Seeking Alpha
Profile| ()  

Wall St. Breakfast's Pre-Market Snapshot:

U.S. Futures As of 8:53 AM EST

S&P 500: -2.60; 1,446.00
NASDAQ 100: -4.50; 1,808.25
Dow: -19.00; 12,535.00

International Indexes

Asia
NIKKEI 225: -0.73%; 17,540.42 (-129.65)
HANG SENG: -0.34%; 20,380.21 (-69.22)
S&P/ASX 200: +0.11%; 6,158.20 (+6.80)
BSE SENSEX 30: -0.53%; 13,113.81 (-69.43)

Europe
FTSE 100: -0.32%; 6,393.00 (-20.30)
CAC 40: -0.50%; 5,723.01 (-28.91)
XETRA-DAX: -0.50%; 7,117.13 (-35.70)

Commodity Futures (Reuters/Jefferies CRB)

Oil: +1.19%; $62.75 (+$0.74)
Gold: +0.04%; $682.00 (+$0.30)
Natural Gas: +0.45%; $7.89 (+$0.04)
Silver: +0%; $13.890

U.S. Breaking Newssee today's Wall Street Breakfast for earlier news

March Same-Store Sales Retail Roundup

Many retailers' March sales numbers came out this morning:

  • WalMart Inc. February same-store sales were up 4%, vs. analyst estimates of 1.6%. Total sales rose 11.7% to $34.3b. The company said that "while the earnings guidance ($0.68-0.71) is still attainable, given the tough sales environment for the April period, it will be a challenge."
  • Costco comparable store sales rose 6% vs. analyst estimates of 4.7%. Total sales rose 11% to $5.94 billion.
  • Gap same-store sales rose 6%, vs. analyst estimates of -1.1%. Total sales jumped 16% to $1.56b. The company said spring clearances at Gap and Banana Republic stores helped but resulted in lower margins.
  • Target Corp. same-store sales were up 12%. Total sales rose 17% to $5.59b.
  • Limited Brands Inc. same-store sales were up 8%, vs. estimates of a 6.6% rise. Total sales climbed from $788m to $892m.
  • Abercrombie & Fitch same-store sales climbed 7%, vs. estimates of 2.4%. Total sales jumped 29% to $331m.
  • Federated Department Stores same-store sales climbed 2.3%, vs. consensus estimates of 3.3%. Total sales were 1.5% higher to $2.29 billion.
  • J.C. Penney Company Inc. sales at department stores open at least one year rose 10.6%, vs. analyst estimates of a 7.5%. Total sales rose 13.3% to $1.44 billion.
  • Kohl's Corp. same-store sales jumped 16%. Total sales climbed 25.4% to $1.55b.
  • TJX Companies Inc. same-store sales/sales at stores open at least a year rose 6%, vs. analyst estimates of 4.6%. Total sales rose 11% to $1.7b. It said it continued "to have great liquidity" in its inventories.
  • Pacific Sunwear same-store sales rose 14.1% vs. analyst estimates of 3.4%. Total sales jumped 18% to $140 million.
  • Cache Inc. said Tuesday sales for stores open at least one year were flat. Total sales fell 0.7% to $29.1m.
  • Bebe Stores Inc. same-store sales rose 0.1% vs. analyst estimates of 4%.
  • Nordstrom Inc. same-store sales rose 15% vs. analyst estimates of an 8.2% gain. Total sales were up 14% to $803m.
  • Claire's stores comparable store sales increased 8% vs. analyst estimates of 3.1%. Total sales rose 17% to $136.6 million.
  • Saks Inc. same-store sales rose 10%, vs. estimates of 13%. Total sales were up to $284 million from $253 million.
  • American Eagle Outfitters Inc. same-store sales rose 20%, vs. analyst estimates of 11.1%. Total sales surged 35% to $271.5 million. It adjusted its Q1 profit forecast from $0.34 to $0.35 vs. analyst estimates of $0.33.
  • Sharper Image Corp. same-store sales fell 29%, vs. analyst forecasts for a 20% drop. Total sales fell 45% to $22 million. It is the company's 29th straight month in decline.
  • Aeropostale Inc. same-store sales rose 15.9%, vs. estimates of 8%. Total sales jumped 31.5% to $125m.
  • Bon-Ton Stores same-store sales rose 0.6%, vs. flat estimates. Total sales went from $244 million to $288 million.
  • Cato Corp. same-store sales rose 7%. Total sales gained 13% to $95 million.
  • Dollar General same-store sales rose 5.5%, vs. analyst estimates of 5.4%. Total sales increased 8.7% to $905 million.
  • Ross Stores sales at stores open at least a year rose 6%, vs. estimates of 4.6%. Total sales increased 14% to $599m.
  • Children's Place Retail Stores sales at stores open at least one year rose 7% vs. 6% analyst estimates. Total sales were up 18% to $204.7 million.
  • Gottschalks same-store sales were up 6.4%. Total sales increased 5.3% to $59 million.
  • Ann Taylor Stores same-store sales rose 6.1%, vs. consensus estimates of 1.3%. Total sales were up 14.8% to $244 million.
  • Gymboree same-store sales were up 9%, vs. analysts' estimates of 5.8%. Total sales rose 20% to $92 million.
  • Family Dollar Stores same-store sales were up 5.8%, vs. estimates of 3.9%. Total sales increased 9.6% to $651 million.

