Category Archives: Earnings
Currency Volatility Could Hurt $C to the Tune of $7B
“Citigroup Inc. (C) could lose as much as $7 billion on currency swings if Charles Peabody is right, putting the analyst at odds with peers who say the stock will be the best performer among big U.S. banks in the year ahead.
Peabody, who leads research at Portales Partners LLC, is among only four analysts out of 34 tracked by Bloomberg who recommend investors sell Citigroup shares. He estimates the bank may lose $5 billion to $7 billion in regulatory capital this year if the dollar gains against the yen, euro and currencies in emerging markets, which provide about half the firm’s profit. That would be its worst translation loss in five years, exceeding the $3.5 billion deficit in 2011.
Former Chief Executive Officer Vikram Pandit expanded Citigroup’s overseas businesses to help it recover from 2008’s U.S. credit crisis. Peabody, who predicted the mortgage market’s plunge as early as January 2005, said the firm’s reliance on revenue from abroad is now driving his concern that a global economic slowdown will hurt the bank more than U.S. rivals.
“Those currency risks are worth taking if the high-growth prospects are there,” said Peabody, 57. “But if global growth falters, then those risks get magnified and growth doesn’t offset the currency risks.”
Citigroup’s stock will climb about 7 percent to $55.67 within the next year, according to the average of 26 analyst estimates compiled by Bloomberg. While Peabody doesn’t disclose his price targets, he said the shares could fall 50 percent. The lender has been the best performer in the 24-company KBW Bank Index (BKX), jumping 87 percent in the 12 months through yesterday.
The other five largest U.S. banks will collectively gain 0.1 percent, led by JPMorgan Chase & Co.’s 4.7 percent advance, according to the analysts.
Citigroup’s Hedges…”
Investors Not Impressed on $LULU’s Beat, CEO to Depart
“Yoga and athletic apparel maker Lululemon Athletica Inc. (NASDAQ: LULU) reported first quarter 2013 results after markets closed today. For the quarter the company reported diluted earnings per share (EPS) of $0.32 on revenue of $345.8 million. In the same period a year ago, the company reported EPS of $0.32 on revenue of $285.7 million. First-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.30 and $341.07 million in revenues….”
$TXN Lowers Guidance
“Texas Instruments said it expects second-quarter earnings of 39 to 43 cents a share. That’s narrower than the 37 cents to 45 cents a share TI had previously projected but still in line with the consensus estimate of 42 cents a share, according to a survey by Thomson Reuters.
The company expects revenue of $2.99 billion to $3.11 billion, narrower than the $2.93 billion to $3.17 billion previously expected, but in line with the $3.06 billion expected….”
$DG Reduces the High End of Its Profit Guidance
“(Reuters) – Discount chain Dollar General Corp cut the top end of its full-year profit forecast, citing moderating sales growth and a lower gross profit rate, sending its shares down 5 percent in premarket trading.
The company, which prices most of its merchandise below $10, cut the high end of its earnings forecast range to $3.22 per share from $3.30. The low end is unchanged at $3.15.
Analysts on average were expecting a profit of $3.28 per share, according to Thomson ReutersI/B/E/S.
The company said it expected sales of non-consumable items – higher-margin goods such as home products and apparel – to remain under pressure as frugal customers opt for lower-margin products.
However, Dollar General said it expected same-store sales to increase by 4-5 percent through the year as key initiatives, including the rollout of tobacco products, gain traction….”
$ZNGA to Pink Slip 18% of Workforce After Announcing Poor Earnings
“Zynga confirmed it was laying off 18 percent of its workforce — which represents 520 employees — in a bid to reduce costs, as it seeks to drastically restructure its troubled business.
The move today will affect every part of the San Francisco social gaming company, cutting $80 million in staff costs. It will also include the closing of its offices in New York, Los Angeles and Dallas, as well as other infrastructure costs, adding to the total expense reduction.
In addition, Zynga has now said in a press release that it is downgrading in its investor guidance for the second quarter with results at the lower end of what Wall Street has been expecting….”
Airline Earnings May Take Off Thanks to Packed Planes
“BERLIN (AP) — A global airline industry group says it expects carriers to generate $12.7 billion in profits this year thanks to packed planes.
The International Air Transport Association says it is revising its previous profit estimate of $10.6 billion upward by 20 percent for 2013. The new profit forecast is a 67 percent increase on the $7.6 billion major airlines earned in 2012…”
FDIC: Bank Profits Hit All Time Highs
“U.S. banks earned more from January through March than during any quarter on record, buoyed by greater income from fees and fewer losses from bad loans.
