U.S. Jobless Claims Rise, Retailers Drive December Sales on Deep Discounts

Nichole Harper
03 Jan, 2013
New York City

Stocks on Wall Street traded sideways after weekly jobless claims rose more than expected and private sector added 215,000 net new jobs in December. For the year, U.S. economy has added 151,000 net new jobs. Retailers reported comparable sales increased 4.5% on deep discounting.

[R]12:45 PM New York – Stocks on Wall Street traded sideways after weekly jobless claims rose more than expected and private sector added 215,000 net new jobs in December. For the year, U.S. economy has added 151,000 net new jobs. Retailers reported comparable sales increased 4.5% on deep discounting.[/R]

Stocks in New York traded mixed after retailers reported healthy gain in sales but only after deep discounts and weekly jobless claims rose more than expected.

On Wall Street, the S&P 500 index and the Nasdaq index opened lower after surging close to 2% in yesterday’s session. Stocks rebounded after first hour of trading.

Weekly Jobless Claims Rise

Initial claims of weekly jobless benefits increased at the end of last week to 372,000. The claims increased more than expected by 10,000 from the revised data for the previous week.

However, the year-end weekly claims data are estimates from the Labor Department when several state government offices are closed.

Weekly claims for the week ending December 15 were revised up to 362,000 from original estimate of 350,000.

Separately, private sector added net 215,000 jobs in December according the latest estimate conducted by ADP, payroll processing firm. The December month data are less reliable because of year-end accounting.

Holiday Sales Rise on Discounts

Major retail chains report higher sales in December after shoppers held out for deep discounts.

Data tracked by 123jump.com research team indicated same store sales at 17 chains increased 4.5% in December from a year ago month.

Costco Wholesale Corp reported monthly comparable sales increased 9% and Nordstrom reported monthly sale increase of 8.6%.

Ross and TJX Cos. both reported same store sales increase of 6% in December but Target reported flat sales in the month.

Stocks in Review

Family Dollar Stores, Inc. ((FDO)) plunged 12.8% or $8.20 to $55.84 after the discount store said net sales in the first quarter ending on November 24 climbed 12% to $2.42 billion from $2.15 billion in the same period of last year. Comparable store sales for the quarter increased 6.6%.

Net income in the quarter edged down to $80.28 million or 69 cents a diluted share compared to $80.35 million or 62 cents a share a year ago earlier.

The company expects comparable store sales in the second quarter to increase between 4% and 5% and earnings per diluted share in the range of $1.18 to $1.28, lower than market expectations.

The company lifted diluted earnings per share in fiscal 2013 between $3.95 and $4.20 from $3.58 in fiscal 2012 and comparable store sales to increase between 4% and 6%.

Hormel Foods Corporation ((HRL)) climbed 5.1% or $1.64 to $33.66 after the food products producer agreed to acquire the Skippy peanut butter business from Unilever United States Inc. The purchase price is nearly $700 million and expects acquisition to be accretive in fiscal 2013.

Limited Brands, Inc. ((LTD)) declined 6% or $2.81 to $44.59 after the specialty retailer reported comparable store sales increased 3% and net sales increased to $1.95 billion.

Macy’s, Inc. ((M)) gained 28 cents to $38.59 after the discount retailer reported total sales of five weeks ended on December 29 increased 3.6% to $5.10 billion and same store sales increased 4.1%.

Ross Stores, Inc. ((ROST)) soared 7.2% or $3.92 to $58.36 after the off-price retailer reported sales in December climbed 11% to $1.28 billion and comparable store sales for the month jumps 6%.

The retailer lifted fourth quarter earnings per share guidance to $1.05 to $1.06, from previous guidance of $.99 to $1.04.