They've got Legs

David Glenn is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Yum Brands, corporate parent of KFC reported it expects its overseas profits to drop like a greasy drumstick in the wake of a scandal involving food safety. KFC had once been the poster child for businesses operating inside of China's complex maze of laws and diverse culture. Yum management sees no growth in established outlets, until at least the fourth quarter.

Yum had earlier reported 6% drop in fourth of last year. Management is in full damage control mode, and speak of the scandal only as "adverse publicity." The Chinese public considers it a food safety issue, after some KFC poultry was found tainted with a chemical residue. In January, same store sales dropped 37% putting an explanation point on the seriousness of the issue.

 Yum needs to come up with a better answer besides, um…

Is it wrong to go from restaurants to mice? Walt Disney Company posted better than expected quarterly earnings. The media mega-corp. posted earning of 79 cents per share, 3 cents better than expected earnings of 76 cents.

 Disney anticipates a bright future “in a galaxy far, far away….” after signing director J.J. Abrams for the first installment of the Disney Company's "Star Wars" franchise it purchased last year from Lucas Film. The first of the new Disney "Star Wars" features isn't due to reach theaters until 2015. If you were 20, when you watched the first "Stars Wars" episode back in 1977 by 2015, you'll be 58 when this new release hits the theaters. It won't simply be about land speeders or of X-wing fighters, but of legs?

Can the "Star Wars" franchise defy gravity and demographics? Well, since our theme today is legs. KFC's are possibly tainted, Disney's are possibly over the hill but then, there's Leggett & Platt. The company is 128 years old and operates 19 factories with 19,000 employee – partners. Last July, Leggett & Platt's stock price had dipped below $20.00 per share, today it is knocking on the door of $30 per share.

 The company has been diversified into a variety of markets, manufacturing drawn steel wire, office furniture and automotive seating systems. It also supplies industrial bedding machinery, carpet underlay and industrial power foundations. Leggett & Platt's operating income rose from $177 million in 2010 to $228 million in 2012. The company is operating on a Gross Profit Margin Quarterly of nearly 21%.

Although not a household name Leggett & Platt products are found in almost every home. In 1885, Leggett & Platt Company patented the coiled bedspring and began the modern bedding industry. According to the Staton Institute, Leggett & Platt is rated as "One of America's Finest Company's". Leggett & Platt are also listed on the S&P 500 Dividend Aristocrats; possessing the 13th longest string of Annual Dividend increases.

It is all about legs, but also about perception. Yum brands have a problem which the company will only addresses as a “media” problem. The Chinese consumers don't see it that way and Yum will have to learn a lesson the hard way. Walt Disney is a mega – corp. with fingers in every pie. It bought the "Star War's franchise with extra cash on hand and with world-wide distribution can most likely turn a profit, no matter what it turns out. Obviously, Lucas film thought that it was the time to sell and only Disney had the money to buy.

It sure does make a company like Leggett & Platt look appealing, a genuine industrial line up of quality products. Leggett & Platt is a company which makes money the old-fashioned way by making things. Their customer base is everyone who sleeps in a bed. Leggett & Platt don't guess about the future, they do as they have done for over 128 years.

Daveparts has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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