U.S. Indexes Lower; Barnes & Noble Soars, Fortune Sells Golf Business

Arthi Gupta
20 May, 2011
New York City

U.S. indexes traded lower after disappointing earnings from retailers. Merger news dominated trading. Fortune Brands sells Acushnet business to Korean consortium for $1.23 billion. Barnes & Noble received $1 billion buyout. Chrysler Group priced debt offerings to raise $7.5 billion.

[R]10:10 AM New York – U.S. indexes traded lower after disappointing earnings from retailers. Merger news dominated trading. Fortune Brands sells Acushnet business to Korean consortium for $1.23 billion. Barnes & Noble received $1 billion buyout. Chrysler Group priced debt offerings to raise $7.5 billion.[/R]

U.S. stocks opened lower as retailers were in focus and commodities declined. Gap Inc declined after it lowered its outlook and Barnes & Noble rallied after it received a buyout offer.

In global markets, Asian stocks fell and European indexes declined after euro area current account deficit narrowed in March. Stocks in Japan eased after the troubled Tokyo Electric Power Co reported a loss of $15.2 billion, the second largest loss in last ten years in Japan.

The U.S. economy experienced a temporary soft patch in activity during the first quarter of 2011, and there is still ""a considerable way to go"" before the employment levels meet standards set by the Federal Reserve, New York Federal Reserve Bank President William Dudley said at a gathering.

He noted improvements in the jobs market and suggested that a recent slowdown in manufacturing was the result of temporary supply disruptions caused by Japan''s earthquake in March.

Fortune Brands Sells Acushnet Business to Fila

Fortune Brands, Inc. agreed to sell its Acushnet business to a Korean consortium led by Fila Korea Ltd. and Mirae Asset Private Equity for $1.225 billion in cash.

The deal gives Fila ownership of the Titleist golf balls and high-performance golf clubs as well as FootJoy brand of golf shoes and gloves.

Chrysler Group Prices Debt Offerings

Chrysler Group LLC priced the offering of new secured senior debt notes and credit facilities to raise $7.5 billion to completely repay loans that it received from the U.S. and Canadian governments in the second quarter.

The company said the Notes will be issued in two tranches of $1.5 billion with principal amount of 8% Secured Senior Notes due 2019 and $1.7 billion with principal amount of 8-1/4% Secured Senior Notes due 2021.

Barnes & Noble Receives Offer from Liberty Media

Barnes & Noble, Inc., the bookstore chain received an acquisition proposal from Liberty Media Corp. for $17 per share in cash. The deal is estimated to be valued at $1 billion.

MOEX Settles Claims with BP

BP plc announced a deal with MOEX Offshore 2007 LLC and its affiliates to settle all claims between the companies related to the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. Under the settlement deal, MOEX USA Corp., the parent company of MOEX Offshore, will pay $1.07 billion to BP.

The British oil giant, in turn, will immediately transfer the payment to the $20 billion trust it established to fund individual, business and government claims, as well as the cost of the natural resource damages.

Earnings Review

Ann Inc. ((ANN)), the specialty retailer of women’s apparel, shoes and accessories said first quarter net sales rose 10% to $523.6 million compared with $476.2 million in the previous year. Net income in the quarter grew 21% to $27.32 million or 51 cents per diluted share compared to net income of $22.62 million or 38 cents per share last year.

Hibbett Sports Inc. ((HIBB)), the sporting goods retailer reported first quarter net sales rose 10.4% to $203.7 million from $184.5 million in the comparable period a year ago with comparable store sales rising 6.8%. Net income in the quarter increased 23.1% to $21.3 million or 76 cents per diluted share compared to net income of $17.3 million or 59 cents per share last year.

Yingli Green Energy Holding Co. Ltd. ((YGE)), the Chinese solar energy products maker reported first quarter total net revenues surged 40.9% to 3.45 billion yuan from 2.45 billion yuan in the first quarter of 2010. Net income in the quarter increased 93% to 368.3 million yuan from 190.88 million yuan in the previous year.

Earnings per share and per ADS grew to 2.29 yuan from 1.24 yuan in the first quarter of 2010.