MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Thursday, May 23, 2013
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9:04 PM More on Ross Stores' (ROST) Q1: Revenue and comps rise 8% and 3% Y/Y respectively (comps growth was 9% in Q1 2012). Operating margin rises 50 basis points to a record 14.9% thanks to "higher merchandise gross margins and [the] favorable timing of expenses." CEO Michael Balmuth says the company is on track to repurchase ~$550M in shares in FY13. Outlook: Q2 EPS of $0.89-0.93 (consensus is $0.91/share ) and FY13 EPS of $3.70-3.81 (consensus is $3.88/share). Shares +0.8% AH. (PR) Comment!
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8:50 PM More on Williams-Sonoma's (WSM) Q1: Revenues, operating margin, and EPS rise 8.6%, 120 basis points, and 33% Y/Y respectively. The quarter was "the best Q1 in the company's history," CEO Laura Alber says. Comps (which is "comparable brand revenue" here) rose 7.2% versus 5.4% growth in Q1 2012. Negative Q1 2012 comps growth in the namesake brand, Pottery Barn Kids, and PBteen is reversed, as the brands see growth of 1.9%, 6.9%, and 16.1% respectively during the quarter. WSM raises FY13 guidance to $2.67-2.77/share on revenue of $4.22-4.3B against consensus of $2.77/share and sales of $4.25B. Shares flat AH. (PR) Comment!
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8:37 PM More on Zumiez' (ZUMZ) Q1: Revenues rise 14.3% Y/Y, even as comps drop 0.7% (comps growth was 12.9% in Q1 2012). CEO Rick Brooks reminds investors that the operating environment in Q1 was "more challenging" than it was in the same period a year ago and notes that "business improved throughout the quarter driven by strong full price selling during" March and April. For Q2 ZUMZ sees EPS of $0.12-0.14 (including a ~$0.04/share hit from the Blue Tomato acquisition) on revenue of $155-158M — consensus is for $0.17/share on sales of $156.79M. Shares -3.09% AH. (PR) Comment!
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8:20 PM More on Aeropostale's (ARO) Q1: Revenues and comps fall 9% and 14% Y/Y respectively. The company cites a "weak macroeconomic environment [and] unseasonably cool weather" — so, the usual suspects — as negative factors. E-commerce revenues (included in the comps calculation) rise 13%. CEO Thomas Johnson says visibility is "limited" going forward but expresses confidence in the company's strategic initiatives to transform the brand and "develop growth drivers." For Q2, ARO sees a loss of $0.15-0.20/share versus consensus of a $0.06 per share loss. Shares -4.49% AH. (PR) Comment!
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7:23 PM Sears Holdings (SHLD) gets slammed in after-hours trade following a disappointing first quarter that was much worse than analysts expected. In its conference call, CEO Eddie Lampert says the performance is "not acceptable,” adding that “a company of our size and with our assets should be generating a significant profit.” Shares -12% AH. 4 Comments
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7:14 PM Tempur-Pedic International (TPX) says shareholders have approved the company's name change to Tempur Sealy International, at the company's annual meetingheld yesterday. The new name recognizes the combination of Tempur-Pedic and Sealy. The shares will continue to trade on the NYSE under the symbol "TPX." Comment!
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6:41 PM Procter & Gamble (PG) says it is bringing A.G. Lafley out of retirement to become Chairman and CEO effective immediately, succeeding Bob McDonald, who is retiring at the end of June after 33 years with the company. Shares +0.5% AH. 5 Comments
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4:39 PM More on Sears Holdings' (SHLD) Q1 results: Domestic comparable store sales fell 3.6%, comprised of decreases of 4.6% at Kmart and 2.4% at Sears U.S., blamed on weather related declines in lawn and garden; excluding that category, comp store sales would have gained 0.3%. Online business rose 20% Y/Y. Says it may put its service agreement business up for sale to raise cash. Shares -13% AH. 10 Comments
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4:10 PM More on Gap's (GPS) Q1: The company reports comparable store sales gained 2% during the quarter with Gap, Old Navy, and Banana Republic all making a solid contribution but nothing remarkable. Operating margin expanded 290 bps to 14.2%. Store count: Athleta +5 to 40; +2 China stores to 49; Gap North America -7 to 983, Total stores +21 to 3,428. The retailer reaffirms its full year EPS guidance of $2.52-$2.60 vs. $2.72 consensus. GPS -1.0% AH. (PR) Comment!
