Tabcorp (ASX:TAH) is a diversified entertainment group specialising in gambling and a variety of other entertainment products.

TAH has reported a 2.7% on-year rise in 1Q12 revenue to $759.4 million.

All of TAH’s divisions recorded growth in the quarter, reflecting the group’s well executed investments in those businesses.

TAH has been one of the shares to buy today on the back of the update.

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David Jones (ASX:DJS) is Australia’s second-largest department store retailer.

The company operates a chain of over 35 retail stores and primarily sells upmarket brands of clothing, accessories and homewares and David Jones-branded merchandise.

Like many other retailers, DJS has been one of the shares to sell in recent times due to challenging trading conditions hurting its sales.

Today DJS reported an FY11 net profit of $168.1 million, down 1.5% from FY10 but in line with the company’s guidance.

Sales were down 4.4% on-year, which DJS attributed to a tough retail environment.  The lower sales were offset by a lower cost of doing business.

DJS forecast no improvement in 1Q12 sales from the 4Q11, but reiterated its 1H12 guidance of a 15% – 20% fall in net profit.

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Harvey Norman (ASX:HVN) is an integrated franchisor, retailer and property entity, operating a slew of retail stores under three leading brand names: Harvey Norman, Domayne and Joyce Mayne.

HVN has been one of the shares to sell in recent times, with the company buckling under the weight of the strong Aussie dollar and declining consumer sentiment.

HVN’s FY11 net profit climbed 9% to $252.3 million.  A final dividend of 6 cents was declared.

Sales were down 1.7% on-year, with HVN suffering from the strong AUD and weak consumer sentiment.

HVN was cautious about the FY12 outlook, citing global volatility, higher utility costs, subdued equity markets and a possible pickup in domestic unemployment.

However the group was anticipating an increase sales leading up to the Rugby World Cup and London Olympics.

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Aristocrat Leisure Ltd (ASX:ALL) develops, manufactures and distributes gaming machines and systems in Australia, New Zealand, the Americas, Asia Pacific, South Africa and Europe.

ALL is the largest gaming machine company in Australia and the world’s second-largest slot machine maker.

ALL has been one of the shares to sell over the past two years given the macroeconomic challenges it has faced.

Today ALL reported a 1H11 net profit of $24.9 million, down 50% on-year due to the strong AUD and weak global market conditions.

ALL maintained its FY11 guidance of 10% – 20% net profit growth, saying new game releases in North America and Japan, and recent releases in Australia, would partially offset the impact of the strong AUD.

An interim dividend of 2.5 cents was declared.

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JB Hifi (ASX:JBH) stores offer the world’s leading brands of hi-fi, speakers, televisions, DVDs, cameras, car sound, home theatre, computers and portable audio and specialist hi-fi products.

JBH is Australasia’s fastest growing and largest retailer of home entertainment, and boasts one of the best low-cost business models in the retail sector.

Yet despite its growth, JBH has been one of the shares to sell in recent months as it contends with a soaring Aussie dollar and the growth of online retailing.

Today, JBH reported a 7.6% drop in FY11 net profit to $109.7 million.  A final dividend of 77 cents was declared.

The result was impacted by a $24.7 million write-down of its Clive Anthony stores, with underlying earnings actually rising 13.3% to $134.4 million.

Sales increased 8.3% despite challenging trading conditions, which JBH expects to persist into FY12.

Despite the uncertain outlook, JBH was anticipating 16 new stores to be opened in FY12 and sales to be 8% higher than the FY11.

The solid result has limited the falls in JBH’s share price today, with the stock so far outperforming the Australian share market.

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Harvey Norman (ASX:HVN) is an integrated franchisor, retailer and property entity, operating a slew of retail stores under three leading brand names: Harvey Norman, Domayne and Joyce Mayne.

Together, these stores sell computer hardware and software, furniture, bedding, electrical appliances, floor coverings, and kitchen and bathroom renovations and items.

Retailers were struggling over the global economic downturn, particularly hit throughout 2008 as high interest rates, climbing unemployment and sluggish consumer spending took a toll.

The trend is now continuing as external environmental pressures, and recent concerns that retail spending is slowing down in Australia has negatively hit HVN’s stock.

Pressure from a rising Aussie dollar and online retailing has seen HVN become one of the shares to sell in recent times.

Challenging market

We have already seen a slowing in consumer spending as rising interest rates put pressure on consumer spending. Making matters worse is the fact that the banks have raised interest rates by more than what the Reserve Bank (RBA) has done.