The Thomson Financial Same Store Sales Index estimate is for a 4.1% gain in overall same-store sales, vs. the 1.8% growth of March 2006. Excluding Wal-Mart, same-store sales are forecasted to climb 6.1% vs. a 2.2% gain a year earlier.
Sources: Wall Street Journal, MarketWatch I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX
Stocks/ETFs to watch: Pacific Sunwear of California Inc. (PSUN), Cache Inc. (CACH), bebe stores inc. (BEBE), Nordstrom Inc. (JWN), Claire's Stores Inc. (CLE), Limited Brands Inc. (LTD), Wal-Mart Stores Inc. (WMT), Costco Wholesale Corp. (COST), Saks Inc. (SKS), American Eagle Outfitters Inc. (AEOS), Sharper Image Corp. (SHRP), J.C. Penney Company Inc. (JCP), Federated Department Stores Inc. (FD), Abercrombie & Fitch Co. (ANF), Aeropostale Inc. (ARO), Bon-Ton Stores Inc. (BONT), Cato Corp. (CTR), Target Corp. (TGT), TJX Companies Inc. (TJX), Kohl's Corp. (KSS), Dollar General Corp. (DG), Ross Stores Inc. (ROST), AnnTaylor Stores Corp. (ANN), The Children's Place Retail Stores Inc. (PLCE), Gottschalks Inc. (GOT), Gymboree Corp. (GYMB), Family Dollar Stores Inc. (FDO)

U.S. Import Prices Rise Greater Than Expected 1.7%; Initial Claims Hit 8-Week High

The U.S. Labor Department reported a 1.7% increase in March prices for imported goods this morning, led by higher energy prices. Imports account for 17% of all goods bought in the U.S. The gain was the biggest in 10 months, as imported petroleum prices climbed 9%. Economists had been expecting a much smaller gain of between 0.6% (MarketWatch) and 0.8% (Bloomberg). Outside of increased energy prices, price rises for imports were modest, rising just 0.2%. In comparison, U.S. export prices rose 0.7%, paced by a 2.1% gain in agricultural goods prices. Excluding agricultural goods, export prices rose 0.6%. In another economic report released this morning, initial unemployment claims rose by 19,000 in the week ending April 7 to 342,000, the highest they've been in eight weeks. The four-week average, considered less volatile, rose by 7,000 to 323,250, the highest it has been in three weeks.
Sources: Bloomberg (i), (ii), MarketWatch (i), (ii)
Commentary: The US Dollar: Worthless - Or Just Worth Less?Philly Fed, Americans Concerned About EconomyThe Employment Report: Decent, But No Blowout
Stocks/ETFs to watch: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)

Vonage CEO Resigns; Cost Cutting Measures Announced

Vonage Holdings announced this morning Michael Snyder has resigned as CEO and from the Board of Directors. Jeffrey A. Citron, current Chairman and Chief Strategist was appointed interim CEO. He announced cost cutting plans of about $110 million from marketing expenses. Vonage said it plans to implement a hiring freeze and cut its workforce by around 10%. Vonage-Holdings-VG-chart-04-11-07 It will "immediately commence a search for Mr. Snyder's replacement." In a press release, Vonage forecast total revenue for the quarter ended March 31 of $195m, with gross subscriber line additions of 332,000 (net total: 166,000), average monthly churn of 2.4%, marketing cost per gross subscriber add at $275, and average monthly revenue per line of $28.17. Shares of Vonage were unchanged at $3 during normal trading yesterday and in pre-market activity at the time of publishing (on light volume of 21,200 shares, trading as high as $3.24 so far).
Sources: Press release
Commentary: Vonage Fighting on Two FrontsVonage: Court Grants Stay On Order Barring Signing Up New UsersComcast Set To Pass Vonage As Top VoIP Provider
Stocks/ETFs to watch: Vonage Holdings (VG), Verizon Communications (VZ), Charter Communications (CHTR), Comcast (CMCSA)

