BROWN-FORMAN: Retiring Director James Welch sold — sort of — 1,741 class A shares on Thursday at $105.17 each for a total $183,000, according to a regulatory filing with the Securities and Exchange Commission. In fact, the SEC Form 4 says, Welch surrendered the shares “to satisfy withholding obligations associated with the vesting of restricted stock upon [his] retirement” (SEC document).
PAPA JOHN’S and PIZZA HUT: A former executive at the maker of FarmVille online games has started a pizza restaurant in the heart of Silicon Valley where he hopes all pies will someday be made by robots. The process at Zume Pizza in California’s Mountain View involves two robots — named Marta and Bruno — that spread sauce “perfectly but not too perfectly, so it looks just like an artisan product,” says owner Alex Garden. The robots then move the pizza into an 850-degree oven to pre-bake. From there, the pizza is given a final bake in a bank of ovens inside the delivery truck on its way to a customer’s door. Traditional humans are still required for tasks like sprinkling cheese and driving the truck, however (Grub Street).
Anxious traders at the New York Stock Exchange today (New York Times).
The Dow Jones Industrial Average cratered 3.3% this afternoon, tumbling 589 points and wiping out its year-to-date gains as fears gripped markets with Britain’s stunning vote to leave the E.U. The broader S&P 500 tumbled 3% and the Nasdaq slumped 3.8%. Latest news.
All 10 big-employer stocks tracked by Boulevard fell sharply:
To fully appreciate the magnitude of the losses, consider Kentucky’s richest family, the Browns of Brown-Forman. They saw $201 million of their more than $6 billion in paper wealth evaporate in a matter of hours.
This morning’s paper.
The impact of last night’s stunning Brexit news for Louisville employers will be greatest for those with extensive overseas footprints and currency exposure.
They include Brown-Forman, which sells 15 brands such as Jack Daniel’s in 160 countries worldwide. The U.K. is the company’s second-biggest market, accounting for 10% of fiscal 2016 sales, according to Brown-Forman’s annual report. Europe, excluding the U.K., was 21%. The U.S. is No. 1, with 46%. The company says foreign markets are increasingly important: “In fiscal 2016, we generated 54% of our net sales outside the United States compared to 41% 10 years ago.”
Other companies likely taking post-Brexit hits include Papa John’s, which operates in 39 countries; Yum in 130 countries and now reshaping overseas operations with a planned China spinoff in October; Ford, which is already reworking its European sales strategy, and Amazon, a relative newcomer abroad.
Boulevard’s Stock Portfolio companies routinely warn investors about risks of doing business outside the U.S. Papa John’s, for one, noted in its annual report that “international operations could be negatively impacted by changes in international economic, political, security or health conditions in the countries in which the company or our franchisees operate.”
Yum’s 14,600-unit KFC Division bears the biggest overseas exposure; it’s in 120 countries, with more than a third — 5,003 restaurants — in China.
Britain’s Guardian.
“Our business,” Yum says in its annual report, “is increasingly exposed to risks inherent in international operations. These risks, which can vary substantially by country, include political instability, corruption, social and ethnic unrest, changes in economic conditions . . . as well as changes in the laws and policies that govern foreign investment in countries where our restaurants are operated.”
Also, Yum warns, “results of operations and the value of our foreign assets are affected by fluctuations in currency exchange rates, which may adversely affect reported earnings.”
Boulevard’s Big 10 companies employ 63,000 workers in the Louisville area, and nearly 2 million worldwide.
HUMANA: A group of high-profile U.S. Senate Democrats yesterday urged the Justice Department to block the proposed Aetna-Humana and Anthem-Cigna mergers, which would shrink the number of national health insurers to three from five. In a letter, they argued the pending tie-ups would threaten jobs, raise premiums, and reduce the quality of care. The letter was signed by Al Franken of Minnesota, Elizabeth Warren of Massachusetts, Sherrod Brown of Ohio, Edward J. Markey of Massachusetts, Dianne Feinstein of California, Mazie K. Hirono of Hawaii — and Richard Blumenthal of Connecticut, in whose state both Aetna and Cigna are headquartered (Business Insurance). Aetna officials have said they expect the $37 billion merger with Humana will close in this year’s second half.