Yesterday, the RBA left the official cash rate at 4.75% against the backdrop of global market uncertainty.

The central bank noted that asset prices had softened in recent months and consumer demand was likely to remain weak in the near term.

We saw new home sales slumped 8.7% from May to June, as Australians grew worried over the global economy and the potential for further interest rate hikes.

The huge decline in home sales provides further evidence of a struggling housing market, and raises concerns over the impact of another rate hike on the economy.

Being also involved in furniture and other appliances, this news hurts HVN’s business.

All the major banks have signalled concerns over slowing credit growth and subdued business and consumer spending.

The effect has taken a toll on the most of the retailers. Recent jobs data showing a huge drop in full time jobs also presents further downside for the retailer.

The rising Aussie dollar has seen consumers shift towards purchasing products from overseas retailing websites. This has impacted on sales at the local retailers and has put pressure on prices and margins for operators like HVN.

Deflating profits

In February, Harvey Norman announced a 17% slump in 1H11 net profit to $131.7 million.  The fall in profit was attributable to price deflation, a strong Aussie dollar and the wet weather impact on sales.

Revenue grew 12.4% to $804.1 million however sales were impacted by consumer caution due to last year’s interest rate hikes.

HVN’s outlook was positive despite economic and market headwinds.  A final dividend of 6 cents was declared, down from 5 cents a year earlier.

HVN reported a 1.4% on-year increase in sales for the nine months ending March 31, 2011.

However, like-for-like sales fell 3.5% in the same period. HVN said the poor result was attributable mostly to adverse currency movements.

Looking ahead

A weak consumer environment implies sales growth is likely to remain subdued in the medium term.

Retail figures continue to disappoint on the back of subdued business and consumer figures.

Other factors such as increasing online retailing due to a stronger Aussie dollar have hurt the sector.

The rise and rise of online retailing has also hurt HVN and its peers. Gerry Harvey has been particularly vocal about the threat of online retail to his business model and continues to put pressure on the government to take action.

Unfortunately for the retailers, with the Aussie dollar as strong as it is, shopping online is becoming increasingly cheaper.

Harvey Norman will thus be one of the stocks to watch in the near future, as it is likely to continue facing these headwinds.

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Kathmandu (ASX:KMD) is a clothing and equipment provider for the travel and adventure market.

Today, KMD reported a 24.5% increase in sales for the FY11, defying what has generally been a gloomy year for retailers.

Kathmandu faced tough trading conditions, but was able to grow sales due to better inventory management, favourable weather patterns and healthy results from its new stores.

KMD has been one of the hot stocks in what has otherwise been a bearish day for the Australian share market.

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Austar United (ASX:AUN) is the largest provider of pay TV in regional and rural Australia, with around 730,000 customers receiving the company’s primary service of satellite digital television.

AUN was dealt a blow on Friday after the ACCC blocked Foxtel’s takeover for the group.

In blocking the bid, the competition regulator warned that a Foxtel-Austar tie-up would substantially reduce competition in the pay-TV market.

The ACCC denied that the decision was related to the Newscorp (NWS) phone hacking scandal.  Foxtel is 25% owned by NWS.

A final decision on the bid will be made on 8 September, although it is unlikely the ACCC will change its mind.

AUN shares sank 16.2% on the day, making it one of the worst performers in the stock market.

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News Corporation (ASX:NWS) is a diversified media giant with interests all over the world and in most facets of media.

It is also considered among the global market’s blue chip stocks.

NWS thus has a wide range of household name services and assets under its belt, including Fox Filmed Entertainment, Twentieth Century Fox Television, Fox Sports, book publisher Harper Collins, the New York Post in the US, web services Photobucket and MySpace, and Dow Jones.

The news giant has made headlines lately following its $12.48 billion bid for pay television operator British Sky Broadcasting Group.

It is also embroiled in a British media scandal following some phone hacking allegations.

NWS continues to suffer from declining earnings and the negative impact of a stronger Aussie dollar.

Scam doldrums

NWS has been experiencing heightened scrutiny amid phone hacking allegations. Pressure on the company has escalated to a political level and some lawmakers are now demanding the deal be blocked.

Allegations of phone hacking and illegal payments at News of the World, one of NWS’s British newspapers, resulted in the paper being shut down.

NWS feels its proposed acquisition will not lead to there being insufficient plurality in news provision in the U.K.

The matter has now been referred to the Competition Commission with immediate effect after the US company withdrew undertakings to satisfy antitrust requirements.

