Nearly every restaurant operator is benefiting from lower food costs, so what is the differentiator to any given stocks’ outperformance – top line sales!


In the second half of 2009 to date, the casual dining stocks as a group have declined 7.6%, excluding Landry’s performance, which is up nearly 150% as a result of CEO Tilman Fertitta’s purchase offer and Pershing Square’s subsequently taking a 9.9% stake in the company.  Outside of LNY, the top performers since June 30, 2009 have been (in order of best to worst) CBRL, BWLD, CAKE, PFCB and BJRI.  These are also the only names in the casual dining group that have posted positive stock performance thus far in 2H09, which represents a big shift from the first half of the year when only LNY’s stock declined from December 31, 2008 with the group, on average, up nearly 84%. 


When I looked at this list of outperformers in 2H09 to date, the first thing that jumped out at me was the fact that three of the names have a high concentration of their restaurant base in California with CAKE at nearly 20%, PFCB at about 16% and BJRI at over 50%.  Based on what we have heard about recent trends in California, particularly as it relates to the 12%-plus unemployment rate in the state, it is somewhat surprising that these California-centric names have outperformed.


The more important similarity among the group is, however, that despite some of these companies’ exposure to California, all of these names, except for one, have outperformed the industry benchmark on a comparable sales basis as reported by Malcolm Knapp in the most recent quarters (as shown in the attached charts below).  We all know the industry performance is not good, but having less bad results points to share gains and helps to explain, for the most part, the companies’ relative stock performance.


CBRL, which is up nearly 35% since June 30, continues to widen its gap to Knapp, outperforming by more than 6% in it last two reported quarters.


BWLD’s (up 22.8% over the same timeframe) gap to Knapp has come in somewhat in the last couple of quarters but the company still posted same-store sales trends that were 7.6% better than the industry average in 3Q09.


CAKE, up 8.8%, has not outperformed the industry average by the same magnitude as CBRL and BWLD, but the company has performed better than the average in each reported quarter of 2009 (by an increasing amount each quarter) after underperforming the average for all of 2008.


BJRI, up 1.2%, has maintained its 5%-plus gap to Knapp in the last two reported quarters despite the sequential decline in its same-store sales growth trends on both a 1-year and 2-year average basis.


So who does that leave out?  PFCB is up 1.7% in 2H09 to date and is the only casual dining name (again outside of LNY) that has posted positive price performance since June 30 with same-store sales trends at its main concept (the Bistro) that are underperforming the industry benchmark.  And, that underperformance increased by about 150 bps in 3Q09 on sequential basis from 2Q09.  Same-store sales growth in 3Q09 decelerated sequentially from 2Q09 on both a 1-year and 2-year average basis. 


Some might point to the improved margin trends at Pei Wei and to the concept’s recent same-store sales outperformance to explain the company’s relative stock performance, but it is important to remember that the Bistro still accounts for about 75% of total company sales.  There is no reason to believe that Bistro trends will turnaround prior to the industry so I do not think it is reasonable to believe that PFCB will be able to maintain this stock price outperformance much longer. 












The Research Edge Consumer Team is hosting a Holiday Party on December 9th



Please join the Research Edge Consumer Team for Holiday cocktails in Midtown on December 9th.  It’s hard to believe another year has almost passed and as a result it’s time to celebrate!  In appreciation of your support throughout the year, we look forward to seeing you at Bar 44 (located in the lobby of the Royalton Hotel, 44 West 44 Street b/t 5th and 6th).  Please stop by at any time between 6:30-8:30pm.  We will have an area reserved on the right side of entrance across from the lobby bar.


If you are able to join us, kindly RSVP by Dec 7th. We look forward to seeing you next week.



Research Edge Consumer Team,

Todd, Anna, Brian, Eric, and Howard


As the story goes according to the Fed, inflation is under control, productivity is improving, not withstanding Friday’s minor blip, there have been no major setbacks for the US market since March 9th, the dollar’s decline is orderly, home prices are generally on the mend and unemployment is high across the country but initial jobless claims appear to be less than toxic.  Even better, there appears to be unlimited demand for US government debt at the lowest yields on record.  


This appears to be the recipe for keeping the market rocketing ahead. 


As Keith said in today’s Early Look – “Remember, when it comes to keeping rates unreasonably low for an unsustainable amount of time, ‘to go beyond is as wrong as to fall short.’ It’s time for He Who Sees No Bubbles to pull up a price chart of gold, the Yen, or short term US Treasuries this morning and wake up.”


