, among makers of consumer-tech devices, is the experience of Palm Inc. In 2000, when Palm went public, its Palm Pilots—those handheld organizers that were marketed as replacements for paper planners—seemed cutting-edge. Al Gore and Robin Williams had their own; in the Times magazine the previous year, the journalist David Colman had called the  device “a perfect amulet.” At the time, cell phones existed but were far from ubiquitous, and they didn’t do much more than send and receive calls. In 2003, though, Research in Motion came out with the BlackBerry, and in 2007, Apple released the iPhone—devices that could do what Palm’s organizers could do, plus much more. Palm tried to stay competitive by creating smartphones with revamped software and striking deals with cell-phone carriers to sell them, but, as The Verge has documented, it was too late. Several missteps, compounded by competition from Apple and other devices, such as Motorola’s Droid, that emerged in the late two-thousands, doomed the effort. In 2010, Hewlett-Packard acquired Palm. By 2011, its brand was dead.


/The problem for single-product tech companies is that, no matter how much they spend to develop devices with cool features, bigger companies like Apple—and, more recently, Samsung and China’s Xiaomi—can always spend more. This allows them to rapidly bridge feature gaps with smaller companies, and to incorporate those features into multi-purpose devices. And the threat goes beyond R. and D. Bigger firms also tend to have deeper and longer-standing ties to the suppliers that build their products—and, perhaps more to the point, more influence over those suppliers. They also have more established avenues to advertise and sell their wares and more clout with publishers and retailers. And they have the flexibility to undercut smaller rivals on price. When Nest, a startup that made connected devices for homes, announced last year that it would be acquired by Google, Nest’s C.E.O., Tony Fadell,  in a blog post the importance of its acquirer’s impressive resources. “We’ve had great momentum,” he wrote, “but this is a rocket ship.”


What if a company could sidestep the Palm problem? That’s what GoPro, which makes small cameras that record footage from the user’s point of view, appears to be trying to do. The company went public around this time last year, with a valuation of three billion dollars, and its stock price doubled by October. By March of this year, its shares had fallen to close to their original levels, partly because of Apple and Xiaomi (which, incidentally, also sells a fitness-tracking device), though in April, GoPro reported earnings that suggested that it has, so far, managed to do well despite those threats; its cameras are only becoming more popular. In May, the company’s founder and C.E.O., Nick Woodman, announced that it is developing drones and viral assistants Erinn Murphy, an analyst at Piper Jaffray & Co., : “This puts some of the naysayers on their heels, who thought this was just a one-hit wonder.”


It might seem that GoPro is doing something similar to what Palm did in the two-thousands by branching out into new products, but there are important differences in its strategy. As Matt Burns of TechCrunch wrote earlier this month, GoPro wants to position itself not only as a maker of hardware but as a service that people can use to store and share their footage. “GoPro doesn’t want to be known just as a camera company,” Burns wrote. Instead, it “wants to be a lifestyle media company” that can “give owners an easier way to share all that rad action footage.” The goal is to “build a new business based on content, not hardware.” Viewed in that context, drone and virtual-reality technologies could be as much about hardware as they are about allowing people to capture, store, and share more interesting content.

It’s not difficult for companies such as Apple and Xiaomi to replicate hardware features—and even to render single-use hardware products obsolete, as smartphones did to handheld organizers like the Palm Pilot. But, as companies like Facebook and Instagram have shown, once people have stored all of one kind of content with one company, they are often reluctant to leave it all behind and start over somewhere else. Facebook and Instagram also benefit from what is known as the network effect: the more users that a given social network connects, the more useful it becomes—thus making it difficult for other companies, even more established ones, to come along and steal the users away. (This phenomenon is partly to blame for the failure of Google’s social network, Google Plus.)