The undertakings included spinning off BSkyB’s 24 hour news channel, Sky News, to alleviate concerns over the extent of its influence in the U.K. media landscape.

A decision could take up to 32 weeks but with the current allegations, the matter might be dragged even longer.

Fresh allegations have also seen another one of NWS’s British newspapers, The Sun, come under fire.

Monetising the net

NWS recently announced it will start charging for access to the online version of The Australian newspaper.

Limited content will be available to the public, with full access costing $2.95 a week.

This follows the model News Corp introduced after it purchased the famed Wall Street Journal in 2007.

News Corporation and fellow media giant Fairfax have introduced high quality online versions of their flagship newspapers in the last decade and if the paid access model works with The Australian, it is expected other key newspaper sites across the stables will start charging for their content.

Earnings not newsworthy

In May, NWS advised that third quarter net profit fell 24% from a year earlier to $639 million.

Net income was $639 million (24 cents a share), down from $839 million (32 cents a share) on year.

The result came on the back of a 6% decrease in revenue to $8.26 billion, which NWS attributed to weakness in its filmed entertainment and publishing divisions.

Weighing on the results was a $125 million charge in its publishing division stemming from a legal settlement and declines in the media company’s movie and newspapers businesses.

However, the cable division was a bright spot, with operating earnings rising 25% on-year amid stronger advertising revenue.

The poor profit result, which missed analyst estimates, saw NWS shares drop 3.4% on the day.

Looking ahead

NWS seems to be in a world of trouble at the moment following the phone hacking scandal.  It is also being considered among the shares to sell, and has recently been a major underperformer in the Australian stock market.

The company is already facing a loss of revenue through the shutting down of its News of the World newspaper.

Current fears are that the scandal will spread to its other newspapers along with a public and political backlash.

In a world where media is already a tough industry, the last thing NWS needs is a bad reputation.

NWS is currently working on introducing charges to online newspaper access. The latest scandal certainly does not help its cause.

With the proposed BSkyB acquisition in limbo, a deepening scandal and declining earnings, we feel NWS will remain under significant pressure.

A strong Aussie dollar will also add to the company’s demise as its US dollar earnings convert to less AUD.

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Invocare (ASX:IVC) is the largest funeral, cemetery and crematorium industry operator in Australia and Singapore.

It operates national brands such as White Lady, Simplicity and Singapore Casket.

The company operates a network of 180 funeral homes and 12 crematoria and cemeteries across Australia.

This network of facilities makes IVC the largest participant in the “death care” industry, performing over 20% of the burials in Australia. The majority of other funeral providers are well-established, small family operations.

Though IVC already has a stranglehold on a defensive industry that is certain of future business, it has continued to grow its market share over the last year via acquisitions.

It recently completed its latest acquisition which saw its shares surge as the market cheered the news.

Takeover completed

IVC recently completed the acquisition of Bledisloe Group. Bledisloe is the largest operator in New Zealand and one of the top four in several Australian markets.

It has revenues of approximately $60 million and maintainable EBITDA of approximately $11 million.

Invocare expects Bledisloe’s post synergy annual contribution to its EBITDA result to be approximately $14.4 million.

This move increases IVC’s presence in markets it was previously light on. We feel the acquisition is a good move for IVC going forward.

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Profits are alive

In February, IVC reported a 43.2% slide in FY10 net profit to $27.4 million.  Excluding the impact of a change in accounting policy, profit increased 11.9% on-year to $34.2 million.

Revenue grew 4.6% to $267.4 million, which was attributable to increased sales of cemeteries and crematoria memorials.

IVC declared a final dividend of 15.25 cents per share.

For the four months to 30 April 2011, total group sales revenue was up 6.5%. Average revenue per funeral was up 5.7% supported by a 4.5% price increase.

The impressive earnings trend looks set to continue as the business continues to engage in earnings accretive investments.

Looking ahead

IVC’s defensive characteristics give it an edged in the current market conditions.

The company is targeting approximately 6%-7% annual revenue growth. Its pillars of growth include favourable demographics (ageing population), consistent annual pricing improvements and market share improvements.

IVC is currently working on prepaid funerals to lock in future market share. The move gives clients guaranteed future service at today’s price.

The company has around $10 million debt headroom following the completion of the Bledisloe takeover.

Unfortunately the number of deaths is a key variable impacting FY results. IVC has no control over this part of the business.

However, with increasing market share, the prepaid service and price increases, we feel IVC will continue to maximise returns.

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