THE WEEK AHEAD: August 3-9

We have a full plate of critical economic data on deck for the week of August 3rd. Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.   


  • US: ISM manufacturing and Manufacturing Price index data for July will arrive on Monday, as will July BAE Domestic Auto sales and June Construction Spending.

  • EURPOPE: German Retail sales are scheduled for release early Monday morning, as are July Manufacturing PMI data for Switzerland, Italy, France, Germany, UK and the Eurozone in aggregate.  

  • ASIA: On Sunday evening South Korean July Trade data will be released and, after the strong rebound in June industrial production released on Friday, we will be watching for more confirmation of recovering strength there (CPI and FX reserve data are scheduled for Monday).  China July CLSA PMI will be released on Tuesday evening. We initiated a new long CAF position in our portfolio on Friday and, with anecdotal reports of some marginal declines in demand for commodity imports, we will be intensely focused on this data point as a signal.  India trade data for June will be released on Monday; we remain bearish on long term prospects there but are anxious to see if imports are showing signs of stimulus driven demand for raw materials. Singapore July PMI is slated for released on Monday Morning.  

 TUESDAY August 4

  • US: BEA June Personal Income/PCE data will be released on Tuesday morning as will weekly ICSC and Redbook figures. Weekly ABC Consumer Comfort index levels are scheduled for 5PM.  

  • EUROPE:  Eurozone PPI data for June will be released on Tuesday morning.

  • ASIA: The RBA board will meet on Tuesday morning; ABS Balance on Goods and Services data for June will be released in the evening. Although we closed our long position in Australian equities last week it’s no secret that we are big fans of Glen Stevens and expect that he will act proactively despite any political pressure to keep rates low.


  • US: Census Bureau June Factory Orders and Factory Inventory data will be released on Wednesday morning as will the ISM Non-Manufacturing Index for July. Weekly MBA mortgage application and EIA Fuel Stock releases are also on the schedule for the day.

  • EUROPE: Eurozone June Retail Sales data released on Wednesday morning.  July Services PMI for Italy, France, Germany and the Eurozone in aggregate are also slated for released that morning along with the final Eurozone PMI Composite.  The UK has a slew of economic data releases scheduled, including NIESR GDP Estimates, Manufacturing and Industrial Production data for June and HBOS housing data. We still regard the UK as one of the weak hands at the table in Europe and will be watching closely for any marginal changes.

  • ASIA: Taiwan CPI for July will be released on Wednesday morning, as will FX reserves.  Australian Employment data for July will be released in the evening.  


  • US: As we said in last Thursday’s note “When Bad Is Good!” any increase in Initial Claims will add more pressure to the US Dollar and support stock and commodity prices (at time of writing, we are short the dollar via UUP and long gold in our portfolio). Consensus estimated for this week’s reading is a 10K decline from last week’s 584K new claims –we’ll see.

  • EUROPE:  German BBK Factory Orders for June and Italian June Industrial Production will be released on Thursday morning. We are long German equities and short Italian equities in our portfolio and expect German orders to show signs of recovery as Chinese led global industrial demand improvement starts to be felt in Europe’s strongest economy. The ECB has a rate announcement scheduled for 7:45 AM.

  • ASIA: On Thursday evening, the RBA will release a monetary statement as a follow up to Monday’s board meeting. Indian Weekly Wholesale Inflation data is released on Thursdays. With some core component prices rising in recent weeks, we will be watching for any marginal increase from last week’s -1.54% WPI reading.

FRIDAY August 7

  • US: July Payroll data and Unemployment Rate will be released at 8:30AM. The Federal Reserve Consumer credit measure for June will be released at 3PM.

  • EUROPE: Friday’s schedule will continue to test our long Germany/short Italy portfolio thesis with German June Trade and Production data and preliminary Italian Q2 GDP due out on Friday morning.  UK PPI and French Trade data are also on deck.

  • ASIA: We will be pouring through Taiwanese July Export data on Friday morning looking for more signals of increasing demand for consumer electronics and from China. On Sunday, Japanese June Machinery Orders, July M2 and Bank Loan data will be released. Chinese CPI and PPI readings for July are also scheduled for Sunday evening.




We’re not as concerned as most with LVS’s covenant situation for 2009. LVS will cross that hurdle but it will come at a price.


At the end of the 2Q09, LVS was in compliance with its US and Macau credit facility covenants, albeit with little cushion.  As wrote about extensively in “LVS: CREDIT OPTIONS AND OUTCOMES” on February 24, 2009, the covenant levels step down in 3Q09 for both the US and the Macau credit facilities, and continue to step down further in 2010. This is why investors are concerned.

