Macy’s maintains outlook for full year, disappointing Wall Street

NEW YORK, Wed May 9, 2012 – Macy’s Inc. kept its full-year profit forecast despite reporting better-than-expected first-quarter earnings on Wednesday, disappointing Wall Street and putting pressure on the retailer’s shares.

Macy’s, which also owns the upscale Bloomingdale’s chain, has handily outperformed its mid-tier competitors in the last year, winning shoppers away from chains such as J.C. Penney Co. Inc. and Kohl’s Corp.

CFO Karen Hoguet told analysts on a conference call that Macy’s has seen an uptick in sales in areas where a store competes directly with Penney, which in February implemented a new pricing strategy that largely gets rid of sales events. Analysts have said such changes would hurt Penney at least initially.

Macy’s often raises its full-year profit forecast after reporting such strong numbers.

When Barclays Capital analyst Robert Drbul asked Hoguet why the company had not done so this time, she said the “guidance for the year was more aggressive than usual.”

Macy’s gross profit margin edged down in the first quarter, largely because of shipping costs linked to its rising Internet sales. Sales growth in April, which had been expected to be weaker than in March because of an early Easter, came in below what Wall Street was expecting.

Morningstar analyst Paul Swinand said that Macy’s long winning streak may have led analysts to get ahead of themselves.

Macy’s shares last week rose to $42.17, their highest level since July 2007, making them vulnerable to a sell-off. On Wednesday morning, the shares fell as much as 6.3 percent to $37.02 on the New York Stock Exchange before paring some of those losses to be down 3.4 percent to $38.18 in early afternoon trading.

LinkedIn jumps as results underscore growth prospects

MOUNTAIN VIEW, Calif., Fri May 4, 2012 – Shares of LinkedIn Corp. rose 10 percent on Friday, after the professional networking company raised its full-year outlook helped by strong demand for its services that help corporations find and hire employees.

The strong results underline the success of social and professional networking sites, as investors watch closely to see if the model is sustainable before Facebook goes public in one of the most eagerly awaited initial public offerings ever.

LinkedIn, which makes money by selling services and subscriptions to companies looking to for new recruits, added 16 million members during the first quarter, taking the total to more than 161 million.

“We believe LinkedIn’s member network is creating a pull that is solidifying its product set as a must-have for human resources professionals,” Canaccord Genuity analyst Michael Graham said in a research note to clients.

“These products appear to be in the early phase of a hard-to-stop penetration curve, lending high confidence to continued growth expectations,” he said.

Graham, who is rated four stars by Thomson Reuters StarMine for the accuracy of his earnings estimates on LinkedIn, raised his price target on the stock to $135 from $95. StarMine awards five stars to the top 10 percent of analysts and four stars to the next 23 percent.

Analysts also expect the surge in mobile usage to drive up sales at the company, as more people log in through their smartphones and tablets.

“LinkedIn is disrupting both the online and offline job recruitment markets, and deeper corporate penetration and increasing member engagement will drive strong results going forward,” J.P. Morgan Securities’ analyst Doug Anmuth said.

LinkedIn — started in the living room of ex-PayPal executive Reid Hoffman in 2002 — said on Thursday it bought content sharing company SlideShare for about $119 million in a deal that will help its users upload and share presentations.

Analysts at Citigroup, Barclays Capital, BMO Capital Markets and Evercore Partners also raised their price targets on the stock.

According to Thomson Reuters StarMine, two analysts rate the stock “strong buy,” eight rate it “buy,” 11 have a “hold,” and only one rates it a “sell.” The mean price target on the stock is $108.47.

LinkedIn shares, which touched $120.62 on the New York Stock Exchange on Friday, were trading up 8 percent at $117.96.

The stock, which rallied after hitting a year-low of $56.15 late November, had touched a nine-month high of $110.61 on April 27.

Plunge in durable goods orders clouds U.S. outlook

WASHINGTON, Wed Apr 25, 2012 – Demand for long-lasting manufactured goods tumbled by the most in three years in March and businesses cut back on spending plans, suggesting the economy slowed as the first quarter drew to a close.

Durable goods orders dropped 4.2 percent, the largest decline since January 2009 when the economy was nose-diving, Commerce Department data showed on Wednesday. Economists had expected a drop of just 1.7 percent.