The Federal Deposit Insurance Corp. said Wednesday the banking industry earned $40.3 billion in the first quarter, up 15.8 percent from the $34.8 billion earned in the first quarter of 2012. The previous high mark was when the industry was smaller in terms of total assets.
Despite record earnings, the report sketched a mixed picture for an industry that is still finding its way five years after the peak of the 2008 financial crisis.
Only about half of U.S. banks reported improved earnings from a year earlier, the lowest proportion since 2009. Bank lending declined after several quarters of increases. And bank profits from interest charged fell to the lowest level in nearly seven years.
A reduction in expenses for legal costs and proceeds from a settlement boosted earnings during the quarter, the FDIC said.
Banks also reduced to a six-year low the amount they set aside in case of losses on loans, the FDIC said…..”
$TIF Beats by $0.18, Company Only Reaffirms Previous Guidance
“NEW YORK (AP) — Tiffany & Co. says its first-quarter net income rose 3 percent as sales improved across all regions.
The high-end jewelry company known for its blue boxes earned $83.6 million, or 65 cents per share, for the period ended April 30. That’s up from $81.5 million, or 64 cents per share, a year ago.
Excluding costs tied to staff and occupancy cuts, earnings were 70 cents per share. This easily beat the 53 cents per share analyst expected…..”
$P Gaps Up on Revenue Beat
“NEW YORK (TheStreet) – Pandora Media (P_) shares were jumping more than 9% to $18.73 in afterhours trading after the biggest online radio service beat first-quarter revenue expectations. The company’s revenue outlook also topped expectations as its mobile advertising sales accelerated and the company added more subscribers during the quarter.
During the first quarter, mobile revenue grew 101% year-over-year to $86.7 million, outpacing mobile listener hour growth, which grew 47% year-over-year. Also, Pandora One subscribers surpassed 2.5 million, adding over 700,000 net new subscribers in the first quarter and growing 114% year-over-year. Total listener hours grew 35% to 4.18 billion…..”
$ANF Tanks in the Pre-Market as Losses Widen and Sale Store Sales Melt Down
“May 24 (Reuters) – Abercrombie & Fitch Co on Friday reported a steeper-than-expected drop in quarterly comparable sales, in part because of inventory shortages, and the teen clothing retailer’s shares fell more than 11 percent.
Sales at stores open at least a year combined with online sales fell 15 percent. The decline was most pronounced at the Hollister chain, the company’s largest. But Abercrombie lost business under all its banners, even in its direct-to-consumer operations, which include e-commerce.
Abercrombie said it expected comparable sales to be slightly down for the remainder of the year.
Overall sales fell 9 percent to $838.8 million in the first quarter ended May 4, well below analysts’ expectations of $941.3 million, according to Thomson Reuters I/B/E/S…..”
$GPS Profits Rise 43%
“NEW YORK (AP) — After years of struggle, Gap is back in style.
Gap Inc., which owns The Gap, Old Navy and Banana Republic clothing chains, on Thursday reported a 43 percent jump in its fiscal first-quarter net income, as the company continues to reap benefits from the turnaround plan that it began early last year.
The results are welcome news for customers and investors who had watched the one-time industry darling flounder over the past several years. Gap’s performance shows that efforts by the chain to attract customers with brightly colored fashions and lively ads are helping to boost sales.
“We are pleased with our strong start to the year, especially first-quarter sales,” Glenn Murphy, chairman and CEO of Gap, said in a statement. Murphy pointed to the improving mindset of the consumer, noting the improving housing market and job picture and the stock market’s gains.
“The consumer has been operating pretty much for the last five-plus years in a very challenging environment,” he said on a call with analysts. “This is the first quarter in a long time that the consumer, to us, felt like they were moving in a more positive direction.”
Gap executives did not mention the recent push by activists for clothing makers to form a global pact aimed at improving safety in Bangladesh clothing factories. Gap said last week that it couldn’t join the pact unless a provision was made that it felt would free it from unlimited legal liability. The San Francisco-based retailer also backed an outlook for the full year that remains below analyst expectations. Gap said that the weaker yen will impact its fourth quarter…..”
$SHLD Reports A Larger Loss Than Expected
“NEW YORK (AP) — It was another ugly quarter for Sears Holdings Corp.
The beleaguered department-store chain reported a steeper-than-expected loss for its first quarter on slumping sales.
It also announced that it is considering selling its protection-agreement business in an ongoing effort to raise cash as it struggles to reverse its fortunes. The unit runs the part of the business that sells customers service contracts that guarantee to fix or replace appliances if they break within a certain timeframe.
