Market to Open Lower on Housing Market Concerns

Elena
24 May, 2007
New York City

U.S. stock futures lost ground on Thursday, pressured by concerns over the housing market. The housing market was in the spotlight, with investors awaiting data on new-home sales and digesting unwillingness from home builder Toll Brothers to provide an earnings outlook. Durable-goods orders report is also due out today.

[R]9:00AM Stock futures pointed to a lower opening, pressured by worries about the housing market.[/R]

U.S. stock futures lost ground on Thursday, pressured by concerns over the housing market. The housing market was in the spotlight, with investors awaiting data on new-home sales and digesting unwillingness from home builder Toll Brothers to provide an earnings outlook. Durable-goods orders report is also due out today.

Luxury home builder Toll Brothers ((TOL)) reported 79% decline in Q2 net income, hurt by slowing U.S. housing market. The company said it earned $36.7 million, or 22 cents a share, down from $174.9 million, or $1.06 a share a year earlier. However, the profit beat analysts'' average expectation of 14 cents a share. Quarterly revenue fell 19% to $1.17 billion.

In other earnings releases, apparel retailer Abercrombie & Fitch Co.((ANF)) reported 7% earnings growth in Q1 to $60.1 million, or 65 cents per share, compared with profits of $56.2 million, or 62 cents a share a year ago. Sales rose 13% to $742.4 million from $657.3 million a year ago. Same-store sales fell 4%. Abercrombie reaffirmed its outlook for the first half of the year, saying it expects to make $1.47 to $1.52 a share.

Network Appliance (NTAP)) slipped 17% in pre-open trade after the storage-technology company released a profit warning for the current quarter. Software company CA ((CA)) dropped 5.5% on earnings outlook below estimates. Among other pre-market highlights, General Motors ((GM)) dropped 1.8% after it said it sees a $7 billion exposure from helping Delphi get out of bankruptcy. S&P 500 futures fell 1.8 points at 1,523.70 and Nasdaq 100 futures declined 3.25 points at 1,907.00. Dow industrial futures slipped 14 points.


[R]8:15AM Limited Brands posted 46% earnings drop.[/R]

Limited Brands ((LTD)) posted 46% earnings drop in Q1, due to lower-than-expected sales and margins across all its brands, particularly Victoria''s Secret. The retailer said it earned $52.9 million, or 13 cents per share, compared with profits of $99.4 million, or 25 cents a share a year ago. Sales totaled $2.3 billion compared with $2.1 billion a year ago.

The company projected Q2 profit decline and cut its full-year earnings guidance. Limited Brands said it now expects to make 20 cents to 24 cents a share in Q2, compared with 28 cents a year ago, and that earnings for the full year would be between $1.55 and $1.65 per share, compared with its initial guidance of $1.75 per share.

The company had posted a 4% increase in April same-store sales, but it expects May''s same-store sales to come below earlier estimates. Limited Brands announced last week that it would sell 67% of its interest in its underperforming Express apparel brand to affiliates of private equity firm Golden Gate Capital for $548 million by July.