24/7 Wall St. » BONT

24/7 Wall St. Closing Bell — May 17, 2012

Paul Ausick — Thu, 17 May 2012 20:04:49 +0000

The three major US stock indexes opened essentially flat this morning as investors were faced with a flat report on new claims for jobless benefits (our coverage here). Manufacturing data from the Philadelphia Fed came in much lower than expected and the leading economic indicators also weighed the market down (more coverage here). The US dollar index rose slightly today, now up 0.03% at 81.398. The GSCI commodity index is down fractionally at 633.40, with commodities mostly higher again today. Wheat is the big gainer again today, while orange juice futures were down more than -6%. WTI crude oil closed down -0.3% at $92.56/barrel, and Brent crude trades down at -2% at $107.55/barrel. Gold settled up 2.5% today, at $1,574.90/ounce, ending a four-day losing streak.

The unofficial closing bells put the DJIA down 156 points to 12,442.49 (-1.24%), the NASDAQ fell more than 60 points (-2.10%) to 2,813.69, and the S&P 500 fell -1.50% or nearly 20 points to 1,304,87.

There were several analyst upgrades and downgrades today, including Dell Inc. (NASDAQ: DELL) raised to ‘neutral’ at Sterne Agee; IntercontinentalExchange Inc. (NYSE: ICE) raised to ‘strong buy’ at Raymond James; SINA Corp. (NASDAQ: SINA) raised to ‘overweight’ at Barclays; Visa Inc. (NYSE: V) reiterated as ‘buy’ but removed from Conviction Buy List at Goldman Sachs; Deere & Co. (NYSE: DE) reiterated as ‘buy’ with target price of $96 at Argus.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Bon-Ton Stores Inc. (NASDAQ: BONT) is down -7.3% at $4.09; Dollar Tree Inc. (NASDAQ: DLTR) is down -5.6% at $95.60; E-Commerce China Dangdang Inc. (NYSE: DANG) is down -16.6% at $6.25 (more coverage here); GameStop Corp. (NYSE: GME) is down -10.1% at $18.72 (more coverage here); Sears Holdings Corp. (NASDAQ: SHLD) is up 3.9% at $52.84; and Wal-Mart Stores Inc. (NYSE: WMT) is up 4.7% at $61.97 (more coverage here).

On Friday we are scheduled to get earnings from ANN Inc. (NYSE: ANN), Brown Shoe Co. Inc. (NYSE: BWS), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), Progressive Corp. (NYSE: PGR), and Footlocker Inc. (NYSE: FL).

Other standouts from today include the following stocks:

Rosetta Genomics Ltd. (NASDAQ: ROSG) is down -17.7% at $4.11. The medical diagnostics firm priced a secondary offering this morning. More coverage here.

Dendreon Inc. (NASDAQ: DNDN) is down -11.3% at $7.65. The company’s prostate cancer drug got another challenge from a competing product from Johnson & Johnson (NYSE: JNJ). More coverage here.

MEMC Electronic Materials Inc. (NYSE: WFR) is down -21.4% at $1.68 after posting a new 52-week low of $1.63. The solar component maker lost its CFO today. More coverage here.

Stay tuned for Friday. We don’t have anything on the schedule for tomorrow, but that doesn’t mean that we’ll have a quiet day.

Paul Ausick

Filed under: General Tagged: ANN, BONT, BWS, DANG, DE, DELL, DLTR, DNDN, FL, GME, ICE, JASO, PGR, ROSG, SHLD, SINA, V, WFR, WMT

24/7 Wall St. Closing Bell — May 16, 2012

Paul Ausick — Wed, 16 May 2012 20:05:52 +0000

The three major US stock indexes opened higher this morning as investors appeared to be reacting to a temporarily stronger euro, which indicated some confidence in the Eurozone generally. But the dollar regained its lost ground by mid-morning and looks to be continuing a run of 12 straight stronger showings, something last seen more than a quarter century ago. US housing data was not encouraging either (more coverage here). The US dollar index rose today, now up 0.14% at 81.336. The GSCI commodity index is up fractionally at 636.10, with commodities mostly higher today, defying the stronger dollar. Wheat was today’s big gainer. WTI crude oil closed down -1.2% at $92.81/barrel, it’s lowest close since November, and Brent crude trades down at -1.66% at $109.60/barrel. Gold settled down -1.3% today, at $1,536.60/ounce, the yellow metal’s lowest close since last July.

The unofficial closing bells put the DJIA down more than 33 points to 12,598.63 (-0.26%), the NASDAQ fell nearly 20 points (-0.68%) to 2,874.04, and the S&P 500 fell -0.44% or nearly 6 points to 1,324.81.

There were several analyst upgrades and downgrades today, including Cisco Systems Inc. (NASDAQ: CSCO) raised to ‘overweight’ at Barclays; Patriot Coal Corp. (NYSE: PCX) cut to ‘market perform’ at FBR; Aetna Inc. (NYSE: AET) cut to ‘hold’ at Argus; Baker Hughes Inc. (NYSE: BHI) cut to ‘neutral’ at JPMorgan; and SandRidge Energy Inc. (NYSE: SD) raised to ‘hold’ at Canaccord Genuity.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: 8×8 Inc. (NASDAQ: EGHT) is down -1.5% at $3.86; Chico’s FAS Inc. (NYSE: CHS) is up 4.2% at $15.28; Deere & Co. (NYSE: DE) is down -3.1% at $74.23 (more coverage here); Eagle Materials Inc. (NYSE: EXP) is down -5.2% at $33.13; LiveDeal Inc. (NASDAQ: LIVE) is up 5.9% at $6.14; and Target Corp. (NYSE: TGT) is up 0.7% at $55.49 (more coverage here).

