1st Quarter's Warm Weather Could Show Big Retail Sales

The weather during the first quarter of 2012 was remarkable. It could translate into big numbers when the March 2012 U.S. Advance Monthly Sales for Retail and Food Services results are released by the Commerce Department this week.

Temperatures were warmer than we've ever measured across a large portion of the United States and spring began much earlier than normal in many places.

Specifically, March was incredibly warm with thousands of heat records smashed in the huge population centers across the eastern half of the U.S.

Setting aside the inevitable debate about global warming, the statistics are stunning and a major positive factor as it relates to retail sales and the economy. Retailers benefited from the incredible warmth and earlier Easter and posted very strong high margin sales. It was, for retailers, the prototypical perfect storm.

According to Richard Hastings, a strategist with Global Hunter Securities, "Looking into next week's big retail sales number Monday morning, we would be looking for year-over-year growth of 6.5 percent to give us total retail sales of $420.5 billion. March can be an explosive month. This occurred in March 2010 when growth, year-over-year was 10.6 percent, and March 2011 was also strong with year-over-year growth at 8 percent."

Looking ahead to April retail sales, the tide has turned as it relates to the incredibly warm weather. The pull forward effect of the March's record weather will likely take a bite out of April's results. However, as unusual as the temperatures in March were this year, April 2011 was also unprecedented in the historical record (117 years). Last year, it was all about rain. Unrelenting rain. The incessant rain had a hugely negative impact on outdoor recreation, lawn and garden, construction and outdoor DIY and, of course, retail store traffic.

This year will be different. On a comparative basis, while the return to more seasonal temperatures may result in a headwind for seasonal apparel, fewer rainy days will provide a counterweight to the pullback in seasonal demand.

AXX Secures C$194M Deal with China's Top Steel Producer

AXX Secures C$194M Deal with China's Top Steel Producer Today, Alderon Iron Ore, the Canadian iron ore development company with a solid footprint in Western Labrador via their 100% owned Kami Project, announced signing of a major, definitive subscription agreement with China's steel producing juggernaut, Hebei Iron & Steel Group Co., Ltd. (formed from the merger of Tangsteel and Hansteel in Hebei province back in 2008), which turns out some 30M tonnes annually and is the second largest producer in the world.

Hebei Iron & Steel, in addition to a C$194M strategic investment into AXX and the Kami Project (in exchange for 19.9% of outstanding AXX shares at C$3.42/share, as well as a 25% interest in a newly formed limited partnership created to own the Kami Project), has come to terms with Alderon Iron Ore regarding all other material agreements governing the relationship, in addition to the agreement to buy iron ore concentrate output from Kami. These definitive agreements will be executed upon closing. In accordance with dictates thus set forth, the entire C$194 (which will be contributed within 15 business days of Hebei receiving the feasibility study) will go to exploration/development at Kami, as well as associated corporate expenses.

Chairman of Hebei Iron & Steel, Wang Yifang, hailed the formation of this "long standing partnership" as a key move in the larger bid to expand into overseas mining assets, characterizing Kami as high-quality, containing abundant resources, and being strategically located. Locking down a continuous stream of high-quality iron ores is precisely what Hebei Iron & Steel needs to ensure growth projections and the partnership with AXX, securing project financing for Kami is seen as naturally leading to the evolution of a world-class iron ore mine in the heart of Canada's premier iron ore district.

President and CEO of AXX, Tayfun Eldem, echoed these sentiments roundly, saying of the deal that it would be a major catalyst for the company, as Alderon moves to further validate, and gain material leverage over risks associated with developing the Kami Project. Eldem explained that this deal provides a significant component for the projected equity requirements needed to build Kami, viewing the ability of AXX to finance the remainder as well within reason, especially with access to more financial institutions with Hebei being at the table, including Chinese banks.

Hebei has agreed to fully assist in securing any debt financing and should prove indispensible as an ally when approaching Chinese banks.

Executive Chairman of AXX, Mark Morabito, cited the roaring Chinese economy and vast experience of Hebei in the steel industry as primer for an explosive combination that should propel the company to world-class status. Developing the Kami Project in conjunction with such a senior steel industry titan will give every opportunity for success and AXX is ready to hit the ground running now that sufficient capital has been obtained.

Upon acquisition of the 25% interest in Kami, obligations call for purchase of 60% of annual output (up to a maximum of 4.8M tonnes of the first 8M) by Heibei, as soon as commercial production starts. Hebei will get a good deal on the ore (monthly average price per DMT for iron ore sinter feed fines quoted by Platts Iron Ore Index), at what is essentially a 5% discount from the Platts Price, making this arrangement a shoe-in for Hebei's team. Hebei Iron & Steel has been looking for precisely this kind of setup and the quality of the ore coming out of Kami is superb, so the approvals required on the agreements by the PRC government should go very smoothly.