February orders were revised to show only a 1.9 percent increase instead of the previously reported 2.4 percent rise.

“This adds to the evidence that momentum in the economy sort of fell flat in March,” said Ellen Zentner, a senior U.S. economist at Nomura Securities in New York.

Data on durable goods, items ranging from toasters to aircraft that are meant to last three years or more, is notoriously volatile and investors on Wall Street ignored the report. Stock prices rose, cheered by forecast-beating results from Apple. Prices for U.S. Treasury debt fell, while the dollar was marginally weaker against a basket of currencies.

The data, which was the latest to show the factory sector losing a step in March, came as officials at the Federal Reserve met for a second day to deliberate on monetary policy, and it reinforced the central bank’s views of moderate growth.

Hershey lifts outlook on first-quarter beat; shares rise 3 percent

HERSHEY, Pa., Tue Apr 24, 2012 –  Hershey Co. posted a higher-than-expected first-quarter profit on Tuesday, helped by price increases, and raised its full-year outlook, sending the candy maker’s shares up more than 3 percent.

The maker of Reese’s peanut butter cups, Twizzlers and Kit Kat bars said price increases were responsible for its 10.7 percent increase in first-quarter sales. Volume, which dipped slightly due to those increases, was still better than expected.

“It is unusual for any food company, in our experience, to raise guidance this early in the fiscal year, and we interpret today’s guidance raise as a particularly strong signal,” said JP Morgan analyst Ken Goldman.

Hershey’s strong results came a day after Kellogg Co. cut its full-year outlook after a disappointing first quarter that was hurt by weakness in Western Europe and in some product categories in the United States.

Hershey, the world’s largest chocolate maker, is often viewed as having more pricing power than some of its food industry peers, since chocolate often serves as an affordable luxury or indulgence.

The second quarter should see shipments of new products accelerate, with the roll out of Jolly Rancher Crunch ‘N Chew and the launch of Rolo Minis and Ice Breakers Duos. The company is also launching Hershey’s Simple Pleasures, with 30 percent less fat than the average chocolate.

Fed’s Dudley: Too soon to say economy out of danger

SYRACUSE, New York,. Thu Apr 12, 2012 – The disappointing performance of the U.S. labor market in March shows it is too early to conclude the economy is out of the woods, despite months of encouraging economic data, New York Federal Reserve Bank president William Dudley said on Thursday.

The Fed is gathering more data to determine whether last month’s non-farm payrolls report, which showed the economy added way fewer jobs than expected, was just a weather-related setback or a sign the recovery is losing momentum again, Dudley said.

An influential voting member of the U.S. central bank’s monetary policy committee, Dudley appeared to leave the door open to additional stimulus measures as he noted that the economic data also “looked brighter at this point in 2010 and again in 2011, only to fade later in those years.”

Signs that the economic recovery was losing steam have encouraged the Federal Reserve to launch in the past few years two rounds of monetary stimulus measures known as quantitative easing. Bets on a third round have again increased following the latest jobs report.

“The somewhat softer March labor market report that was released last Friday may reflect the earlier positive influence of the mild weather on job creation in January and February, although other less sanguine interpretations are also plausible,” Dudley said in prepared remarks to be delivered at a conference in Syracuse, New York.

On Thursday, the Fed’s vice chair Janet Yellen said further monetary easing could be warranted if the economy proceeds at a slower-than-expected pace.

Carnival cuts profit outlook, blames wreck off Italy coast

Carnival cuts profit outlook, blames wreck off Italy coast

BOSTON – Carnival Corp. on Monday said it would take a $155 million to $175 million hit against net income in fiscal 2012, blaming the Costa Concordia cruise ship catastrophe.

The Costa Concordia-related hit against earnings could be higher because of lower net revenue yields. But Carnival said in a U.S. regulatory filing that it has not yet determined that impact.

The accident and loss of the ship off the coast of Italy will hurt net income by $85 million to $95 million in fiscal 2012, Carnival said in an annual report filing. Insurance deductibles will reduce net income by another $40 million and other incident-related costs are pegged between $30 million and $40 million.

Carnival also said it significantly reduced its marketing activities after the disaster. Excluding its Costa European subsidiary, Carnival said fleet-wide booking volumes, from after the ship wrecked through Jan. 25, declined in the “mid teens” compared with the previous year.”

