Retailers Decline, Techs Rebound

123jump.com Staff
28 Mar, 2008
New York City

U.S. stocks traded sideways after earnings warning from JC Penney. The department store retailer warned that earnings for the quarter will be near 50 cents per share, lower than earlier forecast between 75 cents and 80 cents. The warning dragged most retailers lower. Lehman Brothers traded lower after Citigroup raised the stock rating and set target price of $65. Consumer spending in February rose 0.1% after gaining 0.4% in January. Consumer sentiment index in March declined.

[R]1:15PM New York – U.S. stocks trade side-ways with a mild rebound in tech stocks.[/R]

U.S. market averages traded mix after Lehman Brothers was upgraded to a ‘buy’ rating by Citigroup and tech stocks staged a mild rebound.

J.C. Penney fell as much as 11% before recovering to a decline of 7% after it lowered its earnings and same store sales guidance. Department store retailer lowered its earnings estimate to 50 cents a share for the current quarter between 75 cents and 80 cents. Penney also said that the March same store sales are likely to be in “low double digit decline” and for the quarter are in “high single digit decline.”

Cisco, Oracle and Google edged higher in a directionless trading.

Earnings news

Accenture ((ACN)) Second quarter net income was $406.6 million or $0.64 per share, compared to $296.7 million or $0.47 per share for the same quarter of year-ago. Revenue for the six months increased 19% to $11.29 billion from $9.50 billion in the prior year period.

Consulting net revenues for the quarter grew 18% year over year to $3.35 billion, while outsourcing net revenue increased 18% to $2.26 billion.

Williams-Sonoma, Inc. ((WSM)), a specialty retailer of products for the home said that for the fourth quarter net revenue rose 9.5% to $1.37 billion. Fourth-quarter net profit increased to $124.6 million or $1.15 a share, from $121.1 million, or $1.06 per share, a year earlier.

On a 14-week to 14-week basis, comparing the 14 weeks ended February 3, 2008 to the 14 weeks ended February 4, 2007, net revenues increased 3.4%, despite a comparable store sales decrease of 0.1%.

Diluted earnings per share for the 53 weeks ended February 3, 2008, including the $0.013 per diluted share impact from the application from the uncertainty in income tax, decreased 1.7% to $1.76 per diluted share versus $1.79 per diluted share for the 52 weeks ended January 28, 2007.

Net revenues for the 53 weeks ended February 3, 2008 increased 5.8% to $3.945 billion versus $3.728 billion for the 52 weeks ended January 28, 2007. On a 53-week to 53-week basis, comparing the 53 weeks ended February 3, 2008 to the 53 weeks ended February 4, 2007, net revenues increased 3.8%, including a comparable store sales increase of 0.3%.

Retail net revenues in fiscal year 2008, a 52-week year, are projected to be in the range of $2.250 billion to $2.298 billion. In the first quarter of the new fiscal year, the company sees same-store sales falling by 6% to 8.5%. For fiscal 2009, a 52-week year, Williams-Sonoma estimates share earnings of $1.42 to $1.56, down 11% to 19% from $1.76 in fiscal 2008, which included 53 weeks. Total revenue could drop 1.7% to 3.9%, to a range of $3.79 billion to $3.88 billion. That compares with $3.95 billion in fiscal 2008.

Fred''s, Inc. ((FRED)), discount stores retailer and said that net sales for the quarter ended Feb. 2 2008, declined 7.7% to $494.108 million from $535.564 million in the prior year. Same-store sales for the quarter fell 2.5%.

Net loss in the quarter was $4.4 million, or 11 cents a share, compared with a profit of $9.2 million, or 23 cents a share a year ago.

In the first quarter fiscal 2008, Fred''s said it expects earnings in the range of 15 cents to 18 cents a share, while same-store sales are expected to increase between 1% and 3%. Comparable store sales for the first quarter are expected to increase in the range of 1% to 3%.

International markets

Norway leads the European markets with a rise of 0.8% followed by increases in Italy of 0.09%. Markets in UK, France, and Spain closed 0.7% lower.

Asian markets closed higher tracking gains in the U.S. market averages.

In Tokyo Nikkei 225 Index closed higher 215.89 or 1.71% to 12,820.47, in Hong Kong Hang Seng index increased 621.73 or 2.74% closed to 23,285.95. Australia ASX 200 index lower 20.50 or 0.38% to close 5,351.10. In Malaysia KL Composite index increased 4.38 or 0.35% closed to 1,258.41.

In South Korea Kospi Index increased 25.59 or 1.53% to close at 1,701.83, in Thailand SET index closed higher 2.21 or 0.27% to 825.17 and Indonesia JSE Index edged increased 26.24 or 1.07% to 2,477.59. Sensex index in India increased 355.73 or 2.22% to 16,371.29.