Alderon has agreed not to solicit or approve any other transactions for 75 days and is entitled to terminate both the subscription agreement and transactions proposed in the definitive agreements if Hebei can't get the PRC to sign off in the next 90 days (and Alderon enters into an alternate transaction proposal, provided Alderon pays Hebei a termination fee of C$10.25mm). The subscription and definitive agreements are also subject to approval by the TSX and NYSE Amex. Hebei obtains the right to nominate two directors to the AXX Board via the private placement and Alderon has also granted a pre-emptive right for Hebei to maintain its interest in the company in certain circumstances.

Tech Start-ups Test Gaming Talent in Applicants

For one day last month, talented engineers had a chance to win $100 in a minute. All they had to do was solve a programming bug — one that could be found in a standard college textbook — in 60 seconds or less.

By the end of the day, 81 out of 385 contestants had each won $100 — and Quixey, a startup in Silicon Valley, had identified many more talented engineers to recruit to join its fast-growing team.

It's a strategy that Quixey and other high-tech startups have begun to deploy as they compete against the likes of Google and Facebook to attract and hire coveted software engineers. With the technology industry booming (or at least bouncing back), some technology companies are dangling perks such as free food, gym memberships, and stock options. For others, they're looking to set themselves apart by tapping into people's gaming instincts.

"It's a competitive environment for hiring engineers," said Liron Shapira, chief technology officer and co-founder of Quixey, who came up with the idea. "We wanted to distinguish ourselves and get our name out there."

Of course, challenging applicants with puzzles and brain teasers is not entirely new. Google has famously asked quirky questions of its job interviewees. And Facebook has invited prospective developers to submit solutions to programming puzzles posted on its site. But as the battle for talented engineers heats up, startups that want to stand out to prospective employees are giving the idea a new twist.

With $3.8 million in funds raised from the likes of Google chairman Eric Schmidt's Innovation Endeavors, Palo Alto's Quixey has been aggressively beefing up its engineering crew. But traditional recruiting, such as hitting college job fairs and hiring headhunters, wasn't enough. The search engine for apps started the Quixey Challenge in November. To qualify even to participate in the contest, engineers must first solve three practice problems ahead of time.

On the big day, held monthly, they face the one-minute challenge with a Quixey operator on the line. All the winners are automatically invited to interview with Quixey. The startup also identifies other potential candidates through the initial screening. All told, Quixey has interviewed more than 150 candidates it found through the contest. From the December challenge alone, it hired three full-time engineers and three college interns.

"There's so much competition to recruit from well-known sources of engineers in Silicon Valley," Shapira said.

The Quixey Challenge allows the startup to throw a wider net.

"The biggest bottleneck is starting the first conversation with somebody," he said. "Once we're talking to them, we have a lot of success."

Now the Quixey Challenge has become so popular that it has limited contestants to U.S. residents and those who haven't won before.

Another startup, New York's SeatGeek, also found that creating a challenge let it find candidates it might not have otherwise met. Something about the challenge whet their appetite.

"You already know they're intellectually curious," said SeatGeek CEO Russell D'Souza. "The applicants who fill out the hiring challenge are the ones who are talented and already have a job." SeatGeek introduced its first challenge in late 2010 when it asked prospective engineers to hack into its site to submit their resume. It worked so well — for one position, it received more than 100 high-qualified applicants — that it now asks all prospective programmers to do it. The stellar ones can complete the task in about 10 minutes. For those who take too long or just can't hack it, well, SeatGeek isn't interested in them.

More recently, SeatGeek decided to apply the same strategy to find and hire non-engineers, including a new communications director, sales director and even its office manager. For the communications job, contenders had to analyze a set of SeatGeek data, publish a sample blog post and promote it via social media. Office manager candidates took a basic Excel test. Ultimately, the kinds of people these challenges attract are the ones that the startups want to hire. Said Liron, "The best engineers are looking for a challenge. They want to slay dragons."

US Stocks Stumble on Consumer Survey & China GDP Results

"The market dropped because China's economy is slowing down more than expected," said Jim Sloan of Jim Sloan & Associates, a Houston-based money manager.

