Stocks Slide on Profit-Taking

Elena
22 Nov, 2005
New York City

In earnings news today, H.J.Heinz posted Q2 profit increase of 60 cents a share on sales growth, beating estimates. Tech Data reported Q3 income drop of 40 cents per share, missing expectations. Genesco beat estimates with a profit rise of 61 cents a share. Albertso''s Inc. announced 30% quarterly drop blaming hurricanes, missed estimates.

U.S. MARKET AVERAGES

Stocks opened in the negative on profit-taking from November’s rally. Investors were also cautious ahead of the release of the Federal Reserve''s most recent meeting minutes. The selling pressure was light, however, and the major averages have already bounced off their intraday lows, each declining by about 0.2%.

The Internet sector is moving to the downside after rising on Monday. Despite the weakness in the space, shares of Google ((GOOG)) are still showing some strength, ticking above $410. The broker/dealer space is coming off Monday’s highs. Housing and bank stocks are modestly weaker in the early going as well.

The rise in oil prices is giving a boost to The energy sector is strong, boosted by rising oil prices, yet gains are only modest at this point. Gold and utility stocks are also showing gains.

MOVERS AND SHAKERS

Tech Data Corp ((TECD)) posted Q3 income drop of $22.9 million, or 40 cents a share from $37.8 million, or 64 cents a year ago, missing expectations of 45 cents per share, despite sales growth of $5.08 billion. The company projected fourth-quarter earnings between 63 cents and 69 cents a share on sales from $5.3 billion to $5.45 billion. Company’s shares jumped 13%.

Goody’s Family Clothing Inc ((GDYS)) posted Q3 net loss widened to $23.5 million, or 71 cents a share, compared with $816,000, or 2 cents a share last year, with about $15.5 million bid transaction expenses included. Company failed to meet estimates of a loss of 14 cents a share. It announced it will not be able to meet full-year profit and same-store sales guidance. The stock dropped 4.2%.

Mother’s Work Inc ((MWRK)) reported wider Q4 net loss of $5.3 million, or $1.01 a share vs. a loss of $3.9 million, or 76 cents a share a year ago. Company’s revenue increased 11.8%, while same-store sales fell 1%, compared to a decline of 8.3% last year. The company projected comparable store sales in November will be from 3% to 4% higher vs. a year ago and said it is optimistic about delivering a improved results for 2006. The stock advanced 6%.

DaimlerChrysler AG ((DCX)), raising its profile in Canada’s auto industry, announced plans to expand its biggest North America assembly in order to invest more money in its research and development center. The stock lost 2.9%.

ECONOMIC NEWS

The release of minutes of the November 1 meeting of the Federal Reserve's rate-setting committee is due at 2 p.m.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mostly lower with South Korea’s Kospi being the most notable decliner, falling nearly 2% with pressure from chipmakers and the steel sector. The Nikkei advanced 0.2% supported by strong dollar, automakers and other exporter issues. Among other regional markets, Hong Kong’s Hang Seng finished flat and Australia’s All Ordinaries lost 0.6%.

European markets traded steady at mid-day. Higher U.S. markets close, gains in resource stocks, and upbeat earnings reports from Enterprise Inns and EasyJet limited losses. The German DAX 30 traded at the unchanged mark, the French CAC 40 declined 0.2%, and London’s FTSE 100 gained 0.3%.

OIL, METALS, CURRENCIES

Crude oil prices advanced, reflecting chilly weather forecast and expectations of higher heating oil demand. Light sweet crude for January delivery rose $1.01 to $58.71 a barrel. London Brent jumped $1.20 to $56.54.

European gold prices continued their bullish trend, almost reaching an 18-year high on U.S. inflation speculations, increasing the appeal of the precious metal. In London gold traded at $493 per troy ounce, up from $484.70. In Zurich gold advanced to $492.65 from $487.75. In Hong Kong gold jumped $8.70 to close at $493.25. Silver traded unchanged at $8.13.

The U.S. dollar climbed against other major currencies. The euro was quoted at $1.1708, down from $1.1720. The dollar bought 119.24 yen, up from 118.92. The British pound traded at $1.7120, down from $1.7178.

EARNINGS NEWS

Albertson''s Inc ((ABS)), supermarket operator, announced that Q3 net income dropped 30% to 21 cents a share, from 29 cents a share in the year-ago period as revenue slipped 0.2%. Earnings from continuing operations adjusted for the storms in both periods fell 22%. Adjusted for the storms, earnings from continuing operations amounted to 24 cents, down vs. 32 cents in the comparable period last year, missing on that basis the analysts’ forecasts of 27 cents a share.

H.J. Heinz Co ((HNZ)), sauces and packaged-food manufacturer, posted a Q2 of fiscal 2006 net income of 60 cents a share, up from 56 cents in the same period in fiscal 2005, beating analyst estimate of 54 cents a share. Outside special items, the company would have earned 62 cents a share from continuing operations. The company’s quarterly sales totaled nearly $2.34 billion from $2.2 billion. This 6.3% sales growth came primarily from acquisitions; volume increased 0.6%.

Tech Data Corp. ((TECD)), distributor of information technology products, reported that Q3 net income dropped to 40 cents a share, from $ 64 cents, a year ago, missing analyst expectations of 45 cents a share. Sales for Q3 advanced to $5.08 billion from $4.77 billion a year earlier.

Fred''s Inc. ((FRED)), general merchandise retailer, posted Q3 earnings of 16 cents a share, down from a profit of 19 cents a share a year-earlier. If not for the impact of an accounting standard change, the company would have gained 19 cents a share in Q3, well within the range of its previous outlook, beating on that basis analyst expectations by a penny. Sales rose about 8%.

Brown Shoe Inc. ((BWS)), shoe retailer, announced that Q3 net profit advanced to $1.04 a share, up from $1 a share in the year-ago period on sales growth. Adjusted for charges related to close some of its Naturalizer stores, its earnings of $1.21 a share topped analyst expectations of $1.04 a share.

Genesco Inc. ((GCO)), specialty footwear and headwear retailer, posted Q3 earnings of 61 cents a share, up from a profit of 47 cents a share a year-ago, beating analysts’ forecasts of 58 cents a share. On a continuing operations basis, the company earned 62 cents a share in Q3. Sales advanced to $316.3 million from $288.4 million in the same period a year ago. The company attributed its improved performance to gains in same-store sales and gross margin expansion.

Dollar Tree Stores Inc., ((DLTR)), retailer, posted Q3 earnings of 29 cents a share, a penny more than the same period last year’s result and beating analyst estimate of 27 cents a share. Sales advanced 10.1% but same store sales shed 1%.

Dollar General, ((DG)), off-price retailer, posted Q3 earnings of 20 cents a share, down from a profit of 22 cents a share a year-ago, beating the analyst estimate of 19 cents a share. Sales rose 9.5% and same-store sales increased 1.4% in Q3. The company attributed the decline in profits to lower sales of its seasonal home and basic clothing products, increased markdowns to reduce inventory, and the impact of its decision to increase the number of departments used for its retail inventory method gross profit calculation.