With the market making higher highs, I ask myself, is it me or does the market need to reset the most basic relationship between inflation and the structural/secular trends imbedded in today’s prices or does the “new normal” make the old theories and old relationships meaningless in today’s environment?


One thing that has not changed during the recent “boom-to bust” market cycle is that demand elasticity is incredibly high, even for non-discretionary items, such as gasoline and food, and prices for both are rising—that is inflationary!


One rule that will not change is that the burning buck is inflationary.  Look no further than two non-discretionary items – gas and food. 


The consumer is not dumb! 


Howard W. Penney

Managing Director




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ISLE missed consensus EBITDA projections but whisper numbers were lower. A little better cost management but same old top line sluggishness with no improvment post quarter end.



"In an environment plagued with low consumer confidence, our ongoing improvement initiatives are proving successful.... While we will continue to save where it makes sense, it is important to reaffirm our commitment to the long-term success of our business. We carefully evaluate making major changes to the customer experience which could negatively impact our business for years to come. Additionally, we completed the sale of a majority of our Blue Chip operating casino assets this week, completed our exit from the property in Grand Bahama last week, and expect to liquidate our remaining United Kingdom net assets before the end of our current fiscal year. We remain focused on exploring new domestic management and development opportunities."



ISLE reported revenues that were slightly above consensus and EBITDA that was below.  However, after trading off 13% since Nov 20th, investors were clearly bracing themselves for more disappointing results.  It sounds like most of the cost cutting efforts are complete and from now on it's really about being able to drive revenues.  The news there isn't encouraging.


Some markets performed better than others:

  • Colorado and Missouri benefited from regulatory reforms.  The Caruthersville rebranding to Lady Luck and new initiatives in Kansas City also benefited results in those markets.

Other markets remained challenged:

  • ISLE's facilities in Iowa were negatively impacted by new competition, Lake Charles was highly promotional and Florida continues to suffer from the uneven playing field between tribal and commercial properties.




  • The issues continue to be less consumer spend per visit and lower amount of high rollers
  • Unemployment is a huge issue and many of the areas in which they operate have unemployment rates above the national average
  • Continue to pursue management contracts and accretive tuck-in acquisitions
  • Unusual items: $6.8MM receivable representing the recovery of some collectibles that had previously been written off; had a favorable impact from several state income tax audits.
  • Debt: $54MM of R/C, $821MM on T/L, $357MM on bonds, $6MM of other
  • Capitalized interest was less than $25k in the quarter



