Oil and Retailers Contribute to Profit Raking

123jump.com Staff
30 Nov, -0001
New York City

After three positive days of trading market averages took a breather. Unemployment claims report, disappointing July retail sales and higher oil price led market decline. Teenage retailers remain star of the retail sales. Abercrombie, Urban outfitters, American Eagle keep taking market share away from Limited, Gap and other established store chains.

U.S. Market Averages

Stocks traded lower during the entire session. After five days of trading higher and broader averages trading near 4-year highs, investors were in the mood to take profit.

During the session stocks in semi-conductor, networking, home builders and financial sector declined and healthcare, energy and pharmaceutical sectors gained. During the day EDS, Network Appliance and Autodesk managed to hang on to the gains of the session.

Oil prices jumped higher 44 cents on the worries of steady demand at this price level and hurricane forecast. The U.S. weather service is predicting 11 to 14 more tropical storms by the end of November. Oil refiners such as Valero and Tesoro are trading higher.

July retail sales show a mixed sales growth for various companies. While July is a month of inventory liquidation and least important month for retailers, large department and teenage retailers still managed to eke out gains. Sara Lee reported 5% decline in sales and 4Q loss of 19 cents vs. profit of 44 cents a year ago on account of 55 cents charge. The restructuring plan includes spin off of clothing business including brands Playtex and Hanes.

The hot weather skewed the purchased to air-conditioners and refrigerators. Auto sales were driven by significant discounts but apparel sales suffered due to weather conditions.

European markets closed lower as the Bank of England cut for the first time in two years its benchmark interest rate by a quarter-point to 4.5% amid slowing pace of the economic growth and increased terrorism worries. European Central Bank kept the interest rate unchanged at 2% as expected by market.

Economic News

In the week ending July 30, the advance figure for seasonally adjusted initial claims was 312,000, a decrease of 1,000 from the previous week's revised figure of 313,000. The 4-week moving average was 316,750, a decrease of 2,250 from the previous week's revised average of 319,000.

The advance seasonally adjusted insured unemployment rate was 2.0 percent for the week ending July 23, unchanged from the prior week's unrevised rate of 2.0 percent.

The advance number for seasonally adjusted insured unemployment during the week ending July 23 was 2,581,000, a decrease of 18,000 from the preceding week's revised level of 2,599,000. The 4-week moving average was 2,592,000, an increase of 2,250 from the preceding week's revised average of 2,589,750.

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INTERNATIONAL MARKET NEWS

European markets closed lower, reflecting bank shares decline after quarterly results from France’s Societe Generale and Royal Bank of Scotland and decrease of oil stocks, erasing earlier gains. In the market focus were interest rates as the Bank of England cut its benchmark rate to 4.5% for the first time since July 2003.

Averages in Germany slipped 1%, in France lost 0.8%, and in the U.K. declined 0.2%. Crude-oil prices fell below $61 a barrel. The euro slipped 0.2% to $1.7753.

Asian benchmarks closed lower with the Japanese Nikkei down 0.8% ahead of political uncertainty, retreating from a 15-month high on profit-taking in automakers, banks and select blue-chip stocks.

The other regional markets followed the suit as Hong Kong’s Hang Seng lost 0.1%, South Korea’s Kospi dropped 0.5%, and Taiwan’s Straits Times was down 0.2%. In Tokyo the dollar was trading at 111.17 yen.


ENERGY, METALS AND CURRENCIES MARKETS

At mid-day crude oil futures climbed 2% to trade as high as $62.06 a barrel on supply concerns and political uncertainty. Light sweet crude for September delivery was last quoted 52 cents up at $61.38 on the NYMEX. Heating oil September delivery rose 1.1% to close at $1.7078 a gallon. Natural-gas gained 3%.

Gold futures advanced to $445 per ounce on unstable U.S. dollar and possible strike of mine-worker unions in South Africa. Gold for December delivery was last traded at $444.20 bid per troy ounce. September silver fell 4.2 cents to $7.265. Copper for September delivery dropped 1.7 cents to $1.6545 a pound. Gold futures rose in early European trading. In mid-morning trading in London traders fixed a recommended price of $435.60 bid per troy ounce, up from $434.60. In Hong Kong gold gained $3.10 to close at $436.35. Silver opened at $7.25, down from $7.26.

The U.S. dollar fell against the euro which traded at $1.2337, down from $1.2332. The British pound fell to $1.7756, down from $1.7792 after the Bank of England cut its benchmark rate to 4.5%. The dollar bought 110.92 yen, down from 111.38.

EARNINGS NEWS

Alpha Natural Resources, coal producer, reported 2Q net profit of 43 cents a share vs. 83 cents last year on strong coal prices and overall coal margin, meeting analysts’ estimates.

