One sector really loves gridlock: Financials


In preparation for the ASCA Q3 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from ASCA’s Q2 earnings release/call.




  • [St. Charles]Our market share there seems to have stabilized.”
  • [East Chicago] “We’ll see a $20-25 MM annualized negative impact from the bridge closure… A portion of those [road] improvements should be done later this year and the balance through the middle part of 2012.”
  • [Fixed charge coverage ratio] “We’ll see that improve starting in the third quarter now that the swaps have expired and we have substantially lower interest rates going forward.”
  • “Subsequent to the end of 2Q, we’ve retired an additional $16 million of debt. So through seven months, we’ve retired $80 million of debt. That’s created availability in our extending revolver of approximately $20 million over and above what’s required in the non-extending revolver that we have to retire in mid-November of this year. We obviously intend to continue to use free cash flow to retire debt through the balance of the year. For the rest of the quarter, we think we’ll probably end up at about 25 million in total in 3Q for debt reduction, which would be another 11 million from where we are today. And we anticipate having availability in the revolver in December of 45 to 50 million [after 1/2 of CIP] based on our current rate of debt reduction.”
  • “Our Q3 2010 estimate for non-cash stock based compensation expense: should be in the range of $3.4 to 3.9 million. And the blended federal-state tax rate should get back up to about 42.5%.”
  • “Capital spending for Q3 is expected to be between 15 and $20 million in the third quarter…. [For Q4], if we’re going to meet what we told you guys at the beginning of the year, we would have to spend a little more in the 4Q than we have so far on average this year…. Net interest expense in Q3 is expected to be near $28 million. Non-cash interest expense is expected to be between 2.5 and 3 million for Q3. Based on current LIBOR rates, we should see a reduction in the quarterly interest expense for approximately $13 million due to the expiration of the swaps in mid-July.”
  • “We currently expect to make a quarterly dividend of $0.105 per share in Q3.”
  • Pullback in Kansas City promotional spending going forward? “Yes.”
  • [Black Hawk market] “3Q should be the best quarter in that market.”

Risk Rising for PIIGS

Below we show graphically the heightening risk trade in Europe. Although the EU community, IMF, World Bank, and ECB continue to backstop or subsidize the debts of the region’s fiscally bloated countries, the threat of the rising cost of capital remains significant in a world of interconnected risk.


The proverbial ‘PIIGS’ have shown a clear negative divergence across capital markets over the last week, with sovereign CDS spreads blowing out after significant declines in September and most of October (see chart below). Importantly, as Ireland’s ability to meet its sovereign debt obligations this year and next are called into question, Ireland’s CDS rose to a new high of 499bps, as the yield on the country’s 10YR bond widened to 7.22% (or 477bps over German Bunds), the highest yield since the mid-90s. Equally, yields are blowing out in Greece, Portugal and Spain.


Risk Rising for PIIGS - mh1


Risk Rising for PIIGS - mh2


From a quantitative set-up, Spain’s equity index, the IBEX 35, broke its intermediate term TREND line of support at 10,726 today, while Greece’s ASE Index remains broken on both the TREND and immediate term TRADE durations, and is the worst performing index across all global equity indices year-to-date at -30.8%.


Risk Rising for PIIGS - mh3


As the risk premium expands for Europe’s fiscally weaker nations, we want to reiterate our cautious outlook on the region. While we continue to like Germany’s fiscal austerity and relative growth profile into year-end and in 2011, we expect the region’s growth to slow as austerity measures squeeze the consumer via higher VAT, job losses, and wage freezes. Below we chart data out today on the Manufacturing PMI. While the data shows that most countries gained in October versus September, we do not expect to see marked improvement in this data into year-end as Austerity’s Bite plays out.


We’re currently short Italy in the Hedgeye Portfolio via the etf EWI.


