U.S., World Indexes Drop; U.S. Retail Sales Improve

Arthi Gupta
11 Mar, 2011
New York City

U.S. indexes extend world market losses after Japan was struck with the strongest earthquake in three centuries that triggered 10-meter tsunami and warnings for 50 countries. U.S. retail sales rose in February. Ashford Hospitality venture acquired Highland Hospitality portfolio for $1.3 billion.

[R]10:30 AM New York – U.S. indexes extend world market losses after Japan was struck with the strongest earthquake in three centuries that triggered 10-meter tsunami and warnings for 50 countries. U.S. retail sales rose in February. Crude oil futures declined below $100 a barrel.[/R]

World markets slumped after a devastating earthquake, measuring 8.9 on the Ritcher's scale struck northern Japan triggering a tsunami and causing extensive damage and fires in Tokyo.

The largest earthquake to hit Japan for over a century according to Japan Meteorological Agency struck at 2:46 p.m. local time off the coast of Japan.

At least two hundred people have died in Sendai, the nearest city to the epicenter of the quake at 127 kilometer. Tokyo, about 300 kilometer from the offshore quake witnessed widespread damage and a loss of power for 4 million homes.

Tsunami waves as high as 10 meters high hit Japan's Miyagi and Fukushima prefectures, officials said.

Initial media reports confirmed “several hundreds dead” but given the scale of the devastation the death toll is expected to surge. As many as 50 nations on the periphery of the Pacific Ocean are expected to be hit with surging waves.

Philippines, Indonesia, Taiwan, the Pacific coast of Russia and Hawaii have received tsunami warnings.

First tsunami waves are expected to hit Hawaii around 4:30 a.m. local time and the entire West Coast of the U.S. is preparing for a surge in wave that is expected crest between 8:00 a.m. local time and early Saturday.

China Inflation at 4.9% in February

China’s inflation rate rose to 4.9% in February from the same period of previous year, the same rate of growth as seen in January, according to the National Bureau of Statistics.

Industrial production recorded a 14.1% rise in the first two months of 2011 following the 13.5% rise in December. The annual increase in production for February was 14.9%.

U.S. Retail Sales Improve

Retail sales in the U.S. expanded for the eighth straight month in February, according to the Department of Commerce on Friday.

Retail sales adjusted for seasonality and calendar rose 1% to $387.1 billion from January and up 8.9% from a year ago. December to January revised retail sales rose 0.3%.

The increase in retail sales also reflected the increased cost of gasoline, with gas stations showing a 1.4% increase in sales.

OPEC Estimates Crude Demand to Drop in Q2

The Organization of Petroleum Exporting Countries said in its oil market report for March estimated crude oil demand in the second quarter of 28.7 million barrels a day, a decline of around 400,000 barrels per day from the previous quarter.

Crude oil prices declined in New York trading to $99.78 a barrel after the quake hit Japan. The third largest economy in the world imports more than 70% its energy needs.

AIG Offers To Repurchase $15.7 Billion Securities

American International Group Inc. offered to pay $15.7 billion in cash to repurchase a portfolio of mortgage backed securities from a Federal Reserve rescue fund. The securities were acquired by the Federal Reserve Bank of New York as part of AIG's bailout in 2008.

Ashford Hospitality Venture Acquires Highland Hospitality Portfolio

Ashford Hospitality Trust, Inc. formed a new joint venture with an institutional partner to take ownership of the 28-hotel Highland Hospitality portfolio. The acquisition and restructuring were completed through a consensual foreclosure for total consideration of $1.277 billion.

Tomy Buys RC2 Corporation

RC2 Corp., the toys and games company will be acquired by Japan-based Tomy Co. Ltd. for $27.90 per share in cash or about $640 million, the two companies said. The acquisition will be through an all-cash tender offer and second-step merger.

Chevron Sells Pembroke Refinery, UK Assets to Valero Energy

Chevron Corp., the second largest U.S. oil company, agreed to sell its Pembroke refinery and other downstream assets in the UK and Ireland to Valero Energy Corp. for a total consideration of $1.73 billion, including $1 billion payment for inventory and other items.

General Motors CFO Steps Down

General Motors on Thursday said its Vice Chairman and Chief Financial Officer Chris Liddell would leave the company on April 1. Dan Ammann, currently Vice President, finance and Treasurer of the company, will succeed Liddell as finance chief on the same date.

AOL Slashes 20% Workforce

AOL, Inc. announced that it will slash nearly 20% of its work force or 900 jobs worldwide, including about 200 U.S. jobs, close on the heels of the closure of its acquisition of Huffington Post.

The acquisition rendered AOL's India operations redundant as there is overlapping of staff now. The efforts to reduce overlap between the two companies would reportedly save about $20 million in costs.

Earnings Review

Aeropostale, Inc. ((ARO)), the teen apparel retailer said fourth quarter net sales increased 5% to $839.3 million from $801.2 million in the same quarter last year. Same store sales decreased 3% compared to a 9% growth a year ago. Net income in the quarter declined 13.3% to $83.8 million or 95 cents per diluted share compared to net income of $96.6 million or 99 cents per share in the prior-year quarter.

Annual net sales increased 8% to $2.40 billion from $2.23 billion in the year-ago. Same store sales grew 1% over a 10% growth last year. For fiscal year 2010, net income climbed 0.8% to $231.3 million or $2.49 per share compared to $229.5 million or $2.27 per share in the previous year.

AnnTaylor Stores Corp. ((ANN)), the women's specialty retailer said fourth-quarter net sales increased 10% to $515.26 million from $469.14 million in the prior year. Net income in the quarter rose to $7.97 million or 14 cents per diluted share compared to net income of $41,000 or breakeven per share year ago.

Hibbett Sports, Inc. ((HIBB)), the sporting goods retailer said fourth quarter net sales increased 3.8% to $173.21 million from $166.82 million in the prior year. Net income in the quarter improved 6% to $12.46 million or 44 cents per diluted share compared to net income of $11.75 million or 40 cents per share in the comparable quarter a year ago.

National Semiconductor Corporation ((NSM)), the chipmaker said third quarter net sales fell 5% to $343.9 million from $361.9 million in the same quarter last year. Net income in the quarter increased 12% to $59.4 million or 24 cents per diluted share compared to net income of $53.2 million or 22 cents per share for the year-ago quarter.

Pall Corporation ((PLL)), the supplier of filtration, separation and purification technologies reported second quarter net sales increased 15.1% to $645.23 million from $560.40 million last year. Net earnings in the quarter rose 52.5% to $75.66 million or 64 cents per diluted share compared to net earnings of $49.62 million or 42 cents per share in the previous year.

Ulta Salon, Cosmetics & Fragrance, Inc. ((ULTA)), the beauty retailer reported fourth quarter net sales increased 19.5% to $473.66 million from $396.36 million last year. Net income in the quarter rose 49% to $30.10 million or 49 cents per diluted share compared to net income of $20.23 million or 34 cents per share in the previous year.