Markets & Finance

Movers: Wal-Mart, Sears, Macy's, GameStop, Thinkorswim


Stocks in the news Thursday

From Standard & Poor's Equity ResearchWal-Mart Stores (WMT) cuts $1.03-$1.07 fourth quarter EPS from continuing operations estimate to $0.91-$0.94. Posts 1.2% higher December U.S. same-store sales (1.7% without fuel), slightly lower total company sales. Notes total sales in intl segment improved on a constant-currency basis. Sees flat-to-2% rise in January same-store sales.

Macy's (M) cuts fourth quarter EPS view to $0.90-$1.00, excluding items, on worse-than-expected fourth quarter same-store sales decline of about 7.5%. Posts 4.0% lower December same-store sales, 4.7% lower total sales. Also says it is closing 11 underperforming stores. Costs associated with these 11 store closings will be about $65 million (of which about $12 million will be cash), most of which will be booked in fourth quarter.

Sears Holding (SHLD) posts 1.1% lower Kmart December same-store sales, 13% lower Sears Domestic same-stores sales, 7.3% lower December total same-store sales. Notes gross margin rates for QTD period improved slightly from last year as higher margin rates at Kmart were somewhat offset by lower margin rates at Sears Domestic Currently expects fourth quarter EPS of $2.44-$3.09 (excluding items). S&P raises target, but maintains sell opinion.

GameStop (GME) rises 3.23 to 25.84 after the company says total sales during 2008 holiday period were $2.856 billion, a 22% increase from year ago, while same-store sales rose 10.2%. It raises fourth quarter same-store sales guidance to 9.0%-9.5% and low end of its EPS guidance by $0.02, resulting in a range of $1.31-$1.34. Also sees fiscal year 2009 EPS of $2.37-$2.40 (an increase of 32%-33% year-over-year), same-store sales growth of 12.0%-12.5%, total sales growth of 24%-25%. Wedbush raises estimates, reiterates buy.

Whole Foods Market (WFMI) rises 2.01 to 12.02 after supermarket magnate Ronald Burkle's Yucaipa Cos. investment firm discloses in an regulatory filing that it has a 7% stake in WFMI. In the filing, Yucaipa says "there are substantial opportunities for the company to improve operations and its pricing image while maintaining its high-quality product offering."

Limited Brands (LTD) posts 10% lower December same-store sales. Currently estimates a January comp decline in the mid-to-high teens. Expects fourth quarter EPS in the range of $0.55-$0.70, below current estimates.

Urban Outfitters (URBN) posts 3% higher same-store sales for the two months ended Dec. 31, 2008, 9% higher total sales. Cowen upgrades to outperform from neutral.

Thinkorswim Group (SWIM) agrees to be acquired by TD Ameritrade (AMTD) in cash and stock deal valued at about $606 million. Terms: each share of SWIM will be exchanged for $3.34 in cash and 0.3980 of AMTD share.

Intuitive Surgical (ISRG) expects fourth quarter revenue of about $232 million, increasing 22% year-over-year. According to Reuters, analysts were expected fourth quarter revenue of $255 million. Sees 15% revenue increase for 2009, reflecting increased instrument, accessory and service revenue, buy continued flat systems revenue. S&P keeps hold.

According to Reuters story, Verizon Communications (VZ) picked Microsoft (MSFT) to provide Internet search services for cell phones, in what is seen as a blow to rivals Google (GOOG) and Yahoo (YHOO). VZ Chief Executive Ivan Seidenberg announced the deal at a Citigroup conference on Wednesday and MSFT CEO Steve Ballmer confirmed it later in the day at the Consumer Electronics Show. Neither executive gave any details of terms.

EMC Corp. (EMC) announces a restructuring program to further streamline the costs related to its Information Infrastructure business, which does not include VMware. The restructuring program will reduce EMC's global Information Infrastructure workforce by about 2,400 positions, or about 7% of its headcount. Expects program to reduce costs by about $350 million in 2009, increasing to approximately $500 million in 2010.

Target (TGT) posts 4.1% lower December same-store sales, which is in line with its planned range, reflecting stronger results in the last two weeks of the month.

Costco Wholesale (COST) posts 4% lower December same-store sales, 2% lower net sales. Says comps, excluding the negative impacts from gasoline deflation and foreign exchange (primarily in CN, UK and Korea), rose 4%.

Abercrombie & Fitch (ANF) expects fourth quarter EPS to be significantly below the previous $1.00-$1.05 guidance previously issued. Says during fourth quarter it will record a charge of approximately $10.0 million to tax expense as a result of the execution of the Chairman and Chief Executive Officer's new employment agreement on December 19, 2008. Posts 24% lower December same-store sales, 18% lower total sales.