Matthew Hedrick



Risk Rising for PIIGS - mh4

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R3: Uniqlo, Crocs, Gilt Groupe, GCO


November 2, 2010




  • Private sale pioneer, Gilt Groupe, is said to be exploring an apparel line of its own.  No word yet on whether the line will be private label or an exclusive collaboration with another designer.  Clearly a tightened supply chain and lower quantities of closeouts are taking their toll on the availability of compelling, fashion product.
  • While not the first teen focused retailer to use the smartphone as a promotional “carrot”, Journeys is offering teens a choice of devices for free if they try on a pair of shoes.  The iPhone is not amongst the listed choices.
  • The holidays are here!  According to Responsys, 57% of major retailers have already begun their holiday email campaigns.  A surge emails alluding to the holidays came in the final week of October, outpacing efforts observed in both 2008 and 2009.
  • Add Crocs to the list of brands now participating in the toning category. The shoes are aesthetically consistent with what consumers have come to expect from Crocs with the addition of an Easy Tone Reebok-like sole. Importantly, the shoes sell for $49.99 and $59.99 and well below the industry average, which is now hovering around an ASP of $77 compared to $95 at the start of the year.



Uniqlo Comps Down in October - Fast Retailing Co. Ltd. said Tuesday that Uniqlo’s same-store sales slid 1.1 percent in October, regaining some stability after a steep drop the month before."Temperatures were high until the middle of the month, but fell in the latter half, helping drive sales of winter items," the company said in a release. The figures are a vast improvement on September's comps, which slid 24.7 percent.  Fast Retailing blamed that drop on unusually hot weather. Uniqlo currently operates 799 stores across in Japan after having opened 11 new locations and closed two in the month of October. The chain’s comps refer exclusively to its stores in Japan and exclude its international operations. Uniqlo announced separately that its first store in Malaysia, which is set to be the company's location in Southeast Asia, will open its doors on November 4 in Kuala Lumpur's Fahrenheit 88 mall. To mark the opening of the 23,000-square-foot megastore, Uniqlo is planning to offer customers limited-time bargain prices on popular products such as graphic t-shirts, UJ jeans, and fleece jackets. <WWD>

Hedgeye Retail’s Take: Recall that last year’s launch of Heatech drove substantial comp increases across the globe only to result in disappointment a few months later when the product ended up in short supply.  Clearly Heatech round 2 isn’t helping with warm temperatures across the globe.


China Key Market for Ermenegildo Zegna Group. - In the almost 20 years since the Italian luxury men’s wear company entered the market, China has grown to represent some 25 percent of Zegna’s annual sales of 797 million euros, or $1.11 billion, last year, Ermenegildo Zegna, chief executive officer, said during a presentation Monday. The country may eventually account for as much as 50 percent of sales. From 2005 to 2009, sales in China rose 33 percent, and the brand now operates 62 stores in 33 cities in the country. Those stores, which include a Peter Marino-designed flagship that opened in Shanghai last summer, “have to be big and create a wow effect,” Zegna said, because shoppers there seek excitement and exclusivity. The most important products to the Chinese consumer are luxury sportswear and leather accessories, he said, revealing sportswear accounts for 50 percent of the business there and leather accessories 20 percent. Executives at the top of their fields don’t feel the need to wear suits, opting for high-end casualwear instead. “An owner of an enterprise wears what he wants,” Zegna said. <WWD>

Hedgeye Retail’s Take: A rare example of a “first mover” in China while the majority of western brands are looking at the largest population on earth for the first time. 


PE Head Forecasts Active M&A Environment - John F. Megrue Jr. is looking at retail and likes what he sees. “Right now is really a unique time,” Megrue, chief executive officer of private equity firm Apax Partners U.S., said Monday. “There is a dislocation in the market,” with retail debt financing coming back as some stock valuations in the sector lag. “We are going to see a much more active period in the next six to 12 months than we have historically.” That assessment from one of the key players in Apax’s sale of Tommy Hilfiger to Phillips-Van Heusen Corp. merits attention. Just where all the action will be is unclear. There has been rampant speculation through the market that retailers across a spectrum might be in play. So far, there have been only a few deals. Private equity firms like Apax are expected to drive much of the action. As a group, the firms have tons of money ready for retail deals — $100 billion according to McKinsey & Co.’s reckoning — as well as access to debt markets. Megrue sketched out some of the attributes that draw the interest of the investing giant, which manages $37 billion and focuses on deals worth more than $1 billion. Apax owns British fashion retailer New Look and another of its holdings, Rue 21 Inc., went public in November. In addition to searching for “well-positioned” brands, Megrue is focusing on online businesses, which he described as an “underinvested” category. “We are huge believers in this,” he said. “There’s a lot of low-hanging front in terms of scaling this business.” On the other hand, Megrue said businesses that are made up of a portfolio of brands are prone to distraction and take time to figure out. Niche brands are also a problem. “They tend to be too small to be confident we can take them internationally,” he said.