Macau Facility

We believe that LVS will be able to get an amendment in Macau, but at a price and with a “package of goodies” to the lender to boot.  Given the low leverage on the Macau facility and the precedent of recent deals, we think that LVS should secure a fairly favorable deal.  If only Sheldon could deliver on his promise to sell some non income producing assets, the cost would be limited.  However, assets sales are unlikely in this market at the desired prices.  An IPO cannot be floated until Q4 at the earliest but a definitive plan to IPO a minority stake in Macau would give the banks comfort and allow Sheldon still to restart construction on sites 5 & 6 in Macau.  As we wrote about in “LVS: CHINA FORCING THE ISSUE”, Beijing may be twisting arms to get LVS the financing support it needs because they also want to see construction resume by year end.

LVS: A DETAILED CREDIT ANALYSIS - lvs macau covenant

In Macau, at the end of 2Q09, leverage stood at 3.8x versus a 4.0x covenant.  There was $3.2BN of gross debt outstanding, and TTM EBITDA, for covenant compliance purposes, was $827MM.  LVS paid down about $235MM of debt at the Macau subsidiary this quarter.  As a reminder, the leverage test takes into account gross debt vs net debt in the US.  At the end of the quarter, LVS had an EBITDA cushion of $35MM and a debt cushion of $138MM. Of course they also had $473MM of cash on hand at the Macau subsidiary, so real liquidity is closer to $600MM in Macau.  In the 3Q09, the maximum leverage covenant steps down to 3.5x, which means that at $3.17BN of debt, LVS must have TTM EBITDA of $906MM to “clear” the covenant.  We estimate that the TTM EBITDA will be $847MM, presenting a $60MM EBITDA problem for LVS.  Alternatively, LVS can repay $210MM of debt in Macau, which they can do given the cash on hand.   This may buy LVS some time, but the maximum permitted covenant steps down again in 2010 to 3.0x, meaning that on $3BN of debt LVS needs to generate over $1BN of TTM EBITDA. 

With no new properties opening and additional competition coming from SJM (see “OCEANUS TO SINK SANDS MACAU” published on June 28, 2009) and WYNN, we are very skeptical that cost cuts alone will grow EBITDA by 20%.

U.S. Facility

In the US, leverage was 6.8x versus a 7.0x covenant (net debt was $3.1BN and TTM EBITDA was $452MM).  At the end of the quarter, LVS had a $16MM EBITDA cushion and $110MM debt cushion against its covenant.  Next quarter, the maximum permitted leverage covenant steps down to 6.5x.  In 2010, the covenant steps down to 5.5x and continues to step down to 5.0x in 2011 through maturity.  There’s no question that when the agreement was originally crafted, Sheldon was relying on his “unique fundamental business plan by selling off our retail and our apartments and reducing or eliminating all our debt.”  Unfortunately, for Sheldon and other real estate investors, that game of arbitrage worked well until the music stopped and suddenly there were no more buyers at “exaggerated prices”... leaving developers holding the bag. 

LVS: A DETAILED CREDIT ANALYSIS - us credit facility covenant

To that end, we’re projecting TTM EBITDA improving to $490MM (as a reminder, Vegas suffered from very bad hold in 3Q08 and there will be pro-forma treatment for Bethlehem) and net debt of $3.3BN at the US subsidiary level, amounting to leverage of 6.7x versus a 6.5x covenant.

Since the breach is small, Sheldon could cure it by repurchasing up to $800MM LVS’s US bank debt. However, this strategy was significantly deleveraging when LVS’s bank debt was trading at 50% discount to par.  Now that the credit markets have rallied, this strategy will be much less impactful with bank debt trading at 80 cents on the dollar.

We noticed that LVS pulled back (“deferred”) on capital expenditures this quarter, which should have been ramping into the opening of Singapore.  If LVS plans to open Singapore on time, capex will need to ramp up and use some of the $2.6BN of cash that they are currently sitting on.  2010 is the year we are more concerned as the covenant issue gets worse 2010 with the step down.   It will be tough to grow EBITDA with all the new high end product coming to Vegas next year (see “PLENTY OF ROOMS AVAILABLE AT THE STRIP INN IN 2010” published on July 17, 2009).

Chart Of The Day, Month, and Year: Burning The Buck

Andrew Barber and I aren’t smart enough to ignore the simple reality of this chart, so we’ll keep flashing it to you when it makes lower-lows.