  • Iowa suffering from competitive issues and I-74 bridge is still out of commission mid week - which is when they suffer the most.  Bridge construction is ongoing, originally it was supposed to last 3 months, now its more like 6 months
  • Pompano: marketing promotion went south.  Cost them $500k of EBITDA ... "too successful" with redemptions.  Won't do anything with that property until there is some tax relief.  There will be a special session in a few weeks but gaming won't be on the table.
  • Colorado: Most of the increase has come from table games, while slot revenues are largely flat.  Will continue to do what they can to remain competitive in that market.  Hoping that ASCA's Blackhawk grows that market.  
    • Will not committ $50MM
  • Exceeded expectations in paying down debt this year, how are they thinking about allocating the scarce FCF?
    • ISLE's focus during the last several months is to preserve cash flow, pay down down, and stay within the limits of the credit facility.  Longer term they know that there are some properties with deferred maintenance needs and some capital investment opportunities.  When they are more comfortable that things have really stabilized or have started to improve that's when they will start investing more in their properties
  • Thoughts on an equity deal?
    • Have looked at every avenues available to them and over the next few years they will need to term out maturities (maturities in 2012 need to address that by 2011).  Have and are considering all forms of capital including an equity raise to address the terming out of maturities 
    • Basically, they will be opportunistic
  • Active in several discussion on several different fronts (re: developments) but greenfield opportunitites probably make less sense
  • Pompano and Lake Charles were the primary drivers of heightened promotional spending.  Houston had the highest RevPAR decline in the week leading into Thanksgiving... expect some weakness there as a feeder market
  • Have been receiving payments from Pittsburg for the last 6 months (when they were looking to do a deal with the Penguins).  They are owned $10MM, used a higher discount rate before because of collectibility issues
  • State tax adjustements?
    • Settled a liability in LA for less than what they had reserved for
  • Got 2MM GBP for the sale of the UK assets
  • Bahamas impact in 2H2010 should be neglible.  There will be a little carryover into 3Q2010, just got out of the contract this month
  • Normal tax rate = 37%
  • Lake Charles: What are they doing at the property level to improve results?
    • Changed the top three managers in the last month.  Promoted from within (other properties)
    • Stabilized margins? Ran at 17% last year which is closer to where they should be
  • Colorado: Is ASCA really growing the market with their hotel?
    • They are seeing some improvement from August, which was disappointing.  Their hotel occupancy was in excess of 90%.  Looking at opportunities to freshen the slot product to grow slot revenues
  • Pompano: They are entering their strongest period now, but they aren't giving any guidance
  • Had a timing change in corporate expense because they issued restricted stock three months earlier but tracking where they expected for the year
  • Bank leverage calc: 3.7x
  • How are trends in Nov?
    • Haven't seen a whole lot of change in trends since the end of the quarter.  Earlier commentary on spending per trip still holds.  Don't expect to see much change for a while.  Retail revenues is still off 12% (ex-Missouri)
  • Because of the change in regulation in Missouri, there has been a migration to retail play because you no longer need to have a card - "ie be a rated player"
  • Davenport: City would like someone to come in and make a significant investment in the market (Cumming Study indicated that someone would spend $150MM to build a land based property).  They have no appetite, but if they find someone that does and wants to compensate ISLE than they wouldn't stand in their way
  • Slot spending?  Included in maintenance.  They will spend $8-10MM in the balance of the year in slots.  When will they decide what to spend in FY2011?  
    • Wouldn't expect a material increase in maintenance going into next year
    • More opportunity to refresh floors in Blackhawk and Lake Charles
  • Iowa: 4 proposals?
    • Last IRGA meeting, spoke about doing tours of applicants properties in spring of 2010 and then making some sort of decision afterwards
  • Big project in Biloxi?  Still a priority when things recover?
    • No it's third on the list after Black Hawk and Lake Charles
  • Thinks that there is a healthy debate on what to do in Florida, and thinks that the compact will not get approved in current form
  • Covenant is 7x now and drops to 6.75x in 6 months

Don't be SHY: Call Them Bubbles

Last week, as this chart of short term US Treasuries was making its final ascent up into the right of it’s crest, we called it one of the 3 main bubbles that He Who Sees No Bubbles (Bernanke) is not allowed to see:

  1. Gold (immediate term bubble)
  2. 2-year Treasuries (intermediate term bubble)
  3. Banker Bonuses (long term bubble)

So, don’t be shy about this – just see this for what it is and get hedged (SHY is the short term Treasury ETF that we shorted). With 2 year-yields testing 0.65% last week, it was mathematically impossible for yields to go much lower (unless we become Japan, which I guess is possible), particularly if you believe that maintaining a ZERO percent policy on US interest rates isn’t perpetual.


In fact, the only other times that 2-year yields have been this low are December of 2008 and all the way back in 1938 (the early months of 1939 and 2009 were not pretty for equity returns as yields moved higher from their lows).


In the chart below, we have shown the SHY breaking its immediate term TRADE line (today). This raises a critical risk management signal in our macro model. It is both early and leading in terms of its indication. We will have to see if this immediate term breakdown in short term Treasuries holds.


He Who Sees No Bubbles has a unique problem with his vision – he cannot see what he is responsible for creating. Greenspan had really big glasses, but admitted in October of 2008 to missing this altogether as well. This is not new. Cheap money for a select few has plenty of unintended consequences.



Keith R. McCullough
Chief Executive Officer


Don't be SHY: Call Them Bubbles - SHY




December 1, 2009





An article that caught my eye last night shows e-tail share gainers vs. losers on Black Friday. Those with innovation (Amazon) or Size (Walmart/Target) come out ahead. Those selling commodities (Best Buy/Sears) still gained share, but at a far lesser rates. Content always wins. Scalable distribution comes in second. Commodities…stay away.