Palm came of age before anyone had heard the terms “cloud” or “social network”—too early to learn from Facebook or Instagram. But companies like GoPro and Fitbit, whose appeal has as much to do with the material they help store and share as with the devices themselves, might have the best chance at staying in business if they think of themselves not as hardware companies but as providers of services that let people manage and share their content. Fitbit has already announced its own version of a smartwatch—the Fitbit Surge, which sells for two hundred and fifty dollars and includes call and text notifications and music controls. Competing directly with Apple on hardware isn’t a bad move; after all, the success of the Apple Watch is far from guaranteed. Fitbit might want to focus, too, on the health information it stores and lets users share with one another. It may not be able to become a Facebook for health stats, but as Palm’s experience showed, one thing the world doesn’t need—not for long, at least—is a company that does only one thing.




Retailers : Closing Up Shop

Retailers are closing up shop. Here's why...

Another day, another retailer trimming its store count.

On Thursday, J.C. Penney (JCP) said that it will close 40 of its locations -about 4 percent of its stores-this year. Then Macy’s (NYSE:M) said it would close 14 stores in early spring. The announcements came one day after teen retailer Wet Seal (WTSL) said it will shutter about two-thirds of its 500-plus stores , and a bankruptcy judge in Delaware ruled that Deb Shops can shut down nearly 300 stores as part of its liquidation.

These are far from the only retailers whittling down their square footage.

When it filed for Chapter 11 bankruptcy protection last month, teen name Delia’s said it will seek court approval to close all of its stores.

Also last month, Aéropostale (ARO) said it would close 120 stores soon, a significant increase from the 40 or 50 it had originally planned. The company will also close about 125 of its P.S. by Aéropostale children’s stores by the end of the month.

Sears (SHLD), which is trying to turn around its performance after a string of declining sales reports, said last month it would accelerate the number of closings during the year, from 130 to 235.

And RadioShack (RSH), which is negotiating with lenders to gain approval to shutter 1,100 stores,said last month that it had closed 175 locations in 2014 .

Several macroeconomic factors are driving this push toward a smaller store base, analysts said. For one, retailers simply have too many stores, particularly as more consumers shop online. For another, the demographics no longer make sense for stores to exist in certain suburban locations, as more young Americans are flocking to cities and staying there longer.

But it’s more than just external factors. Many of the retailers closing stores are facing company-specific problems that in some ways forced them to downsize.

“When you have a fleet of 1,000 stores, you’re going to have some in lousy locations,” said Craig Johnson, president of Customer Growth Partners. “That’s a tiny subset of the issue.”

One of the biggest issues is that retail is simply overstored, Johnson said. He attributed this supply versus demand imbalance to the fact that retail sales growth has been too tepid to account for an increase in retail real estate. The situation developed even though 2014 saw limited new construction, according to Jesse Tron, a spokesman for the International Council of Shopping Centers.

“If we start most broadly, you have a retail sector that has basically been in slow-growth, no-growth mode for a number of years,” Johnson said. “Meanwhile, store square footage has kept expanding.”

Location also plays a role. Belus Capital Advisors analyst Brian Sozzi said suburban markets are particularly vulnerable, as more Americans move into cities. He used Target (TGT) as an example; although the discounter announced a round of store closures in November , it’s also opening new stores in urban markets.

Johnson added that mall-based locations are facing greater challenges than off-mall concepts, which are stealing share.


It should also come as no surprise that the rapid growth of the Web is causing a traffic decline at physical stores. Johnson said that for the merchandise category, online sales now account for about 13 percent of all retail sales.

While there are certainly external factors to blame, it’s important to note that the companies shuttering a large quantity of stores are also victims of their own mistakes.

For example, much of the trouble facing teen retailers is the fact that their target demographic no longer finds their product appealing. Instead, they’ve begun shopping at fast-fashion stores such as H&M (Stockholmsborsen:HM.B-SE) and Zara (Mercado Continuo: ITX-ES)-which, in contrast, are growing their U.S. square footage.


In a similar vein, Johnson pointed out that department stores’ woes are due, in part, to the fact that their overall share is shrinking. A few years ago, these big-box locations accounted for well over 10 percent of the retail market; now, it’s about 3 percent, he said.

