U.S. Jobless Claims Rise; Retailers Same Store Sales Surge

Arthi Gupta
06 Jan, 2011
New York City

U.S. indexes dropped after weekly jobless claims rose 18,000 and retailers reported sharpest same store sales increase in several years. U.S. home prices are estimated to fall further in 2011. Limited Brands, Walgreen and Costco and Pier-1 Imports reported higher sales.

[R]9:35 AM New York – U.S. indexes dropped after weekly jobless claims rose 18,000 and retailers reported sharpest same store sales increase in several years. U.S. home prices are estimated to fall further in 2011. Limited Brands, Walgreen and Costco and Pier-1 Imports reported higher sales.[/R]

U.S. indexes traded lower after initial jobless claims rose and retailers reported same store sales increased 6%. Investors are also looking for the confirmation of a job market recovery after the release of increase in private sector jobs yesterday.

Asian markets traded mixed but European markets advanced on upbeat economic data.

Thomas Hoenig, President of the Federal Reserve Bank of Kansas City said barring unexpected surprises, ""the recovery should gain momentum, which will encourage hiring and slowly bring down the unemployment rate.""

U.S. Jobless Claims Rise

The U.S. Labor Department said initial jobless claims rose modestly in the week ended January 1.

The claims rose 18,000 to 409,000 from the previous week''s revised figure of 391,000.

The Monster employment index for the U.S. increased in December for the eleventh consecutive month, Monster Worldwide said today.

The employment index rose 13% annually in December. However, the indicator slipped to 130 in December from 134 in November.

The US home price slump is expected to continue through 2011, a property research firm said on Thursday.

Clear Capital said home prices fell 4.1% in 2010, with prices increasing 9.7% between March and August only to be followed by a 9.4% slump over the last four months of the year.

The firm forecast a further 3.7% decline for home prices in 2011, with cities such as Virginia Beach, New Haven, Tucson, Dayton and Jacksonville expected to see double-digit decline.

On the other hand, home prices are expected to rise in Washington, Houston, Honolulu, Memphis and Columbus.

CapitalSource Contemplates Sale

CapitalSource, Inc., the commercial reportedly hired a financial adviser to explore a possible sale of the company.

The Maryland-based CapitalSource has been in private talks with potential buyers including large banks for the past few weeks. It has now reportedly hired JPMorgan Chase & Co. to advise it on available options and to find a buyer.

Commission Blames BP for Oil Spill

The National Oil Spill Commission stated that the primary cause for the blowout at Macondo oil well controlled by BP Plc was the result of decisions and a failure of management at BP and its contractors Halliburton Co., and Transocean Ltd.

Google Gets Temporary Court Order

Google Inc. was granted a temporary court order stopping a $49.3 million contract for an e-mail system awarded to Microsoft Corp. by the U.S. Interior Department, according to media reports.

In a law suit filed two months ago, Google accused the government agency of a bias in favor of Microsoft in deciding to use Microsoft''s e-mail and collaboration tools for its employees as part of government''s move to web-based application.

Goldman Sachs Sells Stake in Accordia Golf

Accordia Golf Co., Ltd., the Japanese golf course operator said today that financial services firm Goldman Sachs Group Inc. will sell its 44.7% stake in the company to public. Goldman Sachs holds the stake through an indirect subsidiary, South Wind Realty Finance Cayman Co.

Pioneer Natural Announces Sale of Tunisia Subsidiaries

Pioneer Natural Resources Company today announced that the company entered into a purchase and sale agreement with a wholly-owned subsidiary of OMV AG to sell all of the stock of Pioneer''s Tunisia subsidiaries for cash proceeds of $866 million.

Earnings Review

A. Schulman, Inc. ((SHLM)), the supplier of plastic compounds and resins said first quarter net sales surged 37% to $495.4 million, from $362.9 million in the same period last year. Net income in the quarter slumped 46% to $9.2 million or 29 cents per diluted share, compared to net income of $17.0 million or 65 cents per share last year.

BJ''s Wholesale Club, Inc. ((BJ)), the warehouse club operator reported comparable club sales rose 3.8% for December 2010, including a 2.4% contribution from gasoline sales. The retailer also reported total monthly sales rose 7.3% to $1.25 billion, from $1.16 billion in December 2009.

Costco Wholesale Corporation ((COST)), the membership warehouse operator reported higher comparable sales and net sales for December 2010.

For the five-week period ended on January 2, total company comparable sales rose 6%. The results included the company''s Mexico operations. The company reported December net sales rose 11% to $9.19 billion, from $8.26 billion in the similar month last year.

Limited Brands, Inc. ((LTD)), the apparel company reported a 5% increase in its December comparable-store sales compared with the five weeks ended January 2. The company reported net sales of $1.79 billion for the five weeks ended Jan. 1, compared to net sales of $1.66 billion last year.

Pier 1 Imports, Inc. ((PIR)), the retailer specializing in imported home furnishings and decor said its December comparable store sales grew 10.3% for the five-week period ended January 1, 2011 compared with an increase of 8.6% last year.

Resources Connection, Inc. ((RECN)), the professional service company reported second quarter revenue increased 14.0% to $138.53 million from $121.53 million last year. Net income generated in the quarter was $17.47 million or 38 cents per diluted share, compared to a loss of $1.91 million or 4 cents per share in the previous year.

RPM International Inc. ((RPM)), the company that manufactures and markets high-performance coatings, sealants and specialty chemicals stated second quarter net sales slipped 3.8% to $826.34 million from $858.65 million last year. Net income in the quarter dropped 12.7% to $48.79 million or 38 cents per diluted share, compared to net income of $55.89 million or 43 cents per share a year ago.

Ruby Tuesday, Inc. ((RT)), the casual dining restaurants operator said second quarter total revenue rose 6.2% to $290.45 million from $273.46 million in the same quarter last year. Net income in the quarter surged 1050% to $4.6 million or 7 cents per diluted share, compared to $0.4 million or 1 cent per share for the year-ago quarter.

Walgreen Company ((WAG)), the drugstore chain operator reported a 2.8% increase in comparable store sales for the month of December, despite the negative impact of calendar day shifts and generic drug introductions. Net sales for the month grew 7.5% to $6.81 billion, from $6.34 billion for the same month in 2009, helped in part by the performance of Duane Reade stores.

Worthington Industries, Inc. ((WOR)), the metal processing company reported second quarter net sales grew 30% to $580.68 million from $447.98 million in the prior-year period. Net income in the quarter dropped 38% to $14.47 million or 20 cents per diluted share, compared to net income of $23.25 million or 29 cents per share in the year-ago period.