Consumer
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News and Views
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Macro/Technicals
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Earnings
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Sector News, M&A, Capital Raises
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Top Events/Earnings Calendar
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Cantor Flows
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News and Views
After pushing towards resistance at 1100, the SPX fizzled out and closed up a fraction for the day on better volume than we’ve seen the past few days. Consumer Discretionary was strong leading the market today. Department Stores were strong across the board and CHS, TLB, ANN, LIZ were all strong in Women’s Apparel. The Retail Food sector was under pressure because of downgrades in KR and SWY.
Macro/Technicals
SPX: 1094.16; +.15RLX: 414.30; +1.65
RTH: 90.19; +.87
XLY: 31.53; +.93
XLP: 27.05; +.07
VIX: 24.59; +1.07
Leaders: CHS, BPI, DDS, COCO, ANN, TLB, OMX, LIZ
Laggards: CTRN, NLS, NFLX, SWY, KR, BJ
Earnings
PLCE Children's Place reports Q2 EPS ($0.30) vs Reuters ($0.34); authorizes share repurchases ($42.13). Guides Q3 EPS to $1.38-$1.43 vs Reuters $1.45. Guides full year EPS to $3.08-$3.18, above prior $3.05-$3.15 vs Reuters $3.20. First Call is $3.18.
NWY New York & Company reports Q2 EPS ($0.49) ex-items vs Reuters ($0.40) ($2.10). Company reports revenues of $243.3M vs Reuters $244.6M.
CMRG Casual Male reports Q2 EPS $0.12 vs Reuters $0.09 ($2.70). 2010 guidance: EPS $0.29-0.32 vs prior guidance $0.26-0.29 and Reuters $0.29
WSM Williams-Sonoma reports Q2 EPS $0.31 ex-items vs Reuters $0.22 ($28.33)
Company reports revenues of $775.6M vs Reuters $757.8M.
SSI Stage Stores reports Q2 EPS $0.27 vs Reuters $0.26 ($10.70)
Company reports revenues of $345.0M, as announced 5-Aug. Gross margin 30.2% vs year-ago 29.3%. Guides Q3 EPS to ($0.15)-($0.18) vs Reuters ($0.16); guides revenues to $333-340M vs Reuters $334.8M. Guides Q4 EPS to $0.76-0.79; guides revenues to $444-452M. Guides full year EPS to $0.90-0.96 vs Reuters $0.91; guides revenues to $1.46-1.48B vs Reuters $1.47B. Boardapproves new stock repurchase program authorizing company to buy back up to $25M of shares.
SHLD Sears Holdings reports Q2 EPS ($0.19) ex-items vs Reuters ($0.19) ($67.25)
First Call is ($0.18). Company reports revenues of $10.46B vs Reuters $10.62B.
- domestic comps (2.2%), including
- Kmart (1.4%)
- Sears Domestic (2.8%)
Kmart's quarterly decrease in comparable store sales was primarily driven by the food and consumables category, partially offset by increases in apparel, including footwear, and toys. Decreases in sales for the quarter at Sears Domestic were primarily driven by the power lawn and garden, tools, and consumer electronics categories. Sears Domestic's home appliance category registered a low single digit comparable store sales increase for the quarter due to increases in sales of refrigeration and seasonal air movement products. Cash balance was $1.2B at 31-Jul. SHLD repurchased $272M worth of stock and as of 31-Jul, SHLD had remaining authorization to repurchase $309M of common shares under the share repurchase program
Sector News, M&A, Capital Raises
TGT Washington Post looks at Target's situation after political donation ($51.95)
Without breaking any news, the article summarizes what has happened. Target thought it was simply supporting a lower-tax gubernatorial candidate when it made a $150K donation in July to help pay for ads for Tom Emmer. But since it turns out that he also wants to ban same-sex marriage, public-interest groups quickly rallied to call for nationwide boycotts of the chain. The article points out that the Supreme Court's ruling allowing companies to make political donations is fraught with similar dangers. Best Buy (BBY) made a $100K donation to the same organization Target did, but has avoided the brunt of the protests, because Target has positioned itself as a Wal-Mart (WMT) that appeals to more liberal people.
PG WSJ profiles Procter & Gamble CEO Robert McDonald and battles he is fighting ($60.75)
The West Point grad is chasing domestic consumers who have traded down from PG products while attempting to seize developing-market territory currently reigned over by Unilever (UL) and Colgate-Palmolive (CL). McDonald is reclaiming market share by cutting prices, which ultimately means that profits get hit. He claims that prices have been reduced on a minority of products, so "price war" does not accurately describe what is going on; observers and competitors tend to disagree. McDonald plans to invade Brazil with multiple brands this year, in contrast to PG's traditional empire setup in which each brand was its own fiefdom and made its own decisions about what markets to go to.
CRI Barron's Weekday Trader is positive on Carter Holdings ($23.77)
Barron's highlights the stability in Carter's consumer market, noting that unlike adults, growing children are unable to rely on the same set of clothing over multiple seasons. The article is also positive on valuation, noting that the stock trades at just 9.5x 2011 consensus EPS, a discount from the 15.3x average multiple seen since the company went public in 2003, as well as the 12x multiple carried by rival Children's Place Retail Stores (PLCE).
Top Events/Earnings Calendar
Earnings
PRE: BKE, BONT, CATO, CMRG, DKS, DLTR, FLO, FLWS, GME, LANC, NWY, PLCE, ROST, SHLD, SMRT, SPLS, SSI, TW, TWMC, WSM
POST: ARO, BAMM, FL, GPS, HPOL, WTSLA, ZUMZ
Events
None
Pre-Market Movers
UP— PETM +8%; DLTR +2%
DOWN— HOTT -4%
Cantor Flows
Flows
Consumer Staples: CQB, GMCR, JJSF, LANC, LNCE, SLE
Consumer Discretionary: AAP, BBY, CHS, GPS, HIBB, LOW, ORLY, TGT, TIF
Consumer Services: CECO, COCO, TIVO