He also highlighted some of the difficulties faced by publicly held retailers. For more mature stores, “It is a lousy idea to be public,” Megrue said. “Wall Street stops appreciating how core the brands are.” Public companies also face difficulties making high-risk moves. Megrue urged boards to think about going private. “Do it at least once a year,” he said. In addition, he noted: “We pay big premiums. That’s the business we’re in.” <WWD>

Hedgeye Retail’s Take: Recall that M&A within the retail and apparel space was on our top 10 themes for 2010.  Looks like we are now getting confirmation from the horses mouth that this should continue into next year.  We wonder however how a weakening consumer may factor into buyouts of companies with peak margins and minimal growth prospects.


RFID Adoption Gaining Momentum - The apparel industry is moving to adopt radio frequency identification at retail to reduce out of stocks, a group of retailers and brands said Monday. Wal-Mart previously said it will move to item-level tagging, and retailers such as American Apparel and Nine West have revealed they are testing the technology, but this is the first time an industry group has publicly said it plans to use RFID tags in stores for tracking individual items of apparel. The technology can reduce out of stocks by as much as 50 percent. “We believe it is time for the industry to come together to advance the use of this technology throughout the retail supply chain,” said Peter Longo, president of logistics and operations at Macy’s Inc. “We are excited about the business improvement and customer satisfaction opportunities that this industry-led initiative affords us.” Retailers and brands participating in the initiative include Macy’s Inc., Dillard’s, Kohl’s, Wal-Mart, J.C. Penney Co. Inc., Conair, Jones Apparel Group Inc., Li & Fung, VF Corp., Jockey and Levi Strauss & Co. American Apparel, Bloomingdale’s and Banana Republic have previously said they are testing the technology. Marks & Spencer, Tesco, Metro, Carrefour, Misukoshki and Throttleman’s also use RFID. Adoption has come more slowly than anticipated, partly because of the way the initial Wal-Mart mandate was crafted, and also because of public misperceptions about privacy risks posed by the technology. In 2003, Wal-Mart required suppliers to tag every pallet and case, but it had not yet tested the business case for the technology. That approach proved less useful than tagging certain key individual items, such as jeans, for a variety of reasons, including that Wal-Mart already had a sophisticated system in place for tracking every shipment, and RFID does not work with metal and liquid. Consumer groups have raised concerns the tags could be used by the government or others to track people at any time and in any place. But the tags contain no personal data, are difficult to read from a distance and can easily be disabled by removing them or covering the tags with tin foil. <WWD>

Hedgeye Retail’s Take: RFID has long been thought to have potential to be the biggest technological breakthrough in retailing since the POS, but costs have kept mass adoption at bay.  If successful, WMT’s lead here could force the hand of the supplier community to begin broader adoption. WMT however will still have to produce goods that consumers actually want.


Initiatives Underway to Grow & Maintain NYC Fashion Leadership - The Bloomberg administration plans to unveil six initiatives today to bolster New York’s $55 billion fashion industry and secure the city’s status as a global fashion capital. City Hall’s efforts will tackle the future on two fronts: Playing up New York as a hub of innovation for specialty and chain stores, along with helping to develop the next generation of designers, managers and merchants by insuring they have the business know-how to succeed. With 165,000 jobs, the fashion industry accounts for 5.5 percent of the city’s workforce, generating about $2 billion in tax revenues and $9 billion in wages annually. City officials aim to shore up those figures. Just last month, designers and union officials rallied in Midtown because of frustration about stalled talks with the city over rezoning the Garment Center to keep its manufacturing core. “The industry obviously is changing significantly, both in terms of production and the sales model,” Seth Pinsky, president the New York City Economic Development Corp., said Monday. “Production, as we all know and have seen in the last several years and past decades, has moved outside the city and the country. There has also been a change in the sales model. A lot more is being sold online instead of just brick-and-mortar stores. In the new global paradigm — whatever that turns out to be — we want New York to remain the fashion hub it has been for the past several decades.”  The program is expected to get rolling next year and each element will have a manager and corporate partner. The individual annual initiatives are: the NYC Fashion Fund and Institute, Project Pop-up, New York City Fashion Draft, Fashion Campus NYC, New York City Fashion Fellows and Designer as Entrepreneur. <WWD>

Hedgeye Retail’s Take: With costs in NYC presenting substantial hurdles for small, under capitalized brands and designers, it will be key for the Mayor to offer tangible incentives to keep the industry alive and well here.  If not, it will ultimately become too expensive to call NYC the fashion hub of the world.