"Everybody's worried and everybody's unsure if the global economy can stand on its own, and China is a big part of global growth. If it slows too rapidly, that would create a lot of pain. I don't think it will, but there's uncertainty," said Alan Skrainka, chief investment officer at Cornerstone Wealth management LLC. Still, "after an explosive 30% rise we were due" for a correction, said Skrainka of the market's climb from its October lows.

The Dow Jones Industrial Average fell 136.99 points, or 1.1%, to close at 12,849.59, leaving it down 1.6% from the prior week, its most substantial weekly hit since the middle of December. Dow component J.P. Morgan Chase & Co. reported a larger-than-expected profit in the first quarter, the first major U.S. bank to report results for the quarter. Its shares lost 3.6%.

The S&P 500 dropped 17.31 points, or 1.3%, to 1,370.26, off 2% from the week-ago close, with financial and technology faring the worst and utilities and consumer staples the best performers among its 10 industry groups.

Google Inc. shares were among those hit, down 4.1% in its worst drop since late January, as corporate-governance entities voiced concern about the most recent effort by the online search engine's founders to retain control. Google detailed Thursday a plan that allows it to issue new shares without diluting the voting power of founders Larry Page and Sergey Brin.

The Nasdaq Composite fell 44.22 points, or 1.5%, to 3,011.33, leaving it down 2.3% from last week's close. The indexes also fell last week, the first back-to-back weekly losses for the S&P 500 and the Nasdaq of the year.

For every stock rising roughly three fell on the New York Stock Exchange, where 771 million shares traded. Composite volume on the Big Board came to 3.5 billion. Major commodity prices fared no better.

Oil and gold prices fell, with crude futures falling 81 cents, or 0.8%, to finish at $102.83 a barrel. Gold futures for June delivery fell $20.40, or 1.2%, to settle at $1,660.20 an ounce on the New York Mercantile Exchange.

The Thomson Reuters/University of Michigan's initial index of consumer sentiment declined in April to 75.7 from 76.2 last month. A separate report, from the Labor Department, had consumer prices climbing 0.3% in March after a 0.4% rise the prior month.

China's National Bureau of Statistics on Friday said the nation's annual rate of economic growth slowed in the first quarter to 8.1% from 8.9% during the prior three months. Rising borrowing costs in Spain also weighed on sentiment.

VLOV Posts Solid Q4, FY2011 Financial Performance

VLOV, a men's lifestyle apparel designer in the People's Republic of China, announced its financial results for the three and 12 months ended December 31, 2011, reflecting record revenue and increased brand awareness. (All amounts in thousands, in U.S. dollars, except for percentages).

The company reported full year 2011 net sales at $88,826, an increase of 20.3 percent compared with net sales of $73,834 reported for 2010.

Total cost of sales for 2011 was $50,064, an increase of 18.1 percent compared to total cost of sales of $43,863 reported for the comparable 12 months of 2010. Cost of sales as a percentage of net sales decreased to 56.3 percent of total net sales for 2011 from 59.4 percent of total net sales for 2010. Gross margin as a percentage of net sales increased to 43.6 percent for 2011 compared to 40.5 percent for 2010.

Net income for 2011 was $13,928, a decrease of 7.0 percent compared to net income of $14,986 reported for 2010. Adjusted net income (non-GAAP) increased by 5.1 percent to $13,289 compared to adjusted net income of $12,635 reported for 2010.

As of December 31, 2011, VLOV had $14.7 million in cash and cash equivalents; $56.4 million in current assets; and $14.0 million in total liabilities. As of April 10, 2012, VLOV had $23.6 million in cash and cash equivalents.

"Fiscal 2011 was a year of important accomplishments and successes," Qingqing Wu, chairman and CEO of VLOV stated in the press release. "We had record revenue while broadening global awareness of our brand by presenting at Mercedes Benz Fashion Week in both Beijing and New York City."

For the fourth quarter ended December 31, 2011, VLOV reported a 25.4 percent increase in net sales to $31.0 million; gross margin of 44 percent; and adjusted net income (non-GAAP) of $4.3 million, or adjusted earnings per share of $0.55.

"We were able to achieve significant growth in both revenue and earnings during the fourth quarter despite fewer store locations collectively operated by our distributors. We remain committed to working closely with our distributors who have been extremely pleased with our initiatives to build VLOV's global brand image and who are making investments to further elevate their VLOV stores. We also plan to open additional stores in Fujian and most importantly, continue to provide our customers with fashion-forward designs that embody their successful lifestyle," Wu stated.

VLOV sells its products through distributors in 393 points of sale (POS) throughout China. The company currently owns and operates 20 stores in Fujian Province: 13 store locations acquired June 30, 2011, and seven additional stores opened since the acquisition.