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3:16 PM Toro (TTC +3.7%) moves up today after posting a better than expected FQ2. Net earnings rose 14% Y/Y on sales strength in its professional segment, which helped offset a 13% decline in residential sales. The company says that although it backs current earnings guidance, it's lowering revenue growth expectations to between 3% and 4%, compared with its February forecast of a 5% revenue increase. Gross margin improved to 35.8% from 34%. Comment!
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3:08 PM Delta Air Lines (DAL +0.8%) CEO Richard Anderson says in a wide-ranging interview with Charlie Rose that the carrier will work hard to create a superior brand. He also calls the combined US Airways-American Airlines a "formidable" competitor, but makes it clear Delta will stay number one. Comment!
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2:07 PM Boeing (BA +1.7%) updates its Orders and Deliveries page for the week, saying that since its last update it has received 107 new orders consisting of six 777s and 101 737s. In the Changes category, it reduced 737 net orders by 24. Additionally, the company says that Chinese regulators have cleared local airlines to fly the 787 Dreamliner, and are expected to allow them to launch overseas flights within a matter of months. Comment!
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2:03 PM Starbucks (SBUX -1.4%) takes the news of a potentially cooling China economy a little worse than other large service/consumer product companies with future growth prospects in China increasingly part of its valuation. SBUX in China by the numbers: The company's 800 China outlets in 58 cities grew same-store sales by 8% and brought in over $200M last quarter. The brand claims 61% of the China coffee market and sees opening 1.5K stores by 2015. Comment!
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1:36 PM VeriFone (PAY +2.9%) trades higher after SunTrust Robinson Humphrey chimes in with an upgrade on the company to Buy from Neutral. The company is two months into its tenure under a new CEO with sentiment gradually improving after a FQ1 earnings warning caught everyone napping and decimated share price. Comment!
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1:26 PM Stanley Black & Decker (SWK -2.4%) Chairman John Lundgren made an interesting revelation during his chat at the Electrical Products Group Conference yesterday. The exec says the company will keep an eye on the spinoff from Ingersoll Rand of its security business to see if a similar move would make sense for SWK with its security business. On strategy: "Because if we are convinced a year or two years from now that we have got a 12x EBITDA business trapped in a 7 or 8x business, we will make it bigger." Comment!
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1:14 PM Overdue student loans reached an all-time high of 11% during Q3 of last year, according to the DOE. The news comes just as the House approved a Republican-led proposal to allow interest rates on student loans to float. Still up for debate is whether or not a two-year extension of the 3.4% rate for subsidized Stafford loans will be legislated. Sector watch: APEI, APOL, CECO, COCO, ESI, STRA, LINC, LOPE, BPI, DV, CPLA, EDMC, NAUH. 2 Comments
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1:05 PM Retail analyst Rahu Sharma found a few things to like about Ralph Lauren (RL -2.4%) despite the company's top line miss with its FQ4 report. The retailer sold its inventory near full price and showed its brand is in good form. If guidance looks a touch light, Sharma reminds that lowball numbers from the company are par for the course. Comment!
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12:59 PM Summer studio watch: 1) Sony (SNE): The studio has seven films coming, but no sure-fire winners although After Earth could be the sleeper in the crowd. Daniel Loeb will be watching. 2) Warner Bros: (TWX) Though bad reviews are a major risk for The Hangover Part III, Man of Steel is forecast to be major hit across demographics. If Superman delivers, a refreshed franchise could boost forecasts for TWX. 3) Universal (CMCSA): Studio heads could roll if Fast & Furious 6 and RIPD don't deliver the macho audience in a crowded field. 4) Disney (DIS): Iron Man 3 is expected to have strong legs into the summer while The Lone Ranger looks more susceptible to disappoint with it debuting up aside Despicable Me 2. Pixar's Monsters University also hits screens. (box office projections) Comment!
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