An article in Internet retailer highlighting the winners and losers of e-tail shopping on Black Friday caught my eye last night. Do I care that it shows how Amazon lead Black Friday web traffic, but Walmart was tops on thanksgiving? Not really. What I do care about is the year/year delta in share gainers. All top five retailers gained share yy on Black Friday according to Experian Hitwise reports. But what I find most interesting is the magnitude of share changes between the top five e-tailers. Am I surprised that Amazon gained nearly 2.5 points to a 13.55% share? Not at all. It’s called innovation (i.e. Kindle). Walmart and Target gaining around a point each (TGT more impressive as it is on a smaller base)? No, not surprised. They’re increasingly using key items as loss-leaders to drive traffic and are now scaling this strategy into their on-line businesses. What is most interesting, I think, is how little share Best Buy and Sears each gained. What’s the key difference between these two and the three top share gainers? Their products are largely commodities and their leverage over the consumer is nil.  Check out these stats…

  •, 13.55%, 11.06%
  •, 11.18%, 9.88%
  • Target, 5.65%, 4.62%
  •, 4.62%, 4.57%
  •, 2.95%, 2.78%



  • In a surprise real estate move, Under Armour is joining the “pop-up” store phenomenon in NYC for the holiday. UA is taking over a vacant storefront on 57th St (formerly the Ebay pop-up store) for the remainder of the holiday and is expected to offer a wide range of product for men, women, and children. This might not be as elaborate as Niketown down the block, but its proximity to the highly trafficked corner of 57th and 5th is sure to create some buzz.
  • Gap’s Holiday Cheer bus campaign rolled into NYC today, complete with a mini parade of drum wielding cheerleaders. The plaid covered tour bus made its way through Manhattan, drumming up PR and giving away free sweaters and coupons for denim. The bus is headed to Chicago, LA, and San Francisco over the next couple of weeks.
  • It’s been a while since there was truly a “hot” toy for the holiday season. The Elmo hysteria peaked a couple of years ago and Cabbage Patch Kids are ancient. Enter Zhu Zhu pets. The Chinese made, robotic hamsters are the toy of the season. These “pets” retail for $8, but appear to be sold out almost everywhere at the moment. If your child really needs a Zhu Zhu, then head to Ebay where the furry creatures can be had for $30-$40!




U.S. Textile Mills Caught in Export Credit Crunch - The U.S. textile industry is struggling with a new credit crisis that is undermining billions of dollars in exports to the Western Hemisphere, its top market. The industry has faced a long-term credit crisis for more than a decade, but the situation has worsened with the economic downturn and bank failures and bailouts in the U.S. The volume of U.S. textile exports to the region — most to Mexico and Central America — has declined 24 percent since last year because it is harder than ever to obtain financing credit and guarantees, industry representatives said. The National Council of Textile Organizations and several of its member textile firms in the Carolinas, including Mount Vernon Mills, Parkdale Mills and Tuscarora Yarns, along with the National Cotton Council of America are lobbying to secure more financing and seeking help from Congress. <>


Schumer Contacts the NBA on Jersey Issue - U.S. Senator Charles E. Schumer announced he has made a direct appeal to National Basketball Association Commissioner David Stern asking him to terminate the leagues contract with the adidas company if it doesn’t scrap plans to ship its game-day jersey production overseas. Last week, Schumer, who held a press conference outside the NBA Store in New York City on Sunday, said adidas plans to end its contract with American Classic Outfitters, a Perry, NY-based supplier and will for the first time produce the game-day jerseys worn by NBA players at facilities outside of the USA. Adidas has an exclusive contract with the NBA to supply the league’s teams with their official uniforms. Schumer had called on adidas to reverse the decision and continue to make NBA jerseys in the United States – a move that could save approximately 100 jobs in Perry, NY, and many more across the country.  <>


Cyber Monday Seen As Bigger Than 2008 - Cyber Monday provided a bit of digital encouragement to retail shares Monday as investors digested news of an otherwise lackluster Black Friday shopping weekend. Early indications were that Cyber Monday was shaping up to be a strong day for online sales this year. In 2008, it was one of the biggest online shopping days of the year, a blockbuster in an otherwise parched season. A National Retail Federation survey predicted that 96.5 million Americans planned to shop online Monday, up from 85 million in 2008. Morning traffic on ShopStyle, an online fashion search engine, was high, with page views up 40 percent over last year and click-throughs to retailers up close to 50 percent over 2008, said founder and executive vice president Andy Moss. “Last year, Cyber Monday was our biggest day or close to it, and I think we’re seeing the same trend again,” he said. “More and more retailers are doing more and more offers on Cyber Monday, and it’s a compelling time to shop.” <>


