MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Tuesday, May 21, 2013
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9:39 AM Heard during Home Depot's (HD +2.2%) earnings call: 1) Comparable-store sales should be higher in Q2 than total sales growth due to seasonal shifts. 2) Pro-level business was a big driver of gains in Q1, boosting sales and average ticket. 3) Appliance business momentum still strong, contributed 70 bps of comp gain in Q1. More product rollouts coming. 4) The late start to the spring garden season could help boost Q2 numbers as the retailer comped negatively in Q1. 5) Looking for some HD momentum? April comparable-store sales came in +10%. (webcast) Comment!
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9:21 AM Jefferies initiates coverage on Sony (SNE) with a Buy rating. With Loeb making some noise, an exit from the electronics business looks more likely, according to the firm. By Jefferies' math, Sony's profits would almost double if that were to happen. SNE +0.9% premarket. Comment!
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9:15 AM Heard during Best Buy's (BBY) earnings call: 1) CEO Hubert Joly indicates the company might do more store-within-a-store deals with vendors. Talks are ongoing. 2) No specific details are given, but the company says it's already seeing a positive impact on sales in states where online sales taxes are collected. 3) Joly seems to be doing what he does best, negotiating cost reductions at Best Buy and squeezing out more savings. 4) A nice improvement in online sales is a highlight for the company as execs pitch the case the brand is being resurrected. BBY -2.7% premarket. (webcast) Comment!
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9:00 AM More on TJX Companies' (TJX) Q1: An unexpectedly soft quarter from the retailer saw comparable store sales up 2% Y/Y, led by strong showings for HomeGoods and TJX Europe. The retailer improved its gross profit margin by 20 bps to 28.4% but spent more on marketing during the period. The company was surprisingly quiet about its e-commerce business (WMT +30% during the period) and its impact on results. FQ2 EPS pegged at $0.61-$0.63 and FY14 EPS narrowed to $2.70-$2.78 vs. $2.82 consensus. TJX -1.4% premarket. (PR) Comment!
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8:44 AM More on Red Robin Gourmet's (RRGB) Q1: Company-owned comparable restaurant revenues rose 2.2% Y/Y. Operating profit margin up 30 bps to 21.5% on lower food and beverage costs. The outlook for 2013 includes comparable restaurant sales growth of 2.5% to 3.0% and operating profit margin of 20.9%. (PR) Comment!
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8:40 AM A trend to watch: The grocery market in the U.K. is becoming increasingly polarized as both high-end specialty grocers and discounters pick up market share while national grocery store chains suffer. Is the same pattern unfolding in the U.S.? The Q1 read is that Wal-Mart (WMT) continues to gobble up grocery market share at the expense of Kroger (KR), Supervalu (SVU) and Safeway (SWY) while natural/organic chains (WFM, TFM, NGVC) remain a growth story. Comment!
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8:27 AM Strengthening rumors of a steep 20% consumption tax on luxury cars in China could create a ripple in the automobile industry with expectations high for the segment and productions plans ramping up. On watch: Lincoln (F), Cadillac (GM), Mercedes-Benz (DDAIF.PK), Audi (VLKAY.PK), Tata Motors (TTM), and Porsche ((POAHY.PK). 1 Comment
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8:13 AM More on Saks (SKS): Comparable store sales grew 5.9% during the period while the retailer's gross margin rate remained flat. The company notes it saw SG&A deleveraging as it invested in its omni-channel initiative. Saks says it will accelerate the launch of Off5th.com to this fall. FY13 same-store sales projected to increase 4% to 6%. SKS +2.2% premarket. (PR) Comment!
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8:03 AM Diageo (DEO) has the firepower to do more deals including taking a stab at buying out LVMH's majority stake in Moet Hennessy, according to Nomura. An acquisition would help Diageo increase its presence in Asia. Comment!
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7:53 AM More on Dick's Sporting Goods (DKS) Q1: Consolidated same store sales decreased 3.8% after adjusted for a calendar shift, a mark which was worse than the company's own guidance for a 1%-2% dip. Gross profit as a percentage of total sales increased 8 bps to 30.87%. The retailer reiterates prior guidance of FY13 EPS of $2.84-$2.86 and says it expects same-store sales to increase 2%-3% during the period. DKS -0.4% premarket. (PR) Comment!
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7:51 AM More on Monro Muffler's (MNRO) FQ4: It looks like Northcoast Research was a bit too optimistic in its EPS call for MNRO, as earnings are in-line with Street expectations (which, at $0.25, were still at the high end of guidance). Nonetheless, revenue beat expectations, rising 14.1% Y/Y and comps growth wasn't as negative as the company originally forecast, coming in at -5.6% (adjusted) versus estimates of between -9% and -6%. Gross margins shrunk 270bps, and operating income fell 11.4%. Outlook: FY14 sales of $840-865, EPS of $1.65-1.80 versus consensus of $865.39 and EPS of $1.78. (PR) Comment!
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7:51 AM ICSC Retail Store Sales: +0.2% W/W, vs. -2.0% last week. +3.1% Y/Y vs. +1.2% last week. Comment!
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7:36 AM KeyBanc upgrades Wet Seal (WTSL) to Buy from Hold, price target $6.50. Analyst Edward Yruma says the retailer "presents [a] significant upside opportunity" as a recent meeting with management indicates the company "can return quickly to its fast fashion roots." Yruma does warn that this trade is more suited for "risk tolerant investors." Comment!
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7:22 AM More on AutoZone's (AZO) FQ3: Domestic store sales dipped 0.1% but the company says sales trends strengthened during the last four weeks of the period. Inventory was up 6.3% Y/Y, largely due to a higher store count and strategic investments in hard parts assortment. The retailer opened 33 new stores during the quarter to take its store count to 4,767. (PR) Comment!
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7:12 AM More on Best Buy's (BBY) Q1: Comparable store sales dipped 1.1% during the period, although the retailer did get a strong bounce (+16.3%) from online sales. If the shift of the Super Bowl and the impact from the decision to cut back on certain non-core businesses is backed out, comp sales were flat. Gross profit was down 190 bps to 23.4% due to the retailer's increased investment in pricing and higher promotional stance. The company notes Samsung Experience shops will be a focus in Q2. (PR) Comment!
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6:58 AM United Continental (UAL) says it signed a capacity agreement with Skywest (SKYW) to operate 40 Embraer 175 aircraft under the United Express brand name. The deal is in addition to previous Embraer 175 jets ordered for United Express. Comment!
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6:53 AM Shares of Home Depot (HD) move 4.3% higher premarket after the retailer beats earnings and raises its guidance. The company benefited from strength in the housing recovery which seemed to trump the disruptions from weather and late tax refunds that plagued other retailers. Customer traffic was up 2.5% during the period while the average ticket rose a brisk 5%. Comment!
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