Costa’s booking activity is difficult to interpret because of the significant rebooking activity stemming from the loss of the ship’s use and related re-deployments,” the company said. “However, we believe it to be down significantly. Despite these recent trends, we believe the incident will not have a significant long-term impact on our business.”

General Dynamics CEO sets sights on further growth, acquisitions

WASHINGTON ― The defense budget is shrinking, but General Dynamics Corp. still sees growing demand for its combat vehicles and warships, coupled with unprecedented opportunities to sell its popular Gulfstream business jets in China and other emerging markets.

Chief Executive Jay Johnson, a former F-14 fighter pilot and chief of naval operations, shies away from phrases like “off the charts,” but his steep hand gesture depicts a bright future for the commercial aerospace sector, and he’s not too worried about the defense outlook, at least for now.

In fact, tighter U.S. defense budgets will generate good acquisition opportunities for General Dynamics in coming years, Johnson told Reuters in a rare interview at the company’s headquarters in Falls Church, Va.

“We don’t have time to wring our hands. For us it’s all about performing for the customer and delivering to the shareholder,” says Johnson, who said the company remained committed to paying strong dividends, but would also keep enough cash on hand to take advantage of possible acquisitions.

The company’s strategy seems to be paying off, with Warren Buffett’s Berkshire Hathaway recently making a significant investment in GD after selling its stake 10 years ago.

“It’s the Warren Buffett seal of approval, which I think counts for a lot,” he said. Buffett has not disclosed the size of his holding, he said.

U.S. defense companies are scrambling to cut costs and find alternate revenue sources as they brace for a big decline in spending after a decade of double digit growth.

Many analysts consider GD the best-positioned company in the sector, given the mix of its weapons expertise and red-hot prospects for its Gulfstream business, which already has 200 orders for the new GS650 jet entering service next year.

Analysts expect General Dynamics, one of the five largest U.S. arms makers, to boost revenues by about $1 billion to over $33 billion in 2011, with sales growing modestly over the next two years. Revenues will be buoyed by an order backlog of over $58 billion and rising international sales.”We still will generate considerable earnings and cash in the defense space,” said Johnson, noting GD would benefit from continued demand for upgrades to tanks and other ground combat vehicles, even as U.S. forces withdrew from Iraq.

Demand from military commanders would ensure continued shipbuilding sales “as far as the eye can see,” said Johnson, who met with top Navy officials in Hawaii last month on the sideline of the Asia-Pacific Economic Cooperation meeting.

GD is one of two builders of Virginia-class nuclear-powered submarines, and recently won praise from Defense Secretary Leon Panetta for building the latest submarine, the USS Mississippi for $50 million below target and a year ahead of schedule.

The company is also “very excited” about the prospects for its commercial aerospace division, Johnson said, adding that demand from emerging markets was fueling growth “in a way that I don’t think we’ve ever seen before.”

In time, the division could generate about 30 percent of revenues, up from 20 percent now, Johnson said.

Analysts say GD’s earnings potential is excellent, given growing demand from China and other emerging markets for its Gulfstream jets, which Morgan Stanley analyst Heidi Wood calls “one of the world’s sexiest and most respected brands.”

GD has forecast that operating earnings from commercial aerospace could grow to over 35 to 40 percent of company-wide operating earnings in the next five years, from 20 percent now. Wood says they could reach as high as 50 percent.

DuPont cuts full-year 2011 outlook; shares drop almost 5 percent

WILMINGTON, Del. ― Chemical maker DuPont cut its full-year profit outlook on Friday, citing slower growth in some of its businesses due to weakness in the company’s end markets, sending its shares down almost 5 percent.

DuPont’s warning follows a similar outlook cut from German specialty chemicals group Wacker Chemie and negative commentary from larger peer BASF, as the chemicals industry battles shrinking inventories at customers amid global economic uncertainty.

The chemical industry’s financial health often serves as a barometer for the global economy since its products are used to produce nearly every consumer good, from toys and toothbrushes to smartphones and solar panels.

DuPont is the largest global producer of titanium dioxide, a white pigment also known as Ti02 that is used to make paint and other consumer goods.