Today the US Dollar is down another full -1.3% (yes, for the said world reserve currency that’s a big one-day move!). The buck is making another run at breaking down through the critical level of $78.11 support. Since March, the USD dollar has lost over 12% of its value and the US stock market (priced in Dollars) has reflated to the tune of +48%! As the US Dollar makes new YTD lows, the US stock market is testing new YTD highs.


As Bernanke stares in the rear-view and his stacks of books about the 1930’s, everyone who is looking forward is starting to understand the compromise of America’s conflicts. If America’s financial system is based on an outlook of a man who missed both the crash and the recovery, why trust her currency right here and now?


Below we have refreshed and outlined our quantitative view of the US Dollar. On all three durations (TRADE, TREND, and TAIL), there is one conclusion – the Buck Is Burning. I don’t know what else to say, so I’ll stop writing here.


Keith R. McCullough
Chief Executive Officer


Chart Of The Day, Month, and Year: Burning The Buck - a1

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PSS: WMT The Share Donor

Here’s another theme with meaningful impact on the footwear space, which I think helps Payless over the next two years. Wal*Mart has covertly indicated over the past month that it is increasingly downsizing its presence in the footwear space to concentrate on more profitable offerings.


Here’s the math… Wal*Mart did $306bn in the US last year. About 11% of that was apparel, footwear, and accessories. Only about 100bps-200bps was driven by footwear, which suggests about $5bn annually. For what it’s worth, Zappos generated $1bn in gross sales last year. Yes, Zappos is bigger than one might think.


But where Zappos and Wal*Mart don’t compare is on price point – where Zappos is over 2x the $9.98 average price at WMT.  Who does compete? You guessed it…Payless. Check out the table below. It shows that a quarter of Payless stores have a Wal*Mart within a mile radius. 43% have a WMT within 5 miles.


Let’s say Wal*Mart scales down footwear to 1% of sales over 3 years as it cycles through its remodel process. That suggests over $2bn is up for grabs. If I take it a step further and assume that 38% is within reach (within a 3-mile radius), then that’s $760mm. If PSS grabs only 10% of that, it would be a 3% comp alone. At a 30% incremental margin, we’re talking $0.23 per share. That’s off a base of $1.06 last year.


Talk about leverage…


 PSS: WMT The Share Donor - 7 31 2009 10 43 21 AM



31 JULY 2009



I highlighted yesterday that the key theme coming out of the WSA (show show) in Vegas today will be distribution – specifically AMZN/Zappos and the .com ramifications. The other theme will be sourcing, and who will benefit from import cost reduction. Even though I still think that the quantification of lower FOB (freight on board – the industry standard term for the total cost of an imported shoe) is misunderstood and underestimated, I think it’s safe to say that ‘lower costs out of China’ is the consensus call for the next couple quarters. The key question that everyone will be asking all the CEOs at WSA will be “who keeps the sourcing savings”?  Most of them will say “we will.”  But if the manufacturer in Asia thinks that they’ll keep it, the brand thinks it will keep it, the retailers thinks they’ll keep it, my sense is that the pie of expectations will add up to more than 100%.  That’s the problem.   

Let’s be clear about two things… 1) Industry executives DO NOT HAVE A CLUE as to how this will play out. If they claim to be keeping the margin, they are oblivious to any potential irrational action on the part of their supply chain partners and competitors.  Very few have a proactive Macro process to drill down this issue. One of the earliest ones to do so was Payless, which (after the 2Q print) remains one of my top ideas over the next 12-18 months.  They are doing what many others are not – in reverse engineering product in order to boost margin at a lower initial price point.  2)  The consumer will decide who pockets any excess cost saves. The best content will win, as always.  

But let’s consider a third point, which leads me to think that I almost don’t care who wins or loses. We’re seeing a 600bp swing in the spread between import costs and consumer prices. When you do the math, that gets me to about $0.40 per pair that get’s freed up in our system. Doesn’t sound like much? Multiply that by the 1.5bn pair of shoes sold in the US each year, and we’re looking at $600mm in incremental profit up for grabs. Yes, it will be a fight for that dollar amount, but keep in mind that since 2005 we’ve seen the net margin impact negative to the same magnitude.   

This is meaningful, and makes it tough to be bearish on margins for any footwear company over the next year.

RETAIL FIRST LOOK: MINE, MINE, MINE - footwear margin chart


Some Notable Call Outs

- For the second time this week we are hearing that trends on women’s fashion boots are strong, which bodes well for the fall and holiday selling seasons. Steve Madden and Nine West both cited strength in the boot category. With higher ASP’s, boots could ultimately be one of the standout products in back half of the year. Additionally, management cited they are actively looking at acquisitions to utilize their cash balance.