“[J.C. Penney] has to shrink the size of its store base to fit the addressable demand that it can reasonably capture,” he said.

Not all store closings should be viewed as a sign of distress for the retailer. That’s because the beginning of the year is when most retailers evaluate their portfolios. According to preliminary estimates from ICSC, about 45 percent of last year’s announced store closings occurred in the first quarter.

Companies that close underperforming stores to strengthen their portfolio stand in sharp contrast to names such as RadioShack, which “need the store closures to stay alive,” Sozzi said.

Although analysts have long been calling for retailers to trim their square footage, it does come with pitfalls. Closing a store cannot only cause someone to switch to a competitor-it can also limit a company’s distribution network.


“If you’re aggressively closing stores, well now you can’t do this ship from store,” he said.

The past four years have seen the death of more than two dozen indoor malls, with another 60 teetering on the edge, according to data from Green Street Advisors that was first reported by The New York Times. But ICSC’s Tron said he does not foresee a year when the industry will post a net decline in retail space.

He added that occupancy rates were at 92.5 percent in the third quarter, which is back above prerecession levels.

“We kind of see this every year,” he said. [In the] first quarter a bunch of stores close and there’s a little bit of panic. And then new retailers emerge.”

Among new tenants filling these vacancies are gyms, minute clinics, clicks-to-bricks concepts such as Rent the Runway, and international retailers such as Primark. The latter signed a deal for space in seven Sears locations last year.

“For all these deaths there will be life,” Sozzi said.

Offshore Portfolio Tax Reduction

Under Armour :Yahoo Finance 2014 Company of the Year

It started 18 years ago with one man hawking one shirt, a guy trying to persuade elite football players that it was simply better – that it would make them better.

Today, Under Armour (UA) is a $15.2 billion company run by that same guy, stalking the legacy giants of athletic gear, a made-in-America global brand that boasts one of the fastest growth records in consumer products and among the best stock performance in the market.

For these distinctions and how they were achieved — and for the way the company has turned potential setbacks into wins in 2014 — Under Armour is the Yahoo Finance Company of the Year.

The squishy retail sales trends of 2014 were a mere rumor for Under Armour, whose revenue and operating profit are on track to climb more than 30%, accelerating from their 2013 pace. Its share price has soared 62.5% this year. And Under Armour’s strong branding efforts, deeply rooted in its sports-performance heritage, earned it Marketer of the Year honors from Advertising Age magazine.

CEO Kevin Plank, that guy who came up with that shirt in 1996 that stayed dry under football pads, says, “These things don’t happen out of nowhere. There were a lot of years preparing for this.”

Speaking in a model retail store on Under Armour’s six-building industrial-urban campus on the Baltimore waterfront, Plank recalls: “Sporting goods, which is where we entered, was this pie – and there was no room in the pie. So we decided, in order to break in, we would make our own pie.”

After finding takers for his pioneering moisture-wicking shirt among some college and pro football players, he expanded in a methodical but ambitious way into other performance garments – ones that kept an athlete warm, or cool, or feeling strong thanks to their compression fabric.

The company took two years to enter the shoe business, starting with football cleats and adding one sport category per year for five years. Its women’s line, once an afterthought, has expanded impressively from almost nothing in 2004 to more than $500 million this year. Total full-year company revenue will top $3 billion for the first time in 2014.

Over the past four-and-a-half years, Under Armour is one of only four companies in the Standard & Poor’s 500 to post at least 20% sales growth in each quarter. Since coming public in late 2005, revenue and earnings growth have averaged more than 30%, marking one of the elite growth stories of the past decade.

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Historical Stock Prices for Under Armour, Inc. (Weekly adjusted closing price from 1/5/10 - 12/15/14)

Historical Stock Prices for Under Armour, Inc. (Weekly adjusted closing price from 1/5/10 – 12/15/14)

Since its IPO, Under Armour stock is up a phenomenal 1,022%, compared to the merely amazing 408% gain by Nike (NKE), the global blue chip in athletic goods — which Plank repeatedly refers toonly as “our largest competitor” in a way that conveys suppressed competitive passion toward the $83.6 billion market-cap incumbent.