J.Crew Group (JCG) lowers $0.05-$0.10 fourth quarter EPS forecast to $0.24-$0.29 loss. Cites lower-than-anticipated sales and gross margin trends. Notes fourth quarter outlook reflects same-store sales in negative mid-teen range and Direct sales in the negative mid-to-high single digit range. Also cuts its fiscal year 2009 EPS guidance to $0.77-$0.82 from $1.11-$1.16.

American Eagle Outfitters (AEO) reports 17% lower December same-store sales, 10% lower total sales. Cuts fourth quarter EPS guidance to $0.19-$0.21 from $0.30-$0.36, excl. any potential other-than-temporary impairment charge related to investment securities; cites lower-than-expected December sales, revised outlook for January, increased markdowns.

Aeropostale (ARO) says based on strength in both its women's and men's categories, it now expects fourth quarter EPS to be in the range of $0.90-$0.92, vs. previously issued guidance of $0.84-$0.90. ARO posts 12% higher December same-store sales, 25% higher total sales.

Cytec Industries (CYT) cuts $3.75-$3.85 2008 EPS guidance to $3.45-$3.50, adjusted for special items. Preliminarily expects a pre-tax non-cash special item charge up to about $500 million will be included fourth quarter results to reduce the carrying value of goodwill related to the Surface Specialties segment. Says restructuring initiatives should lead to a reduction of about 600 employee positions, approximately 10% of company's headcount.

Saks (SKS) posts 20% lower December same-store sales. Says it continues to face very challenging macroeconomic and retail conditions. Based on current level of consumer demand, current promotional environment, and its permanent markdown cadence cycle, it continues to expect a significant year-over-year decrease in the gross margin rate for the fourth quarter.

Shaw Group (SGR) posts $0.48 first quarter loss per share, vs. $0.03 EPS a year ago, as significant non-cash forex losses (due to appreciation of Japanese yen against US dollar) at its Westinghouse segment offset 11% revenue rise.

Biovail (BVF) reaches settlement agreement with Canadian regulators over investigation of BVF and certain former officers related to specific accounting and financial disclosure practices. The agreement, which is subject to approval by Ontario Securities Commission (OSC), will be considered at a hearing set for Jan. 9. Terms are confidential and will be made public if and when approved by OSC.

Wolverine World Wide (WWW) announces further restructure plans, estimates pre-tax charges related to restructure will range from $31-$36 million that will be recorded throughout 2009 as it executes specific initiatives. Says when plan is fully implemented, expects net reduction of about 450 positions. Separately, WWW announces acquisition of Cushe footwear brand for undisclosed amount.

Parametric Technology (PMTC) preliminary posts $0.14-$0.16 first quarter non-GAAP EPS. Street was looking for $0.26. Says global economic situation impacted results.

Bebe Stores (BEBE) reports 20% lower second quarter same-store sales, 13% lower total sales. Cuts $0.12-$0.16 second quarter EPS guidance to $0.05-$0.09.

Haverty Furniture Companies (HVT) posts 23% lower fourth quarter same-store sales, 21% lower total sales.

Zale Corp. (ZLC) reports 20% lower same-store sales for combined months of November and December, encompassing entire holiday selling period; total sales fell 20%. Says November same-store sales fell 13% and December same-store sales declined 22%.

Manitowoc Co. (MTW) estimates that 2008 adjusted EPS will be within the low end of the previous forecast of $3.15-$3.25, which incl. results of its recently divested Marine segment, excl. special items, impact of Enodis acquisition. Sees $1.35-$1.60 2009 EPS (before special items), which seen much lower than consensus forecasts. S&P maintains hold.

Crucell N.V. (CRXL) confirms that it is in friendly talks with Wyeth (WYE) that may lead to a combination of the two companies. Shares were halted yesterday (following WSJ article that companies were in talks) and did not resume trading. Last trade showed shares 4.43 to 20.50.

Hot Topic (HOTT) posts 6.2% lower December same-store sales, 7.1% higher total sales. Still, HOTT raises fourth quarter EPS guidance to $0.30-$0.32 based upon a mid-single-digit comp increase. Previous guidance was the higher end of $0.25-$0.28 range.

Bed Bath & Beyond (BBBY) posts $0.34, vs. $0.52, third quarter EPS on 5.6% lower same-store sales, slightly lower total sales. Sees $0.40-$0.46 fourth quarter EPS on mid-single digit percentage decrease in same-store sales. Sees $1.50-$1.56 fiscal year 2009 EPS. Street was looking for fiscal year 2009 EPS of $1.58.

Willliams-Sonoma (WSM) posts 24% lower 8-week holiday same-store sales, 23% lower total sales. Reaffirms fourth quarter forecast of $0.10-$0.30 EPS on $940 million to $1 billion revenue, $0.13-$0.33 fiscal year 2009 non-GAAP EPS on $3.294-$3.354 billion revenue.

Men's Wearhouse (MW) sees fourth quarter GAAP EPS at lower end of its previously issued guidance range of breakeven to a loss of $0.18. Says sales results in company's Canadian operations were below initial expectations.


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