The steep loss drove Sears’ shares down more than 12 percent in after-hours trading.
Like many retailers, Sears’ business in the first couple of months of the year was hurt by poor weather and new economic pressures on its customers, including rise in the payroll tax. But the latest results show that Sears’ path toward profitability will be more elusive than the chain may have thought. Critics say that Sears still has not given shoppers a compelling reason to spend money there.
“I do not subscribe to the view that the macro factors are the sole reason for our poor performance,” hedge fund billionaire and Sears Chairman Eddie Lampert, who added the title of Sears CEO in February, told investors in a call following the earnings results Thursday.
Lampert succeeded Louis D’Ambrosio, who had been CEO since February 2011 but left because of family health reasons.
“They have an impact. But even with that impact, we should have been doing a lot better than we are,” Lampert said…..”
$URBN Falls on Weak Quarterly Results
“NEW YORK (TheStreet) - Urban Outfitters (URBN_), owner of Anthropologie, Free People and its name brand, fell in after-hours trading as sales growth fell short of analyst expectations.
The Philadelphia-based specialty retailer said revenue rose 14% for the three months ended April 30 to a record $648.1 million, less than an average forecast of $655.1 million, according to according to Yahoo! (YHOO_) Finance. Profit jumped 39%…”
A Better Housing Market Helps $HD to Post Better Quarterly Results
“Home Depot Inc. (HD), the largest U.S. home-improvement retailer, posted first-quarter profit that topped analysts’ estimates and raised its forecast for earnings this year as the housing rebound boosts renovation spending.
Net income in the quarter ended May 5 rose 18 percent to $1.23 billion, or 83 cents a share, from $1.04 billion, or 68 cents, a year earlier, the Atlanta-based company said today in a statement. Analysts projected 76 cents, the average of 25 estimates in a Bloomberg survey.
Home Depot is benefiting from rising U.S. home prices that are giving homeowners the confidence to start projects and spend more. Revenue rose 7.4 percent to $19.1 billion, topping analysts’ $18.6 billion estimate, as the average customer purchase increased 5 percent to $57.24.
Spending rose on “consumers’ confidence to invest in higher ticket projects,” John Tomlinson, an analyst at ITG Investment Research in New York, said today in an e-mail. His company doesn’t rate shares.
Profit this year will be $3.52 a share, up from a previous estimate of $3.37, the company said today. The guidance includes the effect of share repurchases the company already has made and plans to make this year. Analysts estimated $3.54, on average.
Residential real-estate prices rose in February by the most since May 2006, with the S&P/Case-Shiller (SPCS20) index of house values in 20 cities up 9.3 percent from a year ago.
Home Depot rose 3.8 percent to $79.68 at 7:26 a.m. in New York. The shares advanced 24 percent this year through yesterday, compared with a 17 percent gain by the Standard & Poor’s 500 Index.
Transactions Increase…”
$BBY Posts a Quarterly Loss
“Best Buy Co. (BBY), the world’s largest consumer-electronics retailer, posted an $81 million first-quarter net loss as the company lowers prices to compete with online rivals.
The loss of 24 cents a share in the quarter ended May 4 compares with net income of $158 million, or 46 cents, a year earlier, the Richfield, Minnesota-based company said today in a statement….”
$CPB Beats Expectations and Raises Guidance
“Stronger-than-expected fiscal third-quarter growth helps Campbell Soup CPB -0.46% boost its EPS view and project other metrics being at the high end of prior forecasts.
Leading the way is a nearly 5% volume increase amid higher promotional spending helping US condensed, ready-to-serve and broth sales post double-digit sales gains.
That as the early part of 2013 was much-more conducive weather-wise to soup eating that a year earlier, which saw record late-winter/early-spring warmth in America.
But the company also saw roughly 5% volume growth in its global baking-and-snacks business and 4% gains in international simple meals and beverages….”
$JCP Disappoints on Earnings
“Struggling department-store retailer JC Penney on Thursday reported operating margins plunged in the first quarter on weak sales and heavy clearance deals, as its new chief executive promised more promotions and a return to basics to win back shoppers.
Penney, struggling with mass customer defections after a failed strategic shift by former Chief Executive Ron Johnson, said gross margins came in at 30.8 percent, nearly 7 percentage points lower than a year earlier. Total sales and same-store sales both posted double-digit declines, in line with the company’s warning last week…..”
