U.S. Retail Sales Up; Budget Deficit Narrows

Arthi Gupta
14 Sep, 2010
New York City

U.S. stocks gained after retail sales rose 0.4% and budget deficit narrowed to $90.5 billion in August. MedAssets agreed to buy Broadlane Group for $850 million. Churchill Downs agreed to acquire Harlow''s Casino Resort & Hotel for $138 million.

[R]10:10 AM New York – U.S. stocks gained after retail sales rose 0.4% and budget deficit narrowed to $90.5 billion in August. MedAssets agreed to buy Broadlane Group for $850 million. Churchill Downs agreed to acquire Harlow''s Casino Resort & Hotel for $138 million.[/R]

Asian and European markets traded mixed.

The U.S. Treasury Department noted the U.S. budget deficit of $90.5 billion in August compared to a deficit of $103.6 billion in the same month a year ago. The deficit was narrower than expected but still the 23rd consecutive monthly deficit and points to a $1.3 trillion deficit for the year, the second largest on record.

According to a report released by the U.S. Commerce Department today, retail sales increased by slightly more than expected in the month of August, with higher sales of food and clothing offsetting a drop in auto sales.

The retail sales increased 0.4% in August following a revised 0.3% increase in July. Excluding a 0.7% decrease in sales by motor vehicle and parts dealers, retail sales rose by a substantial 0.6% in August compared to a 0.1% increase in July.

Julia Gillard has been sworn in Australia''s Prime Minister leading the country''s first minority government in the post-World War II era. Twenty-nine other Ministers and 12 Parliamentary Secretaries followed suit.

Japanese Prime Minister Naoto Kan retained leadership of the governing Democratic Party of Japan securing 721 points out of the total 1,222 points at stake. Kan reiterated his top priority was to rescue the nation''s economy out of decades-long deflation and create employment.

MedAssets Inc. entered into a purchase agreement to acquire The Broadlane Group for about $850 million in cash, with $725 million to be paid at closing and $125 million to be paid in January 2012.

MedAssets expects to achieve at least $20 million of expense-based synergies in 2011. The company expects this transaction to be about $0.05 to $0.10 accretive to non-GAAP cash earnings per share in 2011, excluding acquisition-related amortization, acquisition-related expenses.

Churchill Downs Inc., the horse racing course operator said it would buy Harlow''s Casino Resort & Hotel in Greenville, Mississippi, in an all-cash deal valued at about $138 million with a view to expand its racing, gaming and online business units. The company expects the acquisition to be accretive to its reported earnings per share for the full year.

BP re-started relief well drilling operations from the Development Driller III for permanently sealing the blown-out Gulf of Mexico oil rig. The resumption of drilling followed the successful installation of a lock down sleeve, a mechanical device that secures the leaking well''s casing hangar.

Earnings Review

BestBuy Co., Inc. ((BBY)), the specialty retailer of consumer electronics said second quarter revenue edged higher 3% to $11.34 billion, from $11.02 billion in the prior-year quarter. Net earnings in the quarter surged 61% to $254 million or 60 cents per diluted share compared with net earnings of $158 million or 37 cents per share in the year-ago quarter. For fiscal 2011, the company now expects revenue of about $52 billion.

Contango Oil & Gas Company ((MCF)), the oil and gas explorer reported fourth quarter sales increased 13.5% to $41.2 million from $36.3 million in the same quarter last year. Net income in the period surged 196% to $15.4 million or 95 cents per diluted share, compared to net income of $5.2 million or 32 cents per share for the year-ago quarter.

Cracker Barrel Old Country Store, Inc. ((CBRL)), the chain of restaurant reported fourth quarter total revenue increased 2.8% to $612.48 from $595.60 million in the fourth quarter of fiscal 2009. Comparable store restaurant sales for the period increased 2%, including a 1.9% increase in average check. Net income in the quarter increased 20.3% to $27.41 million or $1.14 per share compared with net income of $22.78 million or 99 cents per share in the prior-year period.

Farmer Brothers Co. ((FARM)), the manufacturer, wholesaler and distributor of coffee products reported fourth quarter net sales fell 5.4% to $106.96 million from $113.07 million in the year-ago quarter. Net loss in the quarter narrowed 18% to $21.0 million or $1.40 per share, compared with a net loss of $25.6 million or $1.76 per share in the prior-year quarter.

H.B. Fuller Company ((FUL)), the adhesives and specialty chemicals maker said third quarter net revenue rose 7.4% to $338.57 million from $315.33 million in the same quarter last year, as increased volume, higher average selling prices and acquisitions offset unfavorable foreign currency translation. Net income in the quarter declined 46% to $19.0 million or 38 cents per diluted share, compared to net income of $35.4 million or 72 cents per share for the year-ago quarter.

Meridian Bioscience, Inc. ((VIVO)), the life science company anticipates fiscal 2010 net sales between $165 million and $170 million and per share earnings to be between $0.77 and $0.82, excluding the impact of Bioline acquisition costs.

Molina Healthcare, Inc. ((MOH)), the multi-state managed care organization raised its earnings per share outlook for fiscal 2010. The company now expects earnings of $1.70 per share, up from its prior estimate of $1.51 per share.