- On its conference call, Cabela’s management noted that sales of guns are beginning to slow. However, the slowing trend was anticipated and is within management’s expectation. Despite this, the firearms category drove most of the comp store sales growth in the quarter, accounting for 5.1% out of the total 6.1% comp.

- Benefitting from easy comparisons, lower year over year fuel prices, and industry capacity reductions (liquidations and closings), West Marine reported better than expected Q2 results. Additionally, categories aimed at the DIY boater are performing well. Management believes that with the initial shock of the recession now over, boaters are returning to the water but with a preference to maintain their boats themselves.

- In an effort to boost traffic for back to school, Payless is introducing product at an $8.99 price point for kids and $12.99 for women. On promotion, the women’s product will be out the door at $9.99. In order to maintain margins on this extremely low price point, the shoe was reverse engineered to meet a specific margin criteria. This may be one of the lowest price shoes we have ever seen marketed for back to school (inflation adjusted of course!).



-AnnTaylor reports more job cuts and pre-announces - AnnTaylor Stores Corp. is eliminating another 160 jobs, primarily at the corporate office in Times Square, and closing 30 more stores, in the retailer’s latest round of cuts unveiled Thursday. The specialty retailer, challenged by the poor economy, product misses and executive turnover, started restructuring in January 2008. However, chief executive officer Kay Krill vowed that Thursday’s cuts conclude the downsizing. Two thirds of the 160 cuts are at corporate headquarters, and are occurring across almost all functions, including planning and allocation, information technology, human resources, finance and real estate. The corporate office has about 1,600 employees, and the total head count as of last January was 18,000. About one-third of the cuts are happening at divisions. The new cost structure is set up for profitability in the back part of the year. For the second quarter, ending Aug. 1, the company now expects EPS to be slightly better than breakeven due to cost savings and weak but better-than-expected sales. Comp-store sales dropped 28% in the first quarter and in the second quarter were down 20% to $470 million. Loft performed better in the second quarter than Ann Taylor.  <>

-Shoe designer Jeff Staple discusses new airwalk line at Payless - At a party Tuesday night to celebrate the Aug. 11 release of his nine-style collection with Airwalk, Staple told Insider that designing shoes for the brand to retail at Payless gave him the opportunity to think about design in a new way. “I’m very used to designing 100 shoes for one store in Manhattan. That’s easy,” Staple said. “[For the Airwalk collaboration], I had to think about what would work in Chicago, Denver, Los Angeles, for men and women — something that would resonate with all people.” Did the price constraints (no shoe in the collection goes above $50) add an extra challenge? Staple laughed. “Shoes in my market wholesale for more than $50,” he said. “I had to be educated on what materials would work.” Of course, that isn’t to say Staple has abandoned the niche genre entirely. In May, 110 specially designed Airwalk styles labeled with NCC-1701 (the Enterprise call number) were given to Reed Space and distributed to the cast and crew of J.J. Abram’s “Star Trek” film to celebrate the movie’s release. And this fall, to commemorate the DVD release, select Payless shops around the country will have the same silhouette — but this time, the mass version will use the three main colors (gold, blue and red) of the original uniforms instead of being done in burnished silver metallic (like the hull of the Enterprise). <>

-Wal-Mart Everyday Low Price Laptops Lure Buyers to Profitable Hard-Drives - Staples Inc. and Wal-Mart Stores Inc. are slashing laptop prices and expanding their selections for the back-to-school shopping season, banking on the computer demand to sell more profitable accessories and services. <>

-Fine handbag and accessories brand Coach is developing a new luxury apparel label, called Reed Krakoff, after its executive creative director - The women's collection is expected to roll out fall 2010 and will include ready-to-wear, handbags, accessories, footwear and jewelry. "We believe that this concept will serve to define the new American luxury and engage a different customer," says Lew Frankfort, chairman and chief executive officer of Coach. <>

-UK Like-for-like fashion sales were down 4.9% for the week ended July 26 according to BDO High Street Sales Tracker -  BDO Stoy Hayward said that it was the fifth consecutive week of falling fashion sales. It said that only a handful of specialist retailers had bucked the trend and that there were reports of low footfall at key shopping times during the week. Total like-for-like retail sales were down 2.2% over the week. <>