While its consistent growth trajectory from startup to the near-ubiquity of its UA logo might make Under Armour’s path appear effortless, this year began with a global controversy that threatened to undermine the brand’s very essence as a performance booster.

At the Winter Olympic Games in Sochi, Russia, U.S. speed skaters’ poor performance was partly attributed to the highly touted aerodynamic uniforms designed by Under Armour. While the company defended the “speedsuits” design, the athletes switched to their old uniforms and a moment of triumphant arrival for the company was tainted.

Yet the fleeting controversy failed to compromise the brand broadly. The Notre Dame and Naval Academy football teams signed on to be outfitted by Under Armour, giving the company claim to both “God and country,” as Plank has put it.

The company also bid hard over the summer to sign NBA MVP Kevin Durant to an endorsement deal when his contract with Nike lapsed, offering a reported $250 million over 10 years. Nike ultimately re-signed Durant after agreeing to structure a contract that could reach $300 million. The duel was a telling statement that Under Armour has aggressive ambitions to target the top in every category it’s in, but also reinforced its status as the hungry up-and-comer.

Plank embraces this image, seeing it as the core of the Under Armour brand, which he says means, “underdog, go get it done, find a way” – sounding plenty like the intense locker-room motivator in the original Under Armour “Protect This House” ads.

Winning with women

The company’s boldest gambit of the year, though, might have been its attention-grabbing “I Will What I Want” marketing campaign focused on accomplished women overcoming doubters and challenges.

“We launched as this big, bad American football company,” Plank says, and as the key back-to-school season opened, “we tell the world that our brand was about a ballerina.”

That would be Misty Copeland, of the American Ballet Theater, whose commercial focuses on her defying doubters who said she had “the wrong body for ballet.” Another viral ad followed, starring model Gisele Bundchen going through a grueling kickboxing workout.

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“I Will What I want” marketing campaign on display at Under Armour’s NYC retail store. (Photo: Siemond Chan)

The women’s business, led by workout clothes, has certainly benefited from the broader trend of gym wear serving as always-on attire, with yoga pants in some sense becoming the new jeans. Yet Under Armour has lately outperformed even Lululemon Athletica (LULU), the company most associated with that look.

Aside from the women’s business, which BB&T Capital Markets sees rising to more than 25% of revenue over four years, shoes and foreign markets are the key opportunities for the next phase of the company’s growth.

While growing nicely in Japan, Europe, China and South America, about 90% of Under Armour’s sales still come from the U.S. Never shy about setting lofty goals, Plank wants half of revenue to come from overseas one day.

A year ago, Under Armour bought MapMyFitness, a digital health-tracking app — the company’s first-ever acquisition. The service, with some 30 million members, works across a variety of devices, and will serve as a way for Under Armour to explore “connected fitness” without betting on the cutthroat hardware business.

Under Armour pays no dividend, but it’s hard to object to this given its breakneck growth pace and the high returns it earns on investing in the business. The company has gone to significant lengths to assure its clothing suppliers adhere to fair labor standards. And its use of an old Procter & Gamble (PG) facility as its headquarters shows great commitment to downtown Baltimore, helping to revitalize an entire neighborhood.

The Company of the Year judging

The Company of the Year is selected by Yahoo Finance editors, using a mix of quantitative and qualitative factors to recognize a prominent American company that has excelled on behalf of investors, employees and customers.

This is the third year we have granted this honor. The 2013 winner was Walt Disney (DIS) and the 2012 winner was Gap (GPS). The evaluation process combines one-year and long-term financial results; stock-price performance; strategic vision and brand esteem; good corporate citizenship; and a demonstrated ability to overcome challenges.

This year, Under Armour was awarded the title over a handful of other high-achieving, well-managed U.S. companies, including Home Depot (HD), Marriott International (MAR), Southwest Airlines (LUV) and Starbucks (SBUX).

