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Amazon Buying MGM for $8.45B; Retailers Stomp Comps

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Wednesday, May 26, 2021

Market indexes look to be continuing their turnaround begun Tuesday afternoon, following a slight sell-off mid-day yesterday on weaker Consumer Confidence and New Home Sales. After solid gains in international markets while we were sleeping, the Dow appears to be headed 60 points higher by the open, the S&P 500 +10 and the Nasdaq +40 points. Can they keep their gains today?

The big news this morning is the announcement — whispered about in the last week or so, but now for real — Amazon (AMZN - Free Report) is purchasing MGM Studios for $8.45 billion. The studio, which was bought by private investors after coming out of bankruptcy in 2010, is home to the valuable James Bond film franchise. This deal follows that of the Disney (DIS - Free Report) /WarnerMedia deal inked last week. The whisper number for the Amazon buy had been roughly $9 billion.

Of course, this event is subject to regulatory approval, and anyone who has been paying attention to Amazon over the past couple years recognizes Capitol Hill has had its problems with the company’s gargantuan size. This deal certainly won’t put any lawmakers at ease. But it appears as if Jeff Bezos’ company has realigned its original content development business after winding down Amazon Studios three years ago.

Dick’s Sporting Goods (DKS - Free Report) has demolished expectations in its Q1 earnings report released this morning: $3.79 per share flew past the $1.04 per share in the Zacks consensus, and a completely different orbit than the year-ago quarter’s -$1.21 per share. Revenues of $2.92 billion in the quarter stomped the $2.22 billion expected, +119% year over year. Same-store sales grew 115% year over year, with e-Commerce accounting for 14% growth and Digital Sales +20%. Shares are up 9% in early trading. For more on DKS’ earnings, click here.

Abercrombie & Fitch (ANF - Free Report) also easily topped expectations on both earnings and sales, swinging to a profit on the bottom line to 67 cents per share from -39 cents. Revenues of $781.4 million swept way past the $688.4 million expected. Digital Sales now make up 52% of A&F’s total sales. The company’s stock has already gained 87% year to date, and is up 7% on the earnings release. For more on ANF’s earnings, click here.

Capri Holdings (CPRI - Free Report) , the retail conglomerate and parent company of high-end brand names like Versace and Jimmy Choo, also swung to a profit in its fiscal Q4 earnings report this morning: +38 cents per share, where analysts were expecting -$0.01. Sales in the quarter also surpassed estimates to $1.2 billion in the quarter, from $1.03 billion expected. It’s the fourth-straight earnings beat for the retailer, and shares are up 26% year to date. For more on CPRI’s earnings, click here.

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