Robust Retail Sales

Elena
03 Nov, 2005
New York City

Asian markets closed mixed, led by Australia''''s All Ordinaries, up 1.2%. Exchanges in Japan and Singapore were closed for holidays. European stocks traded higher on BMW, Unilever, Adidas-Solomon. Retailers posted strong same-store October sales, led by American Eagle Outfitters, Costco Wholesale, Wal-Mart, Goody''''s Family Clothing.

U.S. MARKET AVERAGES

Following yesterday’s rally when the three major averages hit one-month highs, U.S. stock futures point to a flat opening, cautious ahead of Alan Greenspan's testimony to the Joint Economic Committee in Congress and Friday's employment report, but supported by strong October retail sales.

American Eagle Outfitters Inc ((AEOS)) rose nearly 7% in after-hours trading on Wednesday after the retailer posted a 17.3% rise in October same-store sales and raised its third-quarter profit outlook.

Retailer Costco Wholesale Corp. ((COST)) said that worldwide same-store sales rose 10% in October, above analyst expectations for a 7.9% increase.

Wal-Mart ((WMT)) revealed that its comparable sales increased by 4.3% in October, though excluding gas sales, comparable sales showed a 4% advance. The world’s biggest retailer predicted a 3%-5% increase in comparable sales in November.

S&P 500 futures were down 0.1 point, slightly above their fair value. Dow Jones industrial average futures were down 1 point, while Nasdaq 100 futures were down 2 points.

Greenspan testifies to the Joint Economic Committee in Congress at 10 a.m. and some economists said his comments could signal further Fed tightening. On Tuesday, the Federal Reserve raised the benchmark interest rate a 12th consecutive time and hinted that additional hikes could come.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks finished mixed with bourses in Japan and Singapore closed for holidays. Today’s gainers were led by Australia’s All Ordinaries, rising 1.2% on gains from Westpac Banking Corp. South Korea’s Kospi rose 0.8%, supported by Samsung Electronics, while Hong Kong’s Hang Seng declined 0.1%.

European markets advanced at mid-day dealings, reflecting strong close to U.S. markets overnight, mostly positive earnings news from major companies like BMW, Unilever and Adidas-Salomon. Investors were also awaiting the European Central Bank interest-rate meeting. The German DAX gained 0.3%., the French CAC 40 rose 0.5%, and London’s FTSE 100 added 0.4%.

ENERGY, METALS, CURRENCIES

Crude oil hovered over $60 a barrel on warmer weather forecast and oil inventory report, showing another increase in oil and gasoline supplies. Light sweet crude December contract gained 37 cents to $60.12 a barrel on the Nymex. Heating oil added 1 cent to $1.7986 a gallon. Gasoline traded slightly up at $1.5800. Natural gas advanced 12 cents to $11.730 per 1,000 cubic feet. London Brent rose 27 cents to trade at $58.65.

Gold futures advanced in Europe. In London gold was traded at $464.80 per troy ounce, up from $461.75. In Zurich it was fixed at $464.45, up from $462.80. In Hong Kong the precious metal rose $3.50 to close at $464.75. Silver opened at $7.51, up from $7.49.

In European trading the U.S. dollar traded mixed against its major counterparts. The euro was quoted at $1.2063, up from $1.2060. The dollar changed hands at 116.89 yen, up from 116.80. The British pound was trading at $1.7778, up from $1.7750.

EARNINGS NEWS

MCI Inc. ((MCIP)), telecom carrier, posted Q3 net income of 82 cents a share, up from a net loss of $10.65 a share in the year-ago period. Q3 Results reflected the continued impact of new services and cost-cutting initiatives started in 2004, the company said, as well as it incurred and recorded a $164 million tax reduction in Q3. The year-ago loss largely stemmed from $3.5 billion in impairment charges.

Goody''s Family Clothing, Inc ((GDYS)), retailer, announced that sales advanced 6.8%, with same-store sales up 2.5%. The company expects to report a greater loss in Q3 than the net loss of 2 cents a share posted in the year-earlier period.

American Retirement Corp ((ACR)), senior living communities operator, reported that it reversed to to a Q3 profit of 13 cents a share, from a loss of 27 cents a share in the same period last year. Sales rose 11.3%. The company predicts 2005 adjusted earnings in the range of 48 cents to 50 cents a share.

Aquila Inc ((ILA)), electricity and natural gas utility operator, posted a Q3 loss of 20 cents, up from a loss of 44 cents share on 46% higher revenue. Aquila said its electric- and gas-utility businesses strengthened but earnings were cut by the costs of its remaining obligations related to its merchant business.

Cost Plus ((CPWM)), discount home products retailer, reported Q3 same-store sales dropped 4.7% from the year-ago period. The company expects a loss of 12 cents a share, in line with the analyst estimate.

CVS Corp ((CVS)), drugstore and pharmacy chain, reported that Q3 net profit advanced 37% to 30 cents a share from the year-ago period on 13.4% revenue growth, matching analysts’ forecasts.

Entertainment ((HET)), casino operator, posted Q3 earnings of 91 cents a share, down vs. $1.07 a share in the same period last year despite revenue growth. Excluding non-recurring items, the company would have earned $1.01 a share, beating analyst estimate of 99 cents a share.

R.R. Donnelley & Sons Co ((RRD)), printer, announced that Q3 net profit from continuing operations advanced 15% to 62 cents a share, compared with the year-ago period on 15% revenue growth. The company raised its guidance for fiscal-year operating earnings from continuing operations by 4 cents to $2.21 a share.

Sara Lee ((SLE)), consumer products maker, posted Q1 earnings of 9 cents a share, down from 44 cents a share in the same period a year earlier on revenue decline, missing analyst expectations of 27 cents a share. If not for non-recurring items, the company would have earned 34 cents a share. For its Q2 the company expects earnings of 25 to 30 cents a share, down from analyst expectations of 32 cents.