[Under Armour sponsors the Rivals Camp Series of, part of Yahoo Sports. The sponsorship connection had no bearing on our Company of the Year evaluation.]

Running room – but beware stumbles

As successful as the company has been, there are at least two stark challenges ahead of Plank in the coming years.

One is Wall Street’s towering expectation for the company’s continued growth. After the stock’s upward charge this year, it trades for more than 70-times 2014 earnings and over 50-times the 2015 forecast. Under Armour’s average price-to-earnings multiple since coming public is around 35; Nike, a far more mature and slower-growing company, trades at 25-times fiscal 2015 profits.

A harder-to-quantify risk is that Under Armour’s brand might grow so powerful and ubiquitous that it, in a sense, undermines the underdog image it was built on. Perhaps only Apple Inc. (AAPL) managed to go from aggressive, maverick underdog to world domination without shedding much of its “cool” factor.

Plank is undaunted by the high bar set by Wall Street, believing that with Under Armour sales still only one-tenth of Nike’s, “there is a lot of running room for us.” Quite true. But expensive stocks often make investors intolerant of little bumps along the way.

Plank also doesn’t feel the company is close to having to worry about compromising the brand’s underdog ethos. Under Armour’s mission statement says, “Make all athletes better,” Plank notes, which means remaining focused on performance and not simply settling for becoming a fashion or “basics” brand.

Plank points to UA’s entry into shoes with football cleats in 2006, followed over the next four years by baseball cleats, training, running and basketball shoes. The company went from nowhere to number one in American football cleats in eight years, with a 35% share.

Can Plank possibly believe his company can work its way to the top of each category it enters? Quoting the movie “Predator,” Plank says, “If it bleeds, we can kill it.”


Nike (NKE) shares got the boot from investors this morning ( Friday, Dec.19). The athletic shoe and clothing company said orders for December through April are less than analysts’ had anticipated, especially in emerging markets. On the flip side, Nike is reported second quarter earnings and revenue that topped Wall Street forecasts.

Tax site


Natural Grocers by Vitamin Cottage BUY


US$19.35 BUY 
Target: US$30.00

Currently operating over 80 store locations, Natural
Grocers by Vitamin Cottage is a retailer focused
exclusively on natural and organic groceries (~65% of
sales), dietary supplements (~25% of sales), and
body/pet care products and health-minded books
(collectively ~10% of sales). Store locations span 14
states primarily across the Western US, with a geographic
concentration in Colorado and Texas.
All amounts in US$ unless otherwise noted.

Consumer & Retail — Health, Wellness and Lifestyle

Investment recommendation
We view Natural Grocers as well positioned in a favorable
industry with a growth equation that should drive attractive
revenue and EPS growth.
Investment highlights
 NGVC delivered EPS in line with consensus ($0.01 below us)
on $2M in revenue upside. Comps of 3.7% bested our 2.5%
estimate, and were very resilient despite heightened
competitive pressure.
 Quarter to date Q1 comp approaching 5%, bolstering our
confidence in the turn in comp momentum. A plethora of
initiatives, along with easing compares and new competitive
pressure having peaked should yield continued comp gains.
 F2015 EPS guidance in line with consensus and EPS growth
only impaired due to higher incentive comp YOY.
 F2015 EPS reduced $0.01 to $0.65, while we introduce
F2016 EPS of $0.79, equating to 21% growth.
 $30 target unchanged. The valuation of 28x forward earnings
looks full, but at 8.5x EBITDA we expect expansion. Our
target reflects 11.5x C2016 EBITDA.

