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$47.16 0.4  0.7%

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Consumer Defensives
Large Cap
Market Cap £11.09bn
Enterprise Value £14.34bn
Revenue £6.82bn
Position in Universe 576th / 6400

Reuters Insider - Trading at Noon: Best Buy, Urban Outfitters feel the heat

Tue 19th November, 2013 6:50pm
Click the following link to watch video:                       
 Source:             Thomson Reuters                                   
 Description:        Retailers Best Buy and Urban Outfitters say       
                     ramping up promotions could dampen margins in the 
                     fourth quarter.                                   
(To access all exclusive Reuters Insider programming visit: 
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 Transcript (May be auto-generated)                                    
 'Tis the season for promotions. Let's talk to Jilian Mincer, she is Editor of our Retail and Consumer Group here. Alright, this sounds good for you and me as shoppers. Sounds great. Not so good for the stores, right? Best Buy shares are down 8% today. What is so concerning about its warnings today? Yeah, it actually had a good quarter, but the thing is it's already saying that it's going to match prices even if it cuts into margins to keep up with the competition. On top of that, earlier in the day, Wal 
 -Mart said it's going to match prices with key competitors, including Target and Toys"R"Us. And what it's all coming down to is shoppers who don't want to shop. We have a new Ipsos poll. Right. And it's telling us that people are planning to spend less generally than last year and about a third are planning to spend less on the key clothing, electronics, toys, 39% spending less on jewelry. So, all the major categories here, it sounds like- Other than food- Other than food, right, I mean, in terms of 
 Christmas gifts, that you want to show up with the apple pie or something. Folks not spending, even Urban Outfitters which has been the bright spot among the teen retailers saying basically the same thing? Yeah, I think everyone is just really feeling it. We're still seeing more than half of people said they're going to spend less – this is according to our new Ipsos/Reuters poll – spend less because of the government shutdown and concerns about the economy. Yeah. And Americans basically have tightened 
 their belts and are spending less. And I guess the problem is too, when you discount, you're also losing the customer who may be able to afford to buy it at full price, but they're excited to get it at that price, right? Exactly. Yeah. And I think we're going to see a lot of high earners spending money and getting great deals, but they're also waiting for those deals, our surveys are showing. Even though- planning to spend thousands of Dollars are waiting. Most people do not have all their shopping done. 
 Yeah. Only about 5%. Good. I feel so much better. Thank you so much, Jilian Mincer, for your insight. We're going to now talk about Tesla because there's a big story out today, you probably saw it, that the Feds are investigating what is going on with the cars and the fires because the undercarriages, when they get pierced, there appears to be battery fires there. We're going to turn to our Expert in Detroit, in fact he is our Detroit Bureau Chief, Paul Lienert, and he's got a story out today about Tesla. 
 Paul, the stock has now recovered a bit. It's up 5% today. It was down much earlier on this news. How big a deal is this government probe into these fires? Lisa, any time the Fed's doing an investigation, a vehicle investigation, it's a big deal. This is probably bigger because Tesla is big news on Wall Street and with investors. It's a big deal because this is a fairly expensive electric car and it's a big deal because Lithium Ion, there are still big questions about the safety of the battery chemistry. 
 Right, Elon Musk on the Tesla Blog said that he had asked the government to test these cars. Do you think that's the case or do you think he was kind of, it's a little bit more of a PR-saving-face move there? Well, the blog is dated November 18 and its posted investigation or the beginning of investigation, November 15, so who knows? He is a good PR guy. Okay. He also mentioned that he is going to be making some changes to these cars and the warranty, what are they? And in your opinion, do you think they're 
 going to affect the efficiency of these cars which is of course, what they're known for? Musk, again on his blog said that Tesla's making running changes to the suspension to lift the road height of the car. He claimed not so much for safety, but just to give it more road clearance. We'll see if that makes a difference. He also said they're going to extend the warranty to cover any damage from car fires even if it's from driver error. Alright, so going back to mentioning the stock today, up 5%, do you think 
 this is just investors still continue to swoon over this company? You know, there are a lot of people out there, I think, who have drunk the Tesla Kool-Aid. This company has a lot on its plate right now and a lot of heavy investment ahead of it to get from building 20,000 cars a year to its stated goal of building 400,000 cars a year. I think a lot of investors are still betting on that 400,000 piece, but that's three or four years away at the very minimum. Alright, Paul Lienert, our Detroit Bureau Chief, 
 thanks so much for joining us. Alright, let's look at some other stocks that are on the move, do you remember, the end of last week, of course you do, when Warren Buffett said that he had taken a huge stock in Exxon Mobil. It had given a stock about a 2% bump, well, Jim Chanos, Hedge Fund Manager and noted short seller today, speaking to our own Rhonda Schaffler, saying that he's generally bearish on the oil companies. And as for Exxon Mobil, he calls , he says, eh, I don't really see it as a value stock, 
 but a value trap. Why? Take a listen as to what he had to say. Their revenues are down year over year, yet the amount of capital they've employed in the business continues to grow, their cashflow has dropped dramatically, and where in the past Exxon has been able to finance its dividends and its buybacks out of free cash flow, it no longer is able to do that. It only basically finances half of that. Chanos also told Rhonda that he's short on coal companies and skeptical on China's growth, calling its 
 economic model lopsided to investment. He's suspect of old school tech companies like HP, said that it is in decline and masking it. Look for his interview here on Reuters Insider with Rhonda Schaffler. Alright, finally, let's talk Campbell Soup, down 6%. Chief Executive Denise Morrison, it's not a good day when the Chief Executive says, "I am disappointed in Campbell's first quarter performance," of course they are the world's largest soupmaker and demand is slowing here. Sales of soup in the US on the 
 decline by 6%, down 6% today. Alright, that's a wrap for Trading at Noon. Follow us on Reuters Insider- follow us on Twitter: @ReutersInsider, and remember, get more great videos at I'm Lisa Bernhard. This is Reuters
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