MGIC's Q1 Earnings Miss, Losses Jump, but Delinquencies Slightly Lower

Mortgage insurer MGIC Investment Corp. reported Q1 net income declined 43.5% to $92.4 million, or $1.12/share, missing analysts' average estimate of $1.71/share. MGIC said losses incurred in Q1 totaled $181.8m (+58% y-o-y). Delinquent loans however, were lower than the year ago period and compared to the end of '06. Ex-bulk loans, delinquencies were 3.89% as of Mar. 31, vs. 4.08% as of Dec. 31, and 4.0% on Mar. 31, '06. MGIC-Invest-MTG-chart-04-11-07 MGIC said income from joint ventures fell 64% to $14.1m, primarily impacted by an operating loss at C-BASS (described as "a leading issuer, servicer, and investor specializing in credit-sensitive residential mortgage assets" on its website). Revenues were up less than 0.2% to $369.6m, but also came up short of analysts' expectations of $380 - $383m. MGIC's chairman and CEO commented, "The short-term financial results masked the long term improvements in our business fundamentals, such as improving mortgage insurance penetration and policy persistency as well as a renewed respect for credit quality and the value of our product." Reuters reports MGIC has said "it has limited exposure in [subprime] lending to the riskiest home borrowers." At the time of publishing, MGIC was trading down 5.5% to $54.00 in pre-market activity on volume of 27,500.
Sources: Press release, Reuters
Commentary: Today's MGIC Investment Earnings Report: Subprime Reckoning DayLegg Mason's Bill Miller: Buys, Sells, PortfolioMGIC Investment: Living on Borrowed Time -- Barron's [Nov. '06]
Stocks/ETFs to watch: MGIC Investment Corp. (MTG). Competitors: PMI Group Inc. (PMI), Genworth Mortgage Insurance Corp., subsidiary of Genworth Financial (GNW), United Guaranty Corp., subsidiary of American Int'l Group (AIG)

Citigroup To Lay Off 5% of Its Global Workforce

Citigroup confirmed yesterday it will cut 17,000 jobs worldwide, with the majority of the cuts (57%) coming outside the U.S.c The company has faced increasing pressure to reign in expenses after they rose 15% to $52 billion last year, versus revenue which rose only 7% to $89.6 billion. The layoffs represent about 5% of Citigroup's 327,000 employees globally; in addition, the company revealed that approximately 9,500 jobs will be moved to lower-cost locations. Citigroup is expecting to save $4.6 billion through 2009 as a result of the cuts. The company failed to disclose further details related to the job cuts. Shares fell $0.60, or 1.15% to $52.80 in trading yesterday, before recovering $0.20 in after hours action.
Sources: Reuters, Bloomberg, Wall Street Journal
Commentary: Citigroup Will Cut 26,000 Jobs in Effort to Streamline -- New York TimesCitigroup Needs Un-GroupingCitigroup Set To Finally Consolidate Computer Systems
Stocks/ETFs to watch: Citigroup (C). Competitors: J.P. Morgan Chase (JPM), Bank of America (BAC), Deutsche Bank AG (DB), Credit Suisse Group (CS), ABN AMRO (ABN), UBS AG (UBS), Barclays PLC (BCS). ETFs: iShares S&P Global Financial Index Fund (IXG), iShares Dow Jones US Financial Services (IYG), Financial Select Sector SPDR (XLF)

Seeking Alpha's news summaries are combined into a pre-market briefing called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only a few seconds to sign up.

Asian Headlines (via Bloomberg.com)

Asian Stocks Fall, Led by Toyota, BHP, on U.S. Inflation, Growth Concerns Asian stocks fell from a six-week high after the Federal Reserve said it may raise interest rates to curb inflation. Toyota Motor Corp. (TM) and BHP Billiton Ltd. (BHP) led declines among companies that rely on U.S. sales.

Paladin Raises Summit Resources Bid to $974 Million After Areva Buys Stake Paladin Resources Ltd., an Australian uranium producer, raised its hostile bid for Summit Resources Ltd. by 22 percent to A$1.18 billion ($974 million), a day after Areva SA agreed to buy a minority stake in the explorer.

Japan's Producer-Price Inflation Quickens in March on Increased Oil Costs Japan's producer-price inflation accelerated for the first time in six months in March as higher oil prices pushed up the cost of gasoline and chemical materials.

China's Money Supply, Surging Reserves Add Pressure for Yuan to Strengthen China's money supply grew by more than the central bank's target for a second month and foreign- exchange reserves surged to a record $1.2 trillion, increasing pressure on the government to allow faster yuan gains.

Bombay Stock Exchange May Sell $52 Million of New Shares to Funds, Banks The Bombay Stock Exchange, Asia's oldest, may sell about $52 million of stock to investors including buyout firms, banks and insurers after its members didn't offer enough equity in a regulator-ordered sale.

European Headlines (via Bloomberg.com)

European Stocks Decline on Fed Rate Outlook; Daimler, Lafarge Shares Drop European stocks headed for the biggest loss this month after the Federal Reserve revived the prospect of higher U.S. interest rates and investors bet the European Central Bank will keep raising borrowing costs.

Pinault Rules Out Sweetening PPR's $7.1 Billion Takeover Offer for Puma PPR SA Chief Executive Officer Francois-Henri Pinault said his company won't raise its 5.3 billion euro ($7.1 billion) offer for German sporting-goods maker Puma AG (OTC:PMMAY).

ECB Keeps Interest Rate Unchanged, Awaits Evidence Inflation Is Quickening The European Central Bank left interest rates unchanged after seven increases since late 2005, awaiting evidence that inflation will pick up before raising borrowing costs again.

U.K. February Trade Deficit Widens More Than Expected; Pound Hurts Exports Britain's trade deficit widened more than expected in February while a survey indicated manufacturers are struggling to raise prices, evidence the strength of the pound is hurting exporters.

Source: Pre-Market Snapshot: Bearish Open On Tap