Luxe Retailers Set Markdowns - With at least 20 percent less inventory on hand, luxury retailers say they’re back to a “normal” markdown cadence and will break prices on major designer collections this week, generally at up to 40 percent off. These are permanent markdowns on major designer labels like Prada, Lanvin and Gucci, as opposed to the temporary “friends and family” or one-day-only markdowns seen on a range of labels through the season. Last year, after the collapse of Lehman Bros., the AIG crisis and turmoil in the credit markets, luxury retailers found themselves stuck with bloated inventories and few customers, and desperately broke price a week or so before Thanksgiving. Neiman Marcus was among the first, but Saks Fifth Avenue responded with steeper markdowns. Last Christmas, eye-popping discounts of 75 percent and more for designer merchandise were not uncommon, but this year, inventories in many cases are 20 percent leaner.  <>


Key to Luxe Boost: Turning to New Categories - Down but not out, the luxury market should look to new categories — along with female and older consumers — to boost its bottom line in 2010. That was one of the messages at “Luxury Beyond The Crisis,” a conference organized by The International Luxury Business Association at the Hotel Westin in Paris last week. New luxury categories — including technology, furniture, travel and spas — will help the sector register a 4 percent revenue increase next year, said Jean-Marc Bellaïche, partner at Boston Consulting Group in Paris. Minus such categories, a 3 percent dip is projected for the sector. Although luxury fashion brands are already rallying in Far East, Bellaïche said he is also optimistic about growth prospects in the U.S., where the recession has hurt sales.  <>


Chinese Manufacturing Accelerates as Asia Leads Global Rebound - China’s manufacturing grew last month at the fastest pace in five years, a survey showed, helping Asia to lead the recovery from the global economic slump. The purchasing managers’ index released by HSBC Holdings Plc rose to a seasonally adjusted 55.7 from 55.4. The government’s PMI, also published today, held at an 18-month high. A report later today may show that U.S. manufacturing grew for a fourth month in November, a Bloomberg News survey showed. Stocks rose around the world after the Chinese figures added to evidence that the country is powering a global recovery from the worst recession since World War II. Australia’s central bank cited the speed of Asia’s rebound in today’s unprecedented decision to raise interest rates for a third straight month. India beat economists’ forecasts yesterday with 7.9 percent growth in the third quarter and South Korea said today its exports gained for the first time in 13 months.  <>


European Footwear - Euro-footwear’s fate in the hands of importers and brands - Last November 19th the majority of European Union (EU) states voted against the continuation of punitive antidumping duties on leather footwear imported from China and Vietnam. However, this is not a final, binding decision and it will be considered for ratification by the Council of Member States. It is a theme which could prejudice the unity of the EU since countries which no longer have a shoe manufacturing industry are being unduly influenced by the interests of large importers and distributors, as well as major brands which are manufactured in Asia. Back in 2006, when the European Commission under Peter Mandelson, confirmed the punitive duties on leather shoes manufactured in China and Vietnam, there were already signs of a split in the EU. Manufacturing countries such as Italy, Spain and Portugal were already at loggerheads with northern countries with little or no footwear industry left, and which simply wanted to represent the interests of consumer groups (votes?) demanding "cheaper footwear". <>


Under Armour Wins Boston College Contract - Under Armour topped Canton, MA-based Reebok and won a six-year deal to  become the exclusive official outfitter for Boston College's football and basketball squads, and 29 other varsity teams. The deal starts in July 2010. UA will replace long-time BC-endorser Reebok. The company will provide all the teams with uniforms and training apparel, footwear and coaches’ clothing. It will also advertise its products at games. The deal represents UA's first collegiate deal in the Northeast. The company has similar agreements with Texas Tech, the University of Maryland and Auburn University in Alabama. Boston College Athletics Director Gene DeFilippo said the new partnership "will provide the school’s student athletes the best chance to excel on the national stage." <>


Europe’s Jobless Rate at Highest in Almost 11 Years - Europe’s unemployment rate held at the highest in more than a decade in October as companies cut jobs even after the economy emerged from the recession. Unemployment in the 16-nation euro area remained at 9.8 percent after being revised higher to that level in September, the European Union statistics office in Luxembourg said today. That was the highest rate since December 1998 and in line with the median forecast of 35 economists in a Bloomberg News survey. The September jobless rate was revised from a previously reported 9.7 percent. European companies are reducing costs to shore up earnings battered by the worst global slump since World War II. ThyssenKrupp AG, Germany’s largest steelmaker, said on Nov. 27 that it plans to cut 20,000 jobs. Still, Europe’s service and manufacturing industries expanded at the fastest pace in two years in November, suggesting the economy is gathering strength.  <>


