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Thursday, August 03, 2006

Retail Details

By William Trent, CFA of Stock Market Beat


The consumer clearly appears to be tiring, as there have been very few positive surprises on the retail landscape either from earnings reports or same store sales. We don’t believe business can pick up the slack.
Watch List news:

Restaurant operator Yum Brands Inc.’s (YUM) second-quarter profit rose 8%, but softer recent sales in the United States, particularly at Pizza Hut, took a bite out of the stock.

Nash Finch Co. (NAFC), a U.S. wholesale food distributor, said second-quarter profit sank 58 percent, hurt by a one-time charge relating to subleased property and a decline in food distribution profit. Quarterly profit dropped to $4.13 million, or 31 cents per share, from a profit of $9.74 million, or 75 cents per share, during the second quarter last year. Analysts, on average, predicted a profit of 62 cents per share. Results include a $3 million, or 22-cent-per-share, charge relating to the impairment of some retail properties subleased to a longtime food distribution customer, as well as bad debt expense related to accounts and notes receivable owned by that customer. Revenue edged down 1 percent to $1.07 billion, from $1.09 billion last year.

Guitar Center (GTRC) posted higher quarterly earnings, but Motley Fool worries that growth is fading. Fortune, on the other hand, has a favorable write-up. A sample:

With dominant market share (most of its competitors are mom-and-pop stores and small regional chains) combined with plenty of room to grow, Guitar Center is an investment that rocks. And with Guitar Center trading at about $43, near its 52-week low, and at a multiple of 15, below its historical average of 19, the stock is a bargain.

SAC Capital and Related Funds Raise Stake in Marinemax (HZO) to 5.1%

PetMed Express 2Q Profit Up 34 Percent - The EPS results were $0.02 ahead of expectations despite lower than expected revenue as the company shifted from wholesale to retail focus.

Jewelry retailer Zale named Betsy Burton as president and chief executive officer, and its shares jumped. Burton had served as interim CEO since February.

MarineMax was down on the news of a strong quarter, because its guidance was perceived as weak. Looking ahead, the company raised the fiscal year 2006 earnings guidance to the range of $2.08 to $2.13 per share from the previous range of $2.05 to $2.13 per share. The company expects the earnings per share in the range of $2.15 to $2.25 per share for the fiscal year 2007. Wall Street analysts expect the company to report earnings of $2.12 per share in the fiscal year 2006 and $2.34 in the fiscal year 2007.

Nash Finch Co., a wholesale food distributor, said Monday its chief financial officer is leaving the company and outlined other changes that will result in a $4 million charge. Leanne M. Stewart, 41, senior vice president, chief financial officer and treasurer, will stay until a replacement is named. The company did not provide a reason for Stewart’s departure. The company has hired an executive search firm to find a replacement. This doesn’t sound like a key buying point.

Starbucks Fails to Provide Enough Jolt.

Yankee Candle Makes New Acquisition and considers selling itself.

Other News:

Wal-Mart Stores Inc. (WMT) expects 1 percent to 3 percent August sales growth at its U.S. stores open at least a year.

Target, Costco, Gap, Ann Taylor, and Pacific Sunwear all posted disappointing comparable store sales. Although JC Penney and Nordstrom did better than expected, JC Penney is cautious about whether it can continue.

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