AMAZON: The FAA has proposed fining Amazon another $130,000 for twice shipping hazardous packages in 2014 without warning labels or emergency response information. In one, the retailer offered UPS a box with a 19-ounce container of Simple Air EZ Green HVAC Cleaner. The flammable gas was discovered by UPS workers in Kentucky; the second incident involved FedEx. The proposed penalty comes two weeks after the FAA fined Amazon $350,000 over a similar incident that caused injuries to several UPS workers (CIO). Also, a San Francisco Bay area woman learned the hard way that Amazon can, indeed, ban you for good if you return too many orders — although she eventually got a reprieve (NBC). Amazon employs 6,000 at two distribution centers near Louisville.
PAPA JOHN’S: Researcher Nomura yesterday downgraded Papa John’s stock to neutral from buy, partly because of concerns traffic accidents involving delivery drivers could push up insurance costs. Among the examples cited: A jury in DeKalb County, Ga., awarded $11 million to a woman who suffered long-term brain damage after an incident involving a Papa John’s driver. “While this award likely will be appealed (if it hasn’t already),” Nomura told clients, “it does highlight what appears to us to be the growing risks.” The firm also downgraded Domino’s shares for the same reason (MarketWatch). Wall Street was unfazed: Papa John’s shares closed today at $67.79, up 2.3%.
BROWN-FORMAN is launching a global scavenger hunt to celebrate the 150th anniversary of its flagship Jack Daniel’s Distillery. Starting July 1 through September, the distiller will provide clues via its Facebook page to 150 hidden whiskey barrels around the world and give fans the opportunity to find and win prizes. The barrels will be hidden at airports in Amsterdam, Frankfurt, Heathrow, Milan, Paris, Singapore, Los Angeles and Sydney, plus cultural and historic sites (Frontier Magazine and Travel Retail Business).
FORD and the other two big U.S. automakers collectively outperformed import brands for just the second time in 30 years in this year’s closely watched J.D. Power Initial Quality Study. Still, Ford finished No. 11; Kia was No. 1 (Detroit Free Press). The automaker employs nearly 10,000 workers at its auto and truck factories in Louisville.
UPS: A Idaho woman is praising a UPS driver after he likely saved her and her sons from what could have been a deadly house fire last month (East Idaho News). UPS is Louisville’s single-biggest employer, with about 22,000 workers its Worldport hub at Louisville International Airport, the biggest fully automated package handling facility in the world.
TACO BELL: A viral video of a teenager’s arrest for allegedly brandishing a knife at a Taco Bell employee in Wisconsin has sparked protests and an internal police inquiry (The Root).
In other news, Texas Roadhouse shares closed at $46.55, up 3% — another record closing high — after setting an earlier intraday high of $46.60. And Churchill Downs shares closed at $127.60 up 63 cents as nearly two million shares changed hands — 10 times average volume. Standard & Poor’s announced the Louisville company would replace Fortune Brands Home & Security in the S&P MidCap 400 after the close of trading today (RTT News).
AMAZON‘s plans to use drones for delivery were slowed yesterday when the Obama Administration released new rules limiting their use, including over urban areas. The Federal Aviation Administration said commercial drones are OK so long as the drone and its payload weigh less than 55 lbs., stays within unaided sight of their pilot, and operators pass a test every two years. In addition, each drone must have its own pilot (Guardian). Also yesterday, Amazon said it’s expanding grocery delivery service to Boston (Boston Inno). The retail giant employs 6,000 employees in the Louisville area, and thousands more across the state.
KFC: In India, the fast-chicken giant has introduced its latest mobile technology to lure younger diners: Watt a Box, a 5-in-1 meal box that comes with a Chicken Zinger, two hot wings, hash browns, a chocolate pie, Pepsi and a 6,100 mAh Lithium-ion battery to charge smartphones. The device isn’t sold, but instead can be won as part of a week-long competition; watch the demo video, above (The Memo). Some customers aren’t so thrilled, however: Testers who charged an iPhone with the box said it only gained 17% battery after charging for half-an-hour, during which time the powerbank became completely drained (Eater).