German November Jobless Falls as Recovery Widens - German unemployment fell in November as government measures discouraged firings and the economy recovered from the recession. The number of people out of work fell a seasonally adjusted 7,000 to 3.42 million, the Nuremberg-based Federal Labor Agency said today. The jobless rate declined to 8.1 percent in November from 8.2 percent the previous month. Germany’s economy, Europe’s largest, pulled out of recession in the second quarter and grew 0.7 percent in the third quarter. The Ifo institute’s business confidence index increased more than economists forecast to a 15-month high in November, suggesting the recovery may gather pace next year.  <>


Industry Urges Trade Benefits for Cambodia - Apparel brands, retailers and Cambodian officials are urging duty free benefits for Cambodia, the eighth-largest apparel supplier to the U.S., arguing the move would help the country stay competitive at a crucial time. During a program last month marking the 10th anniversary of the Better Factories Cambodia project, an initiative to improve labor compliance in the Cambodian garment industry, speakers said the competitiveness of the country’s apparel industry is threatened by the economic environment as well as the lifting of quotas last year on garment imports from China and the conclusion of the Vietnam monitoring program, also last year.  <>


EBay Fined Over LVMH Fragrance Sales - EBay was fined 1.7 million euros, or $2.6 million at current exchange rates, by a court here for failing to prevent the trade of LVMH Moët Hennessy Louis Vuitton SA’s fragrances and cosmetics on its French Web site. The online auction giant was found to have violated an injunction issued in June 2008, requiring eBay to stop French users from buying or selling LVMH fragrance products on any eBay site in the world, even if the products are genuine and unused. To comply with the injunction, eBay introduced filtering software to check millions of daily listings and make them inaccessible to French users. LVMH argued that more than 1,300 listings for fragrances and cosmetics still managed to appear on eBay’s French site, while eBay said the listings were posted by users who deliberately circumvented the systems that were put in place after last year’s injunction. <>


Hal Waives Threshold on Safilo Debt - Safilo Group SpA escaped bankruptcy on Monday as Hal Holding NV said it had accepted 50.99 percent of the troubled Italian eyewear maker’s tendered notes. The Amsterdam-listed Hal waived the minimum 60 percent tender threshold and said it had reached an agreement with Safilo and Only3T SpA, which holds a 39.9 percent stake in the company and is controlled by the Tabacchi family, to acquire an equity interest in Safilo ranging from 37.23 percent to 49.99 percent. Hal will proceed with the cash settlement on Friday and the acquisition of Hal’s equity interest in Safilo is expected to close in the first quarter of 2010. The commencement of the tender offer allows Safilo to avoid default and a likely bankruptcy and permits a restructuring of Safilo to proceed. <>


U.S.-China Walk Fine Line on Trade - A volley of trade disputes between China and the U.S. is complicating efforts by both countries to keep tensions to a low simmer in order to achieve goals on a range of issues, from climate change and foreign policy to addressing the fallout from the global financial crisis. The relationship between Washington and Beijing has historically been dogged by ambivalence over trade policies, currency manipulation and the large amount of U.S. debt China holds. As the Obama administration nears its one-year anniversary, it walks a fine line between holding China’s feet to the fire on trade obligations and trying to refrain from pushing the Asian nation too far. U.S.-China trade relations in recent months have been overshadowed by President Obama’s decision in September to impose punitive tariffs on Chinese tires. The move prompted a swift response from Beijing, which launched trade remedy investigations of U.S. poultry exports.  <>


Customs IPR Seizures Fall in '09; Counterfeit Shoes the top Product Seized - U.S. Customs & Border Protection seizures for intellectual property rights violations dropped 4 percent to $260.7 million in fiscal year 2009 from $272.7 million a year earlier, the agency said. In fiscal year 2008, Customs intellectual property rights actions spiked 38.6 percent compared with 2007. The number of seizure actions in 2009 declined 1 percent to 14,841 from 14,992 during fiscal year 2008. Last year, seizures increased 9.7 percent. Counterfeit shoes were the top product seized, accounting for $99.7 million, or 38 percent, of all infringing goods, the same share as a year earlier. Jewelry appeared on the list of top commodities seized for the first time, accounting for 4 percent of the total. China was again the top source for counterfeit goods, accounting for $204.7 million, or 79 percent, of all intellectual property rights seizures, Customs said.  <>

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