$CSCO Beats Estimates for a 9th Consecutive Quarter on Revs and a 6th on Profits
“Cisco Systems (CSCO) reported third-quarter 2013 earnings of 48 cents a share, beating the Zacks Consensus Estimate of 45 cents on higher revenues and lower-than-expected operating expenses. The adjusted earnings per share exclude one-time items but include stock-based compensation expense.
Revenues
Revenues increased 5.2% year over year and 0.8% sequentially to $12.2 billion. Products (78.2% of total revenue) were up 5.5% year over year to $9.6 billion. Services (21.8% of total revenue) jumped 8.0% year over year to $2.7 billion.
Revenues decreased year over year across most of the geographies except Americas. The Americas region increased 10.2% year over year, while Asia-Pacific, Japan and China collectively known as APJC decreased 0.2% from the year-ago quarter. Europe, the Middle East and Africa (:EMEA) also declined 0.9% on a year-over-year basis due to continued macroeconomic challenges in Europe.
Product Revenues by Category
Switching (29.5% of total revenue), Collaboration (8.3% of total revenue), Security (2.7% of total revenue), and Other Products revenues declined 2.0%,1.0%, 4.0% and 41.0% year over year, respectively. NGN Routing, which accounted for 17.5% of total revenue, was flat year over year.
However, this decline was fully offset by strong performances from Service Provider Video (10.6% of total revenue), Data Center (4.2% of total revenue), Wireless (4.3% to total revenue) and Service (21.8% of total revenue) segments, which increased 30.0%, 77.0%, 27.0%, 7.0%, respectively.
Orders
Cisco’s total product orders in the quarter were up 4% year over year. The Americas region saw the strongest growth at 7%, APJC orders increased 1% while EMEA and Russia declined 6% from the year-ago quarter (consistent with broad market trends).
In the APJC region, Japan again witnessed strong growth, while China continues to see challenges related to the business environment.
Gross Margin…”
$WMT Q2 Forecast Trails Estimates
“Wal-Mart Stores Inc. (WMT), the world’s largest retailer, forecast second-quarter profit that was less than analysts estimated as its shoppers struggle amid the slow U.S. economy and higher taxes.
Earnings per share will be $1.22 to $1.27, the Bentonville, Arkansas-based company said today in a statement. Analysts projected $1.29, the average of 24 estimates compiled by Bloomberg. Sales in the fiscal first quarter ended April 30 trailed analysts’ estimates while profit matched projections.
Chief Executive Officer Mike Duke has cut prices on groceries and other necessities as the chain’s lower-income shoppers deal with elevated unemployment and higher Social Security taxes. First-quarter sales at U.S. Wal-Mart stores open at least 12 months fell 1.4 percent, the first drop after six straight gains. Analysts estimated a 0.1 percent decline.
“They’re pressured by the economy, unemployment, the increase in payroll taxes, the delay in tax returns,” Bernard Sosnick, an analyst at Gilford Securities based in New York, said today in an interview. “All these negatives coalesced in the first quarter.”
Sosnick recommends buying the shares and said improvement in the economy and lower gas prices should help Wal-Mart later in the year.
The shares fell 2.9 percent to $77.53 at 7:54 a.m. in New York. Wal-Mart had gained 17 percent this year through yesterday, compared with a 16 percent gain for the Standard & Poor’s 500 Index.
Profit Gains…”
$DE Beats Expectations, Guides Lower for the Year
“MOLINE, Ill. (AP) — Deere & Co. said on Wednesday that bad weather and weak economies will hinder sales growth this year.
The company reported better-than-expected second-quarter earnings and maintained its full-year profit prediction, but the outlook lowered Deere’s stock price in premarket trading.
Deere makes farm and construction equipment, and said sales of that gear would rise 5 percent during the current fiscal year, which is now half over. It had previously predicted growth of 6 percent.
The reduced sales expectation came after a long, cold winter in North America delayed the planting of this year’s seeds. It also slowed construction work and reduced demand for turf-care equipment, the company said.
CEO Samuel R. Allen also said Deere’s “near-term forecast is being tempered by lingering economic concerns in many parts of the world, which are restraining business confidence and growth.”
Deere’s second-quarter net income rose 3 percent to $1.08 billion, or $2.76 per share. That was up from $1.06 billion, or $2.61 per share, during the same period last year.
That topped analysts’ average estimates for earnings of $2.71 per share.
Revenue from equipment sales rose 9 percent to $10.27 billion from $9.41 billion a year earlier. Analysts had expected equipment revenue of $9.82 billion. Including financial services, Deere revenue rose 9 percent to $10.91 billion.
Deere raised prices 3 percent and shipped more gear during the quarter….”