Footwear News Power 100 of 2010 - After the tough times of 2009, when most footwear executives cut costs, slashed inventories and braced for the worst of the recession, this year was a different story. Corporate leaders began to regroup, restrategize and return to finding innovative ways to conquer the retail market. It’s no wonder footwear has been a leading category, rebounding much faster than apparel and, oftentimes, saving the bottom lines of department stores. As in every year, new players earned their places on the list, such as Scott Savitz, who has grown into an e-tail force, attracting 6.5 million monthly visitors and chalking up $180 million in sales. J.Crew’s Mickey Drexler also joined the industry’s elite this year, after making footwear a larger focus for the company and teaming with Alden, Minnetonka and New Balance for interesting collaborations. And Tony Post, too, made the cut after turning Vibram’s FiveFingers style into a footwear movement. To measure the market heft and influence of each executive on the list, Footwear News studied all sides of the industry — from discounters to luxury houses — to determine who is having the biggest impact on the shoe industry. Sales figures and earnings, of course, factored into the decision process, but so did new store openings, line extensions, collaborations, fashion clout, innovative product, revamped business strategies and, of course, the all-important buzz factor. What follows is a ranking of the industry’s most powerful influencers — those who not only survived the recession but are shaping the footwear landscape in its wake. <WWD>

Hedgeye Retail’s Take: With innovation behind several new additions to this year’s list, Christian Louboutin (#2 from #5) and Wes Card & Richard Dickson of The Jones Group (#9 from #13) represent the most notable moves in the Top 10. Among the factors behind Louboutin’s ascension is an aggressive growth in retail stores to 32 in 2010 from 21 last year while Jones’ stake in Stuart Weitzman in June has provided a significant boost to JNY’s profile in footwear circles beyond Nine West.


R3: Uniqlo, Crocs, Gilt Groupe, GCO - R3 1 11 2 10


Internet Flash Sales Surge in Popularity - While competition has dramatically increased over the last year, insiders said there is still growth potential. That is in large part because established leaders, such as Gilt Groupe and Rue La La, are upping the fashion quotient, adding new features and partnering with key brands on collaborations. “[The category] is here to stay,” said Larry Joseloff, VP of content for at the National Retail Federation. “The hype will die down as with any new tech or business model, but retailers will fine-tune their best practices.” The key for retailers, said observers, is to address new areas of the market with their models. “There are tons of sectors that haven’t been touched, so there is definitely room to grow, ” said Krista Garcia, research analyst at, an all-men’s site featuring contemporary and upscale brands, was also founded to serve an untapped consumer. According to CEO Jordan Rosen, while the flash-sales category as a whole is crowded, the men’s market is not as well represented. “We’re trying to be a place that’s all for men,” said Rosen. “I don’t know if I would feel comfortable shopping at a place geared toward women.” His site, which debuted in September, stocks brands such as Creative Recreation, Circa and Osiris, and showcases one or two sales per day that last about 48 hours and offer anywhere from 55 percent to 65 percent off retail value. Fifteen percent of the site’s mix is footwear. Another new entrant in the category,, is taking a different approach, focusing on high-quality products rather than price. Larger retailers are getting in on the action, too. At, merchandise from the outlet stores is being sold in an exclusive online flash sale on the weekends. And last month, discount retailers TJ Maxx and Marshalls announced they were considering adding a flash sales section to their websites. Despite the influx of new competition, existing players such as Gilt Groupe — which is often credited with creating the flash category in the U.S. — said they are continuing to see growth. <WWD>

Hedgeye Retail’s Take: In addition to a lower quantity of closeouts as noted above, increased involvement from larger more established retailers will  begin to squeeze out marginal players.


