Costco Sales Rise 9%

Elena
04 Jan, 2007
New York City

Retail companies will be in the spotlight on Thursday, due to the release of December same-store sales. Rainstorms and warmer winter weather are expected to have negatively influenced retailers

[R]8:00AM Retailers reported weaker-than-expected December same-store sales.[/R]
Retail companies will be in the spotlight on Thursday, due to the release of December same-store sales. Rainstorms and warmer winter weather are expected to have negatively influenced retailers’ holiday sales. The increasing popularity of gift cards and robust online shopping, which is not included in same-store results, are also considered to have hurt sales. The International Council of Shopping Centers is projecting that December same-store sales will rise at the low end of its 2.5% to 3.5% forecast.

Following Wal-Mart’s ((WMT)) report of better-than-expected same-store sales, Costco Wholesale and American Eagle Outfitters posted surprisingly strong data. Costco Wholesale Corp. ((COST)) said that December same-store sales rose 9%, higher than the projected 5.7% increase. Total sales rose 14% to $7.24 billion from $6.37 billion a year earlier. Costco stated that the current reporting period included 34 selling days vs. 33 a year earlier, providing a 3% boost to the latest data. J.C. Penney Corp. ((JCP)) also reported positive results, saying December sales at department stores open at least a year rose 2.6%, slightly higher than estimates of 2.4% growth. Total department store sales rose 4.2% to $2.96 billion.

Among retailers releasing disappointing results, Bebe Stores Inc. ((BEBE)) reported a 4% increase in sales at stores open at least a year, missing analyst estimates of an increase by 6.3%. Total retail sales for the five weeks ended Dec. 30 climbed 13.5% to $95.6 million. The apparel retailer cut its Q2 earnings forecast, due to lower-than-expected sales and higher-than-planned markdowns. Limited Brands Inc. ((LTD)) posted a 4% advance by its December same-store sales, coming in below expectations of a gain by 9.3%. Net sales for the period rose 6% to $2.03 billion.

Pier 1 Imports Inc. ((PIR)) said that December comparable sales dropped 10.7%, below forecasts for a 9.4% decline. Total sales fell 10.9% to $242.5 million. Wilsons The Leather Experts Inc. ((WLSN)) said Thursday that same-store sales slipped 23% for the five weeks ended Dec. 3, blaming warmer-than-expected weather. Total sales for the period dropped to $75.7 million from $110.2 million. Chico's FAS ((CHS)) said December same-store sales fell 2% from last-year levels, meeting estimates. Total sales jumped 12% to $193.2 million from last year's $172.6 million. The specialty apparel and accessories retailer said it expects Q4 earnings of 12 to 15 cents a share, below forecasts of 21 cents a share.


[R]7:30 AM Asian markets mostly fell Thursday, Japan, China gained.[/R]
Asian markets finished mostly lower on Thursday. The Nikkei 225 Average finished the day 0.7% higher at 17353.67. Toyota advanced 1.6% and Nissan gained 1.5%, while Fuji Heavy, the maker of Subaru-brand cars, surged 4.7% on a local newspaper report that top shareholder Toyota will supply compact cars for sale in Europe with Subaru badges. Technology stocks also performed well, with Hitachi up 6.1%, Toshiba gaining 2.6%, Mitsubishi Electric advancing 3.9%, and Sony rising 1.8%.

In China, the Shanghai Composite Index rose 1.5% to 2,715.71. Air China soared 9.9%, China Southern Airlines advanced 4.2%. Sinopec, the largest refiner by capacity in Asia, surged 9.9% on higher global oil prices. In Hong Kong, the Hang Seng Index fell 1.9% to 20,025.58. China Construction Bank was off 4.9%, Bank of China lost 3.8%, ICBC sank 4.3%, while Bank of Communications tumbled 8.5% and Ping An plummeted 8.8%.

In South Korea, banks and construction shares led losses in the stock market. The Korea Composite Stock Price Index, or Kospi, shed 0.9% to 1,397.29. Investors worry that tougher mortgage loan rules will impact negatively bank profit margins and damp the property market. Koomin Bank, the largest Korean bank by assets, shed 1.7%, while Hyundai Engineering & Construction was down 2.3%.

In Australia, the S&P/ASX Index 200 declined 1.1% to end at 5,563.90. BHP Billiton fell 4.4% and Rio Tinto shed 4.2% after London Metal Exchange copper declined 4.0% on Wednesday.


[R]6:30 AM Europe declined on Thursday as copper hit commodity exchanges.[/R]
European markets were lower on Thursday. By mid-morning, the U.K. FTSE 100 shed 0.8% to to 6,269.2, Frankfurt Xetra DAX also slid 0.8% to 6,638.72 and CAC 40 in France declined 1% to to 5,557.56.

Decliners

BHP Billiton and Rio Tinto shed more than 3% in London as copper prices plunged further. Antofagasta, the owner of three copper mines in Chile, dipped 3.9%. Steelmakers were also down. Vallourec, the French maker of steel tube, shed 3.4%, Mittal Steel slid 4.2% and ThyssenKrupp of Germany shed 3%.

Oil and gas producers declined on a 4% drop in crude prices overnight. Austrian OMV was down 2.4%, Total in France slipped 1.8%, while Repsol of Spain was 1.5% lower.

Carmakers were hit after sales in US fell last month. Volkswagen AG and DaimlerChrysler AG declined as shares of Volkswagen fell 1.4% and DaimlerChrysler, shed 1%. BMW dropped 1.8%. The biggest luxury carmaker in the world had the recommendation on its stock cut to hold from buy at Citigroup Investment Research.

Advancers

Akzo Nobel NV gained 2.3%. The Dutch chemicals maker announced an initial public offering of its pharmaceutical unit Organon is still the preferred option after a newspaper reported today that the company is in talks with at least two private equity firms about the sale of Organon. Carnival Plc, a cruise-ship operator, gained 2.5% as Morgan Stanley raised its share-price forecast on the stock with 15%.

Oil and gold

Crude oil for February delivery on the New York Mercantile Exchange declined $2.73 from settlement price on Friday to a six-week low of $58.32 a barrel. Gold traded in London at $625.25 per troy ounce, down from $635.25 late Wednesday.

Currencies

The U.S. dollar rose against other major currencies in European trading Thursday morning. The euro traded at $1.3101, down from $1.3165 late Wednesday in New York. The British pound traded at $1.9430, down from $1.9505. The dollar bought 119.37 Japanese yen, up from 119.35.