Cantor Morning News

A worse than expected jobless claims number and the weakest Philly Fed since last November put the markets on their backs. Consumer Staples did better than the overall market while Consumer Discretionary issues were hurt by poor macro data and earnings/guidance. DLTR and PETM bucked the trend and were up nicely but GME, WSM, SPLS, FLWS, SHLD to name a few came up short and provided no silver lining going forward. The consumer is not doing well overall and as we have said to sell strength lately, we will stand by that and be a sellers of the retail group in general.

Macro/Technicals

SPX: 1075.58; -1.70%
RLX: 408.24; -1.46%
RTH: 88.87; -1.46%
XLY: 30.92; -1.93%
XLP: 26.73; -1.18%
VIX: 26.30; +6.95%

Leaders: CMRG, PETM, PLCE, DLTR, KCP, ZLC
Laggards: SHLD, GME, CHRS, LZB, ABM

Earnings

HIBB Hibbett Sports Inc reports Q2 EPS $0.14 vs Reuters $0.16 ($26.13). Company reports revenues of $139.8M vs Reuters $138.5M.

SJM J.M. Smucker reports Q1 EPS $1.04 ex-items vs Reuters $0.96 ($58.03). Results for Q1 of 2011 include the impact of a lower effective tax rate of 31.3%, compared to 35.2% in the Q1 of 2010. Company reports revenues of $1.05B vs Reuters $1.07B. Q1 EBITDA $223.2M vs. Reuters $228.5M.

KIRK Kirklands reports Q2 EPS $0.16 vs Reuters $0.18 -- 2 estimates ($16.23). Company reports revenues of $89.5M vs Reuters $90.7M.

Q2 comps +1.0%
During the 13-week period, the company operated an average of 282 stores as compared to 291 in the prior-year period.
Guides full year EPS to slightly increase y/y
Guides full year total sales to +4-6% vs prior +5-8%; implying comparable store sales ranging from slightly negative to slightly positive for H2 of 2010, combined with a sales lift provided by the net increase in the store base.
Reaffirms FY11 net store unit growth of approximately 10% and net square footage growth of approximately 15%.

ZUMZ Zumiez reports Q2 EPS $0.02 ex-items vs Reuters ($0.01) ($15.95). Company reports revenues of $97.7M vs Reuters $97.5M. The company guides comps for Q3 to increase in the mid single digit range and guides Q3 EPS to $0.21-$0.24 vs Reuters $0.24.

GPS Gap reports Q2 EPS $0.36 vs Reuters $0.35 ($17.69). Company reports revenues of $3.32B. Note GPS reports sales and comps monthly. Reaffirms full year EPS guidance of $1.77-$1.82 vs Reuters $1.80. GPS repurchased 38M shares for $799M. GPS continues to see operating margin for f10 to be about 13%. Separately, GPS authorizes a new $750M share repurchase program.

BAMM Books-A-Million reports Q2 EPS $0.12 vs year-ago $0.10 ($5.88). Reports Q2: Revenues $120.0M vs year-ago $122.4M

ARO Aeropostale reports Q2 EPS $0.46 vs guidance $0.45-0.46 and Reuters $0.46 ($23.23). Company reports revenues of $494.7M. Guides Q3 EPS to $0.61-0.63 vs Reuters $0.73

FL Foot Locker reports Q2 EPS $0.04 vs Reuters $0.03 ($12.99). Company reports revenues of $1.10B vs Reuters $1.13B.

CRMT America's Car-Mart reports Q1 EPS $0.70 vs Reuters $0.67 ($22.92)

WTSLA Wet Seal reports Q2 EPS $0.02 vs Reuters $0.02 ($2.99). Reports Q2: Revenues $131.5M, as previously announced and Q3 Guidance:

Revenues $139-144M vs Reuters $148.4M
Guides Q3 comps to decline 2-5%.
For all of fiscal 2010, the company now expects to have 25 net Wet Seal store openings and 3 net Arden B store openings.
The company forecasts fiscal 2010 net capital expenditures will be approximately $31M to $32M, of which approximately $20M to $21M will be for construction of new stores or remodeling of existing stores upon lease renewals and/or store relocations.

Sector News, M&A, Capital Raises

PEP Barron's Weekday Trader is positive on PepsiCo ($64.66). Barron's notes that the company has raised its dividend for 38 consecutive years and has plans to repurchase up to $15B worth of stock over the next three years. It adds that the company is also taking significant steps to revitalize weak earnings and sluggish North American beverage sales. The article is also positive on the savings from the company's $7.8B acquisition of two its biggest bottlers and heightened investment in emerging markets.

JWN Nordstrom authorizes $500M share repurchase program ($31.19)

Research Away

UA ($36.31) Jefferies comments on Under Armour, confirms launch of basketball footwear The firm sees footwear as a positive catalyst for the company and while a fall launch for basketball was somewhat expected by the market, Jefferies notes this is the first time mgmt. has publicly announced any details around the product. Vs. prior launches, basketball should be more conservative with a moderate impact to EPS in 2010 with the potential for $0.05 in accretion next year. Shares of UA are buy rated with a $45 target.

Cantor Flows

Flows

Consumer Staples: HANS, GMCR, LNCE, SLE

Consumer Discretionary: AEO, CHRS, FRED, HOTT, ZZ

Consumer Services: CECO, COCO, TIVO

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