Weakness in Golf Rounds Persist - According to Golf Datatech, golf rounds played for the US were down 3.6% in September and were also down 3.6% on a YTD basis. Public access play was down 3.8% for the month and private course activity was down 2.9%. A total of 3960 courses are represented in the report. The biggest decline in September came in West North Central, 9.0%; followed by East North Central, 7.8%; New England, 6.2%; Mid Atlantic, 3.2%; Mountain, 1.6%; South Atlantic, 1.0%; and Pacific, 0.5%. The one positive region was South Central,  up 3.4%. <SportsOneSource>

Hedgeye Retail’s Take: Not much changed here – rounds have been down LSD all year as evident with both September and YTD down -3.6%.


E-Commerce Sales Remain Robust in Q3 - U.S. online retail sales increased 9% in the third quarter, comScore reports today, calling it “a fairly positive indicator for the upcoming holiday season.” That follows 9% year-over-year growth in the second quarter and 10% growth in the first quarter, according to comScore, which makes its estimates based on the activity of some 2 million consumers who agree to have their online behavior tracked. Total U.S. e-retail sales were $32.133 billion in Q3, comScore says. It was the fourth consecutive quarter of year-over-year growth in e-retail sales, following four quarters of flat or negative growth during the recession, according to the web measurement firm. Despite what he calls solid growth in the third quarter, comScore chairman Gian Fulgoni says, “We continue to preach caution due to the continuation of high unemployment, which is creating very divergent spending patterns between the 'haves' and the 'have-nots.' Even Americans who do have jobs still aren't confident enough to spend freely and many are still pained by their loss of wealth since the financial crisis struck in 2008. The top-performing online product categories were Books & Magazines (excl. digital downloads), Computers/Peripherals/PDAs, Computer Software (excl. PC Games) and Consumer Electronics, indicating a higher willingness of consumers to spend on in-home entertainment.  41 percent of online retail transactions included free shipping, down marginally from last year. <internetretailer>

Hedgeye Retail’s Take: Not surprisingly, online sales continue to outperform. Interestingly, the top 25 retailers accounted for 70% of sales this year up nearly 6 points yy suggesting accelerating growth at the top end at the same time the bottom 30% of the industry becomes increasingly more fragmented.


Mobile Couponing Slow to Take Hold - According to some predictions in 2009, mobile couponing was ripe for takeoff. While relatively few mobile users had redeemed a coupon through their phone, many were interested, and Yankee Group predicted an increase in the number of mobile coupons redeemed in North America in 2010 from 200,000 to 2.3 million. But consumers have been slow to climb on board. According to a September 2010 survey conducted by OnePoll for mobile transaction network mBlox, fewer than 15% of US mobile subscribers have redeemed a mobile coupon. This is about twice the penetration Yankee Group found in 2009. Also in September, research from the In-Store Marketing Institute found 12% of US shoppers had used a mobile coupon, and 34% were interested in doing so. mBlox found even greater interest, at nearly 42%, but both these numbers were significantly down from the 73% of US consumers who told Yankee Group last year that they wanted mobile coupons. Overall, respondents to the mBlox survey still preferred to clip coupons the traditional way—receiving them by mail. Email was popular with nearly a third, and a combination of email and text message with nearly 11%. <eMarketer>

Hedgeye Retail’s Take: What’s not captured here is the quality of couponing in the study (as in brands participating) – a key component of true underlying consumer demand. Additionally, the conversion from an email to mobile coupon requires that consumers enable retailers to push content a function that has been historically labeled as a four-letter word.


R3: Uniqlo, Crocs, Gilt Groupe, GCO - R3 2 11 2 10




The following is a post written by our Hedgeye Financials team, led by Josh Steiner, on the impact of QE2 on consumer spending through 2011.  The analysis shows that the modest impact on consumer spending resulting from QE2 may not be worth the significant opportunity cost (for savers) associated with longer term rates.


When $2 Trillion Buys You $3 Billion

We think it's conventional wisdom that when long-term rates are low it drives high volumes of refinancing activity, which puts significant incremental disposable income back into consumers' pockets. While this was true back in 2003, we think investors will be surprised to find out just how little it will add this time around, especially when comparing 2011 to 2010.


Low Long-Term Rates (i.e. Refinancing) Are Not the Elixir the Market Thinks They Are

In the table below we've mapped out precisely how much additional money consumers will have from refinancing opportunities. We've used MBA estimates, which, to be fair, have generally overestimated activity in the past. The takeaway is that based on their estimates for refinancing volume over the remainder of this year and throughout next year, we expect a very modest increase in disposable personal income of $5.9 billion in 2010 (roughly 4 bps of GDP) and an even more modest boost of $3.1 billion (2 bps) for 2011.