“The earnings revision reflects de-stocking across polymers and certain industrial supply chains that has accelerated during the fourth quarter,” DuPont Chief Executive Ellen Kullman said in a statement.

“Consumer electronics demand has further softened, and housing and construction markets remain weak,” she added.

In morning trading on the New York Stock Exchange, DuPont shares were down 4.9 percent at $44.21.

Analyst Hassan Ahmed, of Alembic Global Advisors, said the warning came as a surprise, since the company had raised its outlook in October when it announced higher-than-expected third-quarter earnings.

Wal-Mart profit below Wall St despite better sales

BENTONVILLE, Ark. ― Wal-Mart Stores Inc’s quarterly profit growth missed Wall Street’s expectations on Tuesday, as the economy continues to weigh on customers at Walmart U.S., by far the company’s largest division.

Still, key sales at those U.S. discount stores rose more than expected, reversing a string of nine quarterly declines.

Shares of Wal-Mart, the world’s largest retailer, were down 1.8 percent at $57.93 in premarket trading.

Wal-Mart earned $3.34 billion, or 97 cents per share, from continuing operations in the third quarter ended on Oct. 31, compared with $3.44 billion, or 95 cents per share, a year earlier. There were fewer shares outstanding during the most recent quarter.The company had forecast a profit of 95 cents to $1.00 per share. Analysts on average expected 98 cents, according to Thomson Reuters I/B/E/S.”Every business segment is stronger today than it was a year ago,” Chief Executive Officer Mike Duke said in a statement.

Sales momentum at Walmart U.S. and the Sam’s Club warehouse chain position the company “exceedingly well for the holidays,” Duke added.

Net sales rose 8.2 percent to $109.5 billion.

Sales at U.S. discount stores open at least a year rose 1.3 percent. That topped the company’s forecast, which called for Walmart U.S. same-store sales, excluding fuel, to be down 1 percent to up 1 percent. It also exceeded the analysts’ average forecast for a rise of 0.3 percent, according to Thomson Reuters data.

Wal-Mart forecast fourth-quarter earnings of $1.42 to $1.48 per share from continuing operations, up from $1.41 a year earlier. That would lead to full-year earnings per share from continuing operations of $4.45 to $4.51, up from $4.18 last year.

Home Depot outshines Lowe’s again; raises its fiscal outlook

ATLANTA ― Home Depot Inc. raised its fiscal-year outlook for the third time in six months as a host of efforts to improve distribution and boost customer service helped the No. 1 home improvement chain gain share from archrival Lowe’s Cos. Inc.

Home Depot, which reported stronger-than-expected quarterly results on Tuesday, also raised its quarterly dividend by 16 percent to 29 cents per share.

The news boosted its shares 1.3 percent and came the day after Lowe’s also beat quarterly profit estimates and laid out a blueprint to win back shoppers from its larger competitor.

Home Depot is benefiting from opening more centralized distribution centers, better merchandising tools, efforts to redirect labor to more customer-facing tasks and the use of more technology in stores.

The company has also been quicker to curb store growth and cut costs than Lowe’s, and in some cases has benefited as housing markets have improved in regions where it has a heavy presence.

“Overall, they are just out-executing Lowe’s at this point,” RBC Capital Markets Scot Ciccarelli said. “Lowe’s is trying to copy a lot of these same efforts that I think has helped Home Depot, but it is going to take a while for them to benefit from some of the changes that they are currently making.”

Home Depot’s sales at stores open at least a year rose 4.2 percent globally, including a 3.8 percent rise in the United States. This was the 10th consecutive quarter that the company has outshone Lowe’s, whose same-store sales rose 0.7 percent in the quarter.

Net income rose to $934 million, or 60 cents a share in the third quarter ended on October 30, from $834 million, or 51 cents a share, a year earlier.

Analysts on average were expecting a profit of 58 cents a share, according to Thomson Reuters I/B/E/S.

Sales rose 4.4 percent to $17.33 billion, beating the analysts’ average estimate of $17.12 billion.

For the current fiscal year, Home Depot sees earnings of $2.38 a share, up from its prior outlook of $2.34. It continues to expect sales to rise 2.5 percent in the period.

The dividend is payable on Dec. 15 to shareholders of record on the close of business on Dec. 1.