GAP – don’t drop your pants BUY

GPS : NYSE : US$40.14

Target: US$47.00

Consumer & Retail — Specialty Retail



Investment recommendation
We are lowering our Q4 EPS estimate for GPS by $0.09 to $0.68,
below prior consensus of $0.77. There is more work to do in the
Gap brand (38% of TTM sales) than we had previously
anticipated, particularly in the women’s business. As a result, we
are lowering our consolidated SSS estimate from flat to a decline
of 2.4% on top of +1%. Our gross margin forecast moves 50bps
lower, and we now expect 59bps of expense deleverage on the
lower sales. Our BUY rating remains intact despite the near-term
headwinds. We continue to expect supply-chain initiatives will
drive gross margin expansion over the long term. This does not
appear priced in with shares trading at 13x our C2015 EPS
estimate and 7x C2015E EV/EBITDA.
Investment highlights
 Art Peck will begin his CEO stint with two new brand
presidents. Jeff Kirwan (10 years with GPS, recently as
president of Gap China) will take the reins from Stephen
Sunnucks at the Gap brand in December, and Andi Owen (19
years at GPS, recently leading the Gap outlet business) will
head up Banana Republic beginning in January, replacing
Jack Calhoun.
 Our price target moves from $51 to $47 as we incorporate
our updated estimates into our DCF model.

GAP Target Price $ 51


NYSE : US$37.90 BUY 
Target: US$51.00

Gap is a global specialty retailer of clothing and
accessories for women, men, and children. GPS brands
consist of Gap, Old Navy, Banana Republic, Athleta, and
Piperlime. The company operates 3,200 stores
worldwide, and GPS products are sold through nearly 400
franchise locations.
All amounts in US$ unless otherwise noted.

Consumer & Retail — Specialty Retail
Investment recommendation
We are raising our Q3 EPS estimate by $0.08 to $0.73 driven by
better margins than we had expected. GPS guided for Q3
adjusted EPS of $0.72-$0.73, excluding a $0.06 benefit resulting
from the recognition of certain foreign tax credits. Prior
consensus was $0.71. We are raising our Q3 gross margin
estimate by 50bps and reducing our operating expense rate by
90bps. We expect gross margin expansion to return in Q4 and
continue into FY15 and beyond as GPS starts to reap the rewards
from its supply-chain initiatives, at first through fabric
platforming and later from vendor managed inventory and rapid
response inventory management. We continue to believe the
long-term margin expansion opportunity is underappreciated
and not reflected at the stock’s current valuation of 12x our
C2015 EPS estimate and 6x C2015E EV/EBITDA.
Investment highlights
 October SSS split the difference between our estimate and
consensus. GPS’s consolidated October SSS declined 3% on
top of +4%, versus our -4% forecast and consensus of -2%.
October is largely a clearance month, and we are leaving our
top-line outlook unchanged for the remainder of FY14.

 We are raising our price target by $2 to $51 based on our
discounted NOPAT model.

Family Dollar Stores Target Price $ 74.50

FDO : NYSE : US$77.75
Target: US$74.50 

Family Dollar operates over 8,000 retail discount stores
in 44 states, providing a merchandise assortment
including consumables, home products, apparel and
accessories, seasonal goods, and electronics.
Merchandise is generally sold for $1 to $10.
Consumer & Retail — Specialty Retail
Investment recommendation
We continue to move closer to the completion of the acquisition
of FDO by Dollar Tree (DLTR : NASDAQ : $56.70 | HOLD). In
early September, the companies accelerated the expected
timeframe to the end of November, compared to the initial
schedule of early 2015. We are raising our price target to the
deal price of $74.50 (which includes $59.60 in cash and $14.90
in stock). We would take a much more positive view on the
combined entity as it would create an instant market-share
leader with over 13,000 stores and annual sales of $18B. We
think DLTR’s superior merchandising organization and greater
store consolidation than what was included in the companies’
initial outlook would drive annual synergies above the $300MM
the merger is expected to generate by year three.
Investment highlights
 Dollar General is still in the picture. DG extended its
$80/share tender offer to 10/31, but FDO remains confident
this combination would not receive antitrust approval.
 Q4 EPS missed our estimate by $0.07, but shares should
continue to trade on the potential acquisition. FDO reported
Q4 EPS of $0.73 on SSS +0.3% on top of flat. Gross margin
was 90bps below our forecast, and there was 16 bps more of
SG&A expense deleverage than we had anticipated.