Ross Stores, off-price apparel retailer, posted 17% total sales increase of $362 million and 7% same-store sales increase.

Health Net, health care provider, reported 2Q net income rise of 47 cents a share compared with 36 cents a year ago, missing estimates of 55 cents a share. The quarterly results include 8 cents litigation charge.

Radio One posted 2Q profit rise of 19 cents a share, up from 12 cents a year ago on 18% higher broadcast revenue, beating estimates of 16 cents a share.

Jo-Ann, fabric and craft retailer, announced 2Q 3.5% higher total sales but 0.5% lower same-store sales. The company expects a quarterly loss of 22 to 24 cents a share, citing softer-than-expected sales.

Dollar Tree Stores, discount retailer, posted 2Qtotal sales increase of 9.2% but same-store sales decrease of 1.5%. The company sees 2Q earnings in the range of 25 to 27 cents a share.

J.C.Penney, department-store chain, reported July same-store sales increase of 1.6% and total sales growth of 2.1%, or $1.185 billion.

New Century Financial posted 2Q profit decline of $1.65 a share vs. $2.46 last year on higher operating expenses, beating estimates of $1.54.

Gap, retailer, posted 2Q same-store sales decline of 3% with net sales flat at $3.72 billion. The company expects quarterly earnings of 28 to 29 cents a share, including one-time gain of 8 cents a share.

Family Dollar Stores, retailer, posted 1.6% comparable-store sales drop for July, but 5.7% increase in total sales to $418.8 million. The company expects flat 4Q same-store sales and lower earnings of 17 to 25 cents a share.

Central European Media Enterprises, reported 2Q three-fold higher net income, or 72 cents a share vs. 21 cents a year ago on revenue growth of 152%.

Dollar General, discount retailer, reported 2Q same-store sales rose 3.9% on strong food sales, pet supplies and paper products with total sales increase of 13% to $617.1 million.

BJ's Wholesale Club, warehouse clubs operator, said its same-store sales rose 4.7% in July, together with a 9.3% rise in total sales to $582.3 million on strong gasoline sales.

Cadmus Communications, integrated graphic communication services provider, posted 4Q net income of 13 cents a share against a loss of 22 cents a share in the year-ago period on growth in sales.

Revlon, cosmetics and skin care manufacturer, posted a 2Q loss of 10 cents a share, vs. a loss of 11 cents a share in the year-ago period, despite slight revenue growth compared with last year, but missing analysts' estimate by a penny.

Tesoro, petroleum products and marine logistics services provider, posted a decline in 2Q net income of $2.62 a share, down from. $3.11 a share in the same period last year on higher expenses, beating expectations of $2.48 a share.

Huntsman, chemical company, posted earnings of 73 cents a share, up from a loss of 29 cents a share from the same period last year on revenue growth, missing forecasts of 82 cents a share.

Talbots, apparel retailer, posted 2Q 12% sales growth of $449.6 million and 6.7% same-store sales increase. The company raised its quarterly earnings to the range of 33 to 34 cents a share, up from 28 to 32 cents.

Chico’s FAS, specialty retailer, reported 15.7% same-store sales rise. The company projected 2Q earnings between 26 and 27 cents a share.

WPS Resources, electric power and gas provider, posted 2Q net income jump of 62 cents per share , up from 12 cents a year ago on expanded markets and favorable prices.

Gillette, consumer products manufacturer, reported 2Q earnings increase of 49 cents a share compared with 42 cents last year on 13% sales growth and favorable exchange rates. The company is being acquired by Procter & Gamble.

Top Tankers, oil tanker shipping company, reported 2Q profit decline of 49 cents compared with 95 cents for the comparable quarter last year on revenue growth of $56.3 million.

Ipayment, credit provider, posted 2Q profit increase of 43 cents a share vs. 32 cents a year earlier on doubled revenue of $181.14 million, missing estimates by a penny.

Sypris Solutions, diversified technology-based outsourced services provider, posted 2Q earnings of 11 cents a share, flat with year-ago results, beating analysts' estimate by a penny.

MedCath, heart hospitals operator, posted 3Q net income of 14 cents a share, up vs. 7 cents a share a year earlier on higher patient volumes, missing expectations of 20 cents a share.

Wet Seal, a specialty retailer, posted July net sales of $37.6 million, up vs. $32.7 million for the same period last year, with comparable-store sales rise of 50.9% for the cited period, compared with a decline of 14.7% a year ago.

Sunrise Senior Living, provider of senior living services, posted 2Q earnings of 46 cents a share, down vs. 66 cents in the same period a year earlier, beating analyst estimate of 37 cents a share.

Finlay Enterprises, a fine jewelry retailer, announced that same-store sales rose 0.1% in 2Q with a total sales increase of 5.9% to $199.8 million.

