Brown-Forman, GE, and Haier clawed back losses sustained in the days after Britain’s unexpected vote to quit the European Union a week ago today — and then some, based on today’s closing prices. All three are now above pre-Brexit levels.
But the other big employers in Boulevard’s Stock Portfolio are still in the red, with Ford the deepest: the automaker, which employs nearly 10,000 in the Louisville area, is still down 6% from its closing price June 23, when Brits went to the polls, but before results were known to Wall Street.
Those employers’ shares closed higher today, as overall U.S. stocks clawed back half the ground lost after Britain’s surprise vote Thursday to quit the European Union. It was the second rally in two days on Wall Street, which had been rattled since Friday by uncertainty over the so-called Brexit. Britain’s stock market also has recouped losses in the same stretch, although other major markets in Europe and Asia have yet to bounce back fully, according to The Associated Press.
AMAZON: Walmart today launched a free 30-day trial of ShippingPass, its two-day shipping program to all U.S. consumers, as the world’s biggest retailer ratchets up the competition with Amazon’s Prime subscription service. ShippingPass costs $49 a year, half as much as Amazon’s $99 (Reuters and press release). Also today, Amazon slashed prices up to 50% on newly released, full-featured, unlocked Android smartphones for Prime members (company website). Amazon employs 6,000 workers in the Louisville area, at distribution centers in Jeffersonville, and in Bullitt County’s Shepherdsville.
KINDRED: Senior Vice President John Lucchese sold 4,341 shares for about $11.39 a share today for a total $49,000, the company said in a Form 4 regulatory filing (SEC document). Kindred shares closed this afternoon at $11.43, up 5%.
GE: U.S. regulators rescinded stricter oversight of the company’s finance arm, GE Capital, after saying the conglomerate had made changes that significantly reduced its threat to U.S. financial stability (Wall Street Journal). Its former residential home appliance business, now owned by Haier Group, employs 6,000 workers in Louisville.
Yarmuth
In other news, U.S. Rep. John Yarmuth of Louisville has once more donated his entire congressional salary — $174,000 — to charity, making good on a campaign promise when he was first elected a decade ago. The 17 recipients include three arts and humanities groups: Louisville’s Fund for the Arts, Louisville Orchestra, and the Muhammad Ali Center (WDRB).
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: 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).
A slowdown in its mainline white goods business has the new owner of GE Appliances, Haier Group, looking for fresh paths to growth.
“At the core of its revitalization push is a program to create in-house venture businesses that take advantage of talent and ideas that otherwise might not have seen the light of day,” says Nikkei Asia Review.
China’s biggest consumer electronics and home appliance company has established 180 such ventures over the past three years, the Review says. One of those ventures created through Haier’s incubation program makes Hello Kitty-themed washing machines.
Haier completed its $5.6 billion purchase of Louisville-based GE Appliances last week. The deal included 6,000-employee Appliance Park in the city’s South End. Another 6,000 work at other worksites.
Related: Japan’s Sanrio produces and licenses all things Hello Kitty. There are numerous blogs about Hello Kitty, some less reverential than others: Kitty Hell. And counterintuitively, she’s not a cat.
KINDRED: A jury in Nashua, N.H., yesterday cleared Kindred Healthcare and Greenbriar Terrace nursing home in the death of a Nashua man more than five years ago. Byam “Bing” Whitney Jr. died in 2011 after developing pneumonia and then bedsores that led to sepsis and his death at the age of 84 (Union Leader).
FORD: In a radical shift, Ford is repositioning itself in Europe’s small-car market by abandoning the minicar and focusing on subcompact buyers with a larger Ka and a more upscale Fiesta. The change highlights the automaker’s strategy of picking battles to win 6% to 8% profit margins for its European business (Automotive News).
Ruimin
GE: Haier Group CEO Zhang Ruimin was awarded the Legend In Leadership Award at the Yale University Chief Executive Leadership Institute Summit in New York City. The conference is organized by Jeffrey Sonnenfeld, the prominent senior associate dean for Leadership Studies at Yale’s School of Management; he is a much sought-after commentator on management issues (press release). Haier bought GE Appliances and 6,000-employee Appliance Park for $5.6 billion in a deal completed last week.
Delcid
PAPA JOHN’S: A 38-year-old San Antonio man was found guilty and sentenced to life in prison yesterday for killing a Papa John’s delivery driver in 2014. William “Jimmy” O’Neill, 46, had been delivering at an apartment complex when Robert Carlos Delcid stole his car and ran over him as he tried to stop the theft. O’Neil’s 86-year-old mother Edna O’Neill told the jury: “He was a good kid” who called her nearly every day, always ending the conversation saying, “I love you” (Express News).
PIZZA HUT: In Odessa, Texas, a gunman robbed a Pizza Hut Wednesday night, demanded money and fled; no injuries were reported (American).
Ramsey
In other news, University of Louisville Foundation vice chair Joyce Hagen paid virtually all the cost of a full-page Courier-Journal ad in April that lauded embattled school President James Ramsey, and blasted his critics on the board of trustees (Insider Louisville). Enormous craft beer restaurant HopCat expects to open in five weeks, assuming construction is done at its Grinstead and Bardstown roads location; it’s now hiring some 200 employees to handle the 132 varieties of beer (WDRB). And the news drought continues about Louisville native and Oscar winner Jennifer Lawrence :(.
News about business and culture in Louisville, Ky.
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 (
Boulevard 