Considering that QE2's only direct stimulative property for consumers is in boosting the housing market and consumer spending through refinancing activity, we were somewhat surprised to see just how paltry the benefit would be ($3 billion) especially when juxtaposed against the rumored cost of QE2 (~$500 billion to $2 trillion).


For those who think the MBA's rate forecasts and commensurate refi volume assumptions are overly conservative in light of the rumored scale and scope of QE2, consider that in 2010 mortgage rates fell 40 bps and drove only $6 billion in incremental disposable income. If we assume that 2011 sees mortgage rates fall another 40 bps, averaging 4.3% for the whole year, this would drive roughly $6 billion in further disposable income, only $3 billion higher than our $3.1 billion estimate. In other words, we just don't see how QE2 can drive enough incremental spending power to either move the needle on GDP or justify the profound cost.



Our Methodology

We've used MBA forecasts for refi volume and 30-year mortgage rates, and we've even used their home price assumptions (basically flat), which are in sharp contrast to our own (down). Based on this, we show there being 2.2 million mortgages being refinanced in 2011, down from 5.5 million in 2010 leading to a total annual payment reduction of $3.1 billion in 2011, down sequentially from the $5.9 billion boost it gave to 2010. We've assumed, based on Freddie Mac data, that, on average, people save 90 bps on their rate when they refinance. We've also assumed that everyone is in a 30-year fixed rate mortgage and that everyone is refinancing at 80% LTV.


It's worth pointing out that there is a not immaterial opportunity cost associated with lower long-term rates. Namely, the savers in this country are earning lower returns on their deposits. While it's difficult to quantify precisely what this opportunity cost is, we estimate that it is in the billions of dollars and likely exceeds any aggregate savings from refinancing activity.


We recognize that the goals of QE2 are twofold: to inflate asset prices by crowding out whatever asset class the Fed decides to monopolize for the next 6-24 months and to transfer lower borrowing costs to the consumer. The point of this note is to call out how small the actual transfer will be.


The new CoD show may or not be a success but MPEL’s turnaround has been impressive. However, the catalysts we’ve been waiting for are already on the table and this one may take a breather.



The MPEL thesis was two pronged:  strong market share gains punctuated by a strong bottom line quarter – finally.  MPEL certainly delivered.  Street estimates still need to go up.  To be fair, although we knew hold percentage would be high, it did come in above what we were looking for, so some of this upside may not be sustainable.  We may want to keep a trade a trade.  Here are some takeaways from the quarter:


CoD net revenues were $7MM above our estimate while EBITDA was $9.6MM better

  • We know that the company said that direct play was 20% but we think it was actually a little north of 13% with the addition of 3 more junket rooms in the quarter.
  • VIP gross table win was $7MM above our estimate
    • RC was actually $600MM less than our estimate, but hold was 20bps higher as a result – which also helped margins even more since 50% of their junkets are paid on a fixed % of RC
    • At a normal 2.85%, net revenues would have been about $76MM lower and EBITDA would have been about $83MM (about $32MM lower than reported results)
  • Mass win was $1.5MM higher than our estimate, with drop $22MM lower but hold rate 1.3% better
  • Slot win was $5MM light
  • Non-gaming revenues net of promotions were $2MM below our estimate
  • Fixed costs were $5MM below our estimate and were essentially flat to last Q at $55MM.

Altira net revenues came in $10MM below our estimate although EBITDA came in $8MM above

  • RC was $100MM better than we modeled, which we attribute to a small increase in direct play which is also why the reported hold of 2.7% was 10bps below our estimate.
  • VIP gross win was $7MM below our estimate
  • Mass win was $500k better than we estimated
  • Non gaming revenues, net of promotional expenses were $2MM above our estimate
  • The real story seems to be lower junket commissions and controlled fixed costs.  All-in, junket commissions were $9.5MM below our estimate while fixed expenses look to be only $15MM

Other stuff:

  • Mocha Slots was $0.7MM ahead on revenue and $0.6MM ahead on EBITDA
  • D&A was $3MM below our estimate
  • Pre-opening expense was $5MM higher but it looks like they took it all in the Q vs. over the next 2 Qs
  • Interest expense was $8MM higher



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