Biovail, drug maker, posted 2Q earnings of 2 cents a share, down vs. 28 cents a share in the same period last year, despite revenue growth, missing analysts' expectations of 26 cents a share.

Harrah's Entertainment, operator of gambling casinos, posted 2Q earnings of 84 cents a share, up vs.79 cents in the same period a year ago, despite reporting record 2Q revenues, missing analyst estimate of 93 cents a share.


GPC Biotech, genomics and proteomics developer, posted a 2Q net loss of 53 euro cents per share, vs. a net loss of 43 euro cents per share in the year-ago comparable period on revenue decline.

Newcastle Investment, real estate investment trust, reported 2Q profit of 64 cents per share, up vs. 51 cents per share a year ago on strong revenue, matching analysts’ expectations of 64 cents per share.

Tesco, supermarkets, hypermarkets, and convenience stores operator, posted 2Q net income of 10 cents per share vs. a net loss of 4 cents per share in the same quarter a year earlier on revenue growth.

Gold Fields, gold exploration and development company, posted 4Q net earnings of 8 cents per share, up vs. 4 cents a share last year on revenue growth, topping analysts’ estimate of 3 cents per share.

AIXTRON, chip equipment maker, posted 2Q net loss of 2 euro cents per share vs. a net income of 1 euro cent per share in the same period last year, despite a rise in revenue.

Pengrowth, oil and natural gas company, posted 2Q net income of C$0.34 per unit, up vs. C$0.24 per unit in the comparable quarter a year earlier on strong oil and gas sales.

Kubota, maker of tractors and farm equipment, posted 2Q net income of 19.1 billion yen, up vs. the comparable period last year on jump in income and strong sales.

Costco, wholesale club operator, posted net sales of $4.02 billion, up vs. $3.71 billion in the same period last year on sales growth.

UniLever, consumer products maker, posted 2Q net profit of 73 euro cents per share, down vs. 1.00 euro per share a year earlier, turnover edged slightly up.

Toll Brothers, builder of luxury homes, reported 3Q revenues increased to $1.54 billion from $991.3 million in the same quarter last year on rise in contracts.

ShopKo, discount stores operator, reported 4.9% decline in sales over the same month last year.2Q earnings results due on August 18.

TODCO, provider of contract oil and gas drilling services, reported 2Q net income of 18 cents per share, compared to a net loss of 12 cents per share in the same quarter last year on revenue growth, matching analysts expectations.

PMI, provider and promoter of homeownership and mortgage transactions, said 2Q net income totaled $1.04 per share, up vs. 93 cents per share in the year-earlier comparable period on revenue growth, beating analysts’ expectations of $1.01 per share.


CORPORATE NEWS

Three major automobile manufacturers – Honda Motor Co., General Motors Corp. and BMW AG - are developing cooperative technologies for hydrogen fuel-cell vehicles, according to reports. The companies hope the collaboration will cut development costs and plan to standardize fuel nozzles and other parts so they can sell fuel-cell-powered vehicles around the world.

Infosys Technologies Company Ltd. ((INFY)), the China subsidiary of Infosys Technologies Ltd., announced that it has signed letters of intent with Shanghai Zhangjiang Company Ltd. and Administrative Commission of Hanghzhou Hi-Tech Development Industry Zone-Hangzhou, to set up software development centers in China. Infosys currently has 250 employees in China. The new centers, to be located in Shanghai and Hangzhou, would see total investment of $65 million in the next five years and would contain 6000 engineers. The Shanghai centre would get an initial investment of $10 million in the next two years. On the Hangzhou project, Infosys plans to invest $15 million in the next two years.

Private-equity firm Bain Capital and MacGregor Golf, one of the oldest names in golf equipment, are making a bid for Callaway Golf Co., lifting the chances that the world's largest golf-club maker will be taken private. The all-cash offer values Callaway at as much as $1.24 billion, or $16.25 a share, slightly more than an unsolicited all-cash offer of $16 a share made in late May by buyout company Thomas H. Lee Partners and insurance giant Fidelity National Financial.

OTHER NEWS

July Retail Sales Summary Report

Following companies reported total growth in store sales and same-store sales growth in July.

Abercrombie & Fitch – 33% and 22%
Ross Stores – 17% and 7%
Family Dollar – 5.7% and (1.7%)
Payless ShoeSource – (3.5%) and (2.4%)
Guess? Inc – 16.6% and 5.6%
DSW Inc – 17.8% and 3.3%
Ann Taylor – 7.5% and 3.5%
Nordstorm – 5.4% and 3.6%
Chico’s - 33.5% and 14%
WalMart – 10.7% and 4.4%
Mothers Work – (4.3%) and (2.6%)
Target – 11.9% and 5.5%
Gap Inc. – Zero and (4.5%)