Meanwhile, in an unusually public spat with an employer, Darrell Hammond — the Saturday Night Live comedian hired to play Colonel Sanders in the new KFC commercials — says the company “played” him into thinking he’d have the gig permanently. He was later replaced by another SNL veteran, Norm Macdonald, in what’s now a running joke of actor switches (Hollywood Reporter). Indeed, it’s part of the script in comedian Jim Gaffigan’s version:
YUM: As Yum gears up to spin off its China operations in October, rival McDonald’s has received more than half a dozen bids for its China and Hong Kong stores, including from Beijing Tourism Group, Sanpower and ChemChina, in an auction that could fetch up to $3 billion. In March, McDonalds said it was reorganising its Asian operations by bringing in partners who would own the restaurants within a franchise business (Reuters).
HUMANA: Regulators in the nation’s biggest insurance market, California, have signed off on Aetna’s $37 billion plan to buy Humana, saying yesterday the deal could move forward after Hartford-based Aetna agreed to invest $50 million in the state’s health-care infrastructure (Bloomberg). The companies have said they expect the deal to close in this year’s second half. In another big merger before regulators, Anthem and Cigna may find it impossible to divest themselves of large chunks of their health insurance businesses in order to overcome reported Justice Department antitrust concerns (Wall Street Journal). Meanwhile, Humana plans to move 1,000-1,200 employees to the Waterside and Clocktower buildings it owns downtown, from leased space at 12501 Lakefront Place in the Blankenbaker Station Business Park (Courier-Journal, Business First and WDRB).
PAPA JOHN’S ranked No. 2 among fast-food restaurants in the annual American Consumer Satisfaction Index survey with a score of 82 out of a possible 100, a 5% increase from 2015. No. 1 Chick-fil-A got 87 points, according to the survey results out today. KFC was No. 9 at 78, and Pizza Hut was No. 79 at 77 (CNN).
TACO BELL makes good on a promise to give away potentially millions of Locos Tacos today, in a promotion tied to the NBA championship finals, which ended yesterday with the Cleveland Cavaliers beating the Golden State Warriors (WISH).
KINDRED: Under the agreement announced late his afternoon, Kindred said it will expand its existing home health and hospice services to 70 of the state’s 75 counties from the current six.
Fourth and Broadway headquarters.
The deal with the Arkansas Department of Health includes the Louisville company’s buying the agency’s 74 home health locations; seven hospice service offices, providing hospice services in 42 counties, plus personal-care service business that helps patients with daily living activities. It’s expected to close in the third quarter, pending regulatory and other approvals (press release).
HUMANA: Chief Medical Officer Roy Beveridge sold 3,228 company shares for $186.67 each — a total $603,000 — in a two-step transaction Friday, according to a Securities and Exchange Commission filing this afternoon. The shares were among 7,947 he received earlier that day as restricted stock units awarded under the insurance giant’s 2011 stock incentive plan. Humana appointed Beveridge to the post in 2013 (SEC document). Humana’s stock closed at $189.90 a share today, up 1.5%.
KFC: A St. Louis police officer who gunned down a robbery suspect in the doorway of a KFC restaurant in January won’t face charges because he acted in self-defense, Circuit Attorney Jennifer Joyce announced today (Riverfront Times).
PAPA JOHN’S franchisees have signed a three-year contract to become the official pizza at the Chicagoland Speedway NASCAR track in Joliet in a deal announced today. The track previously served Chicago-based chains Giordano’s Pizza at its concession stands and Connie’s Pizza in its suites (Crain’s).
Roberts
TACO BELL: In Eugene, Ore., police arrested a 44-year-old woman at a Taco Bell Friday night when a dispute with a teenager turned ugly in the restaurant’s drive-though lane. Laura Kay Roberts was booked and released from the Lane County Jail on charges of interfering with police, resisting arrest and disorderly conduct. “Thank God county [jail’s] full,” read a post on her Facebook page, followed by several emoji icons. “No pickle suit for me hahaha.” When a commenter asked what happened, she replied, “I had beer muscles with a side of fireball” (Register-Guard).
News about business and culture in Louisville, Ky.
PAPA JOHN’S: Researcher Nomura yesterday downgraded Papa John’s stock to neutral from buy, partly because of concerns traffic accidents involving delivery drivers could push up insurance costs. Among the examples cited: A jury in DeKalb County, Ga., awarded $11 million to a woman who suffered long-term brain damage after an incident involving a Papa John’s driver. “While this award likely will be appealed (if it hasn’t already),” Nomura told clients, “it does highlight what appears to us to be the growing risks.” The firm also downgraded Domino’s shares for the same reason (
Boulevard 