-The UK High Street is having a difficult time as summer retail sales drop in three consecutive months - The only other sector to report growth was footwear & leather (a balance of +64%), which saw its strongest result since August 2007 (+70%), while falling sales were reported by retailers of hardware, china & DIY, and furniture & carpets. While sales continued to fall in the durable household goods sector, they dropped at a slower rate than the very heavy falls seen in the past year. However, the latest overall decline in retail sales was similar to the more moderate rates seen in May and June, and not as severe as the heavy falls seen between July 2008 and March 2009. Stocks remain adequate in relation to expected demand, but the volume of stocks lay below its long-run average for the third consecutive month. The volume of orders placed upon suppliers fell again, with a balance of 13% of retailers reporting a drop in July, and a balance of 17% foreseeing a decline in August. <>

-Egyptian textile and clothing industry exports are falling - The Egyptian textile and clothing industry which has taken a vital role the country's economy is expected a decline this year due to the global economic downturn. Textile and clothing exports are seen falling by 5.3% in 2009 to US$2.169 billion, according to a new report from Business Monitor International (BMI). BMI expects the current global economic downturn will have an adverse effect on the industry, with sales and output set to decline this year and next. Overall Egyptian textile and clothing value added will drop by 9.3% in 2009, and again by 6.6% in 2010.  Moderate recovery is expected to set in from 2011, with growth of 4.5%.  <>

-Colombia's textile and garment industry fears Venezuela will ban Colombian exports - Colombia's textile and garment industry has been worried about its neighbouring country Venezuela's probable implementation of import  ban of goods from Colombia, one of its biggest buyers. The Venezuelan government had stopped providing dollars to Venezuelan importers of textile goods from Colombia at the official exchange rate due to which they have to buy them from the open market at a high rate. This is the second time in recent years that Venezuela has imposed such bans from Colombia. Venezuela is the one of the biggest importer of textiles and apparels from Colombia. <>

-CNBC's Darren Rovell discusses the recession, golf, and Callaway - "As I sit here at CNBC, I hear more and more people say that the recession is over and there are definitely signs. The Dow, for example, is on track to have its best July –- on a percentage basis -– since 1939. But I haven’t really seen any talk of recovery in the sports business world, until today that was. The golf club business has pretty much been a disaster over the last year. Since shafts don’t fall apart, it’s a totally discretionary purchase. Callaway, which were among the most aggressive in partnering with retailers on economical deals, reported that its profits dropped 82 percent in the last quarter. Yet many were ready to focus on the upside. Some potential upside has been seen in an uptick in sales in July and emerging market potential in China and India. Like every sector, there are still many signs that we’re not out of the woods.  Given the position the golf retail business was in (free club with this purchase! free club if this guy wins!) this is really the first great piece of news for the industry. Then again, maybe we should say then when we actually see sales going up instead of people projecting sales will be up." <>

-Hartmarx CEO steps down - It’s the end of an era for Hartmarx Corp., which is losing its chief executive officer and longtime employee Homi Patel just weeks after being purchased out of bankruptcy by Emerisque Brands. Patel, 60, who has worked for the men’s wear giant for more than 30 years, will step down as ceo today. “I have been extremely privileged to be the head of this wonderful company and its extremely talented and dedicated people,” Patel said of his tenure. “I am particularly proud that even in the most adverse of circumstances, our board and our employees conducted themselves with class and dignity, accomplishing our most important goals of maximizing the sale price while saving our brands and thousands of jobs.” Patel’s replacement was not immediately revealed, but it is widely expected to be Ajay Khaitan, the principal of Emerisque and a former ceo of denim brand Lee Cooper. <>

-The ongoing economic crisis continues to bite into PPR’s business - The French luxury and retail group said sales slipped 3.6%. The group, which owns Gucci Group as well as French retail chains Conforama and Fnac, will continue to use “all available means” to adapt to an economic environment that remains uncertain. “We have launched initiatives aimed at reconfiguring our organizations and energizing our sales efforts over time,” chairman and chief executive François-Henri Pinault said in a statement. “These should begin to bear fruit in the second half of this year and continue into 2010.” <>

-Despite a progressive improvement in the second quarter Bulgari SpA sees continued slow down in demand for watches and jewelry - Despite a progressive improvement in the second quarter and sales picking up at directly owned stores, Bulgari SpA was hit by poor sales in the U.S. and continued slow demand for watches and jewelry, reporting revenues down 21.7%. At constant exchange rates, sales would have dropped 28.9%. CEO Francesco Trapani said second-quarter results were an improvement over the first three months of the year and “particularly encouraging in terms of growing performance of the directly owned stores.” <>

-Destination Maternity Corp. gets by with reductions - Reductions in inventories, expenses and markdowns helped Destination Maternity Corp. boost third-quarter profits by 64%. The company said it would exceed the high end of its earlier guidance for earnings per share of between 74 and 91 cents. Sales fell 6.4% and were down 5.5% on a same-store basis.  “We have taken aggressive actions to manage our business in this tough environment, and with our tight management of expenditures and inventory, we were able to continue to reduce expenses and were able to control markdown levels versus last year, resulting in better-than-planned gross margin performance and lower-than-planned expenses,” said chief executive officer Ed Krell.  <>


RESEARCH EDGE PORTFOLIO: (Comments by Keith McCullough): PSS, WMT

07/30/2009 01:54 PM


The stock has had another nice run since we bought it and McGough's duration isn't owning this one for the quarter. KM


07/30/2009 10:12 AM


Free moneys will create y/y inflation in Q4. I'll continue to take down exposure to the US Consumer as we approach those dates. Sell high. KM






DM gives credit to LVS and WYNN following their second quarter earnings, although they are taking “the Las Vegas Sands Corp. bigwigs at their word that they are on track to cut nearly US$300 million in annualized costs out of their three Macau properties”.   Net revenues are holding up and both organizations are much leaner than a year ago, when visa restrictions began.  This means that both companies are well positioned when a rebound in the markets occurs, according to DM

DM sees WYNN’s IPO as being the more appealing target for “smart money”. WYNN makes a lot more per visitor in Macau and it not sitting on nearly the same amount of debt.  DM also believes that Sheldon Adelson’s claims on having great options with respect to asset sales, equity purchases by third parties, or IPOs to be “total BS”.



EBITDA for the Galaxy Entertainment Group grew for the third straight quarter at HK$264 million, driven by cost cutting and a lucky run on the high-stakes baccarat tables.  The StarWorld Hotel and Casino had EBITDA of HK$214 million, its fourth sequential quarterly increase.  Win percentages in the second quarter certainly helped Galaxy, with RC volumes up 3.2%. 

One weak area for Galaxy was the mass market, which entails walk-in cash play rather than high-stakes players brought in by VIP junket agents who typically play on credit.  A sizeable portion of StarWorld’s main casino floor was closed for renovation from May and is set to reopen this weekend.

Galaxy continues to wait patiently on Cotai.  The company has plenty of liquidity: HK$4.5 billion currently lines the Lui family’s pocket. 


The “Big Six” have formed an association with Stanley Ho as the first chairman.  The Chamber of Macau Gaming Concessionaires and Sub-concessionaires has agreed that junket commissions should be capped at 1.25% and that the government should be worried about the rise of Singapore.  Stanley Ho suggested that the ascension of Chui to the office of Chief Executive could mean the end of “so many favors for the Americans”. 

How the junket commission cap will be enforced remains unknown.  The new chief has said that he will take his time in examining the tax situation vs that in Singapore. 


Wynn Resorts’ cost cutting in Macau and Las Vegas preserved the firm's bottom line profit in the three months to June, successfully offsetting declining revenues in both cities.  Mass market casino revenues have been hit by declining visitation numbers and the house played less lucky than previously against RC players.

The profit was still better than expected at US$73.66 million, down 28.6% from a record quarter a year earlier but up 6.1% from the first quarter.  Companywide, Wynn reported net income of US$0.21 per share, down dramatically from US$2.45 per share a year ago but significantly better than expected.

A Bloomberg survey of 10 analysts had forecast a net loss of US$0.03 per share for the quarter.


MGM said it is overhauling operations and marketing in Macau in order to boost the company’s revenue after an “underwhelming” start.  CEO Jim Murren believes that MGM’s Macau market share, being the smallest of any of the big six in Macau, is “half what it should be” and called for more aggression in marketing and building relationships with junkets.

MGM may also consider an IPO when earnings improve, Murren stated.  MGM’s venture with Pansy Ho generated $17 million in EBITDA in the first quarter of 2009.  MGM Grand had less than 9% of Macau Casino’s gross revenue in June, Portuguese news agency Lusa reported this month, citing data from operators.  MGM are sending a “major contingent” of its “best operators and marketers” to assess Macau this month, Murren said.


“The Motherland not only provides us with powerful backing, but also continuously injects dynamism into our development." This was part of a statement released by Chui Sai-on after his formal endorsement this week as Chief Executive-elect.

Dr. Chui takes office on December 20.


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