On Thursday we are scheduled to get earnings from Bon-Ton Stores Inc. (NASDAQ: BONT), Dollar Tree Inc. (NASDAQ: DLTR), E-Commerce China Dangdang Inc. (NASDAQ: DANG), GameStop Corp. (NYSE: GME), Jinkosolar Holding Co. Ltd. (NYSE: JKS), Ross Stores Inc. (NASDAQ: ROST), Sears Holdings Corp. (NASDAQ: SHLD), Teekay Corp. (NYSE: TK), and Wal-Mart Stores Inc. (NYSE: WMT).

Other standouts from today include the following stocks:

J.C. Penney Co. Inc. (NYSE: JCP) is down -19.2% at $26.92. The retailer absolutely failed on quarterly results. More coverage here.

Rosetta Genomics Ltd. (NASDAQ: ROSG) is up 263% at $5.88. The medical test making firm will have one of its tests covered by Medicare. There was also a 1-for-15 reverse stock split. More coverage here.

Abercrombie & Fitch Inc. (NYSE: ANF) is down -13.7% at $39.21 after posting a new 52-week low of $38.26 earlier today. The teen retailer badly missed estimates last night.

Stay tuned for Wednesday. St. Louis Fed President James Bullard is giving a speech. We have also noted the following events on the schedule (all times Eastern):

8:30 a.m. – New claims for unemployment benefits
10:00 a.m. – Philadelphia Fed manufacturing survey
10:00 a.m. – E-commerce retail sales
10:00 a.m. – Leading indicators
10:30 a.m. – EIA weekly natural gas storage report
4:30 p.m. – Fed balance sheet and money supply

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AET, ANF, BHI, BONT, CHS, CSCO, DANG, DE, DLTR, EGHT, EXP, GME, JCP, JKS, LIVE, PCX, ROSG, ROST, SD, SHLD, TGT, TK, WMT

24/7 Wall St. Closing Bell (AAPL, ADP, KFT, PG, MCO, LULU, ADGF, CHTP, AEO, BWS, CSIQ, CTIC, HOV, TRCR, MAG, BONT, P, VRML)

Paul Ausick — Wed, 07 Mar 2012 21:10:13 +0000

US stocks opened higher this morning following an in-line report from ADP on US employment gains. There was little economic news out today, but we can anticipate tomorrow’s report on new jobless claims and, of course, the biggie, Friday’s report on non-farm payrolls. By mid-morning stocks were solidly higher and have been trading more than half a point pretty consistently. Apple Inc. (NASDAQ: AAPL) pretty well shut down the afternoon news with its new iPad announcement (more coverage here). The dollar was weaker this morning and has fluctuated somewhat on the downside all day, trading down -0.12% now at 79.715. Crude oil has been higher on the weaker greenback, with WTI closing up 1.4% at $106.16/barrel and Brent crude up 1.99% at $124.41/barrel. Gold rose 0.7% today, settling at $1,683.90/ounce.

The unofficial closing bells put the DJIA up nearly 79 points to 12,837.78 (0.62%), the NASDAQ rose more than 25 points (0.87%) to 2,935.69, and the S&P 500 rose 0.69% or more than 9 points to 1,352.63.

There were several analyst upgrades and downgrades today, including Automatic Data Processing Inc. (NYSE: ADP) raised to ‘Focus List’ at Credit Suisse; Kraft Foods Inc. (NYSE: KFT) cut to ‘hold’ at Jefferies; Proctor & Gamble (NYSE: PG) raised to ‘overweight’ at JPMorgan; Moody’s Corp. (NYSE: MCO) cut to ‘neutral at UBS; and Lululemon Athletica Inc. (NASDAQ: LULU) raised to ‘outperform’ at Credit Suisse.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Adams Golf Inc. (NASDAQ: ADGF) is up 1.7% at $9.60; Chelsea Therapeutics International Inc. (NASDAQ: CHTP) is up 2.3% at $3.57; American Eagle Outfitters Inc. (NYSE: AEO) is up 6.1% at $15.52; Brown Shoe Co. Inc. (NYSE: BWS) is down -9.3% at $9.46; Canadian Solar Inc. (NASDAQ: CSIQ) is down -12.8% at $2.86; Cell Therapeutics Inc. (NASDAQ: CTIC) is up 0.80% at $1.26; and Hovnanian Enterprises Inc. (NYSE: HOV) is up 3.3% at $2.48.

Other standouts from today include the following stocks:

Transcend Services Inc. (NASDAQ: TRCR) is up more than 39% at $29.24. The medical transcription service is being acquired by Nuance Communications Inc. (NASDAQ: NUAN) for $300 million in net cash ($29.50/share). More coverage here.

Magnetek Inc. (NASDAQ: MAG) is up 22% at $17.50. The electrical equipment maker posted a robust quarterly earnings report today.

The Bon Ton Stores Inc. (NASDAQ: BONT) is up more than 32% at $6.95. The retailer reported lower-than-expected earnings and revenues, but its forecast is above expectations.

Pandora Media Inc. (NYSE: P) is down more than -24% at $10.83. The Internet radio company posted worse than expected earnings last night. More coverage here.

Vermillion Inc. (NASDAQ: VRML) is down -29% at $2.13. The medical device maker’s stock more than doubled yesterday, and today’s action is likely a bit of profit-taking following an analyst’s downgrade. More coverage here.

Stay tuned for Thursday. We have noted the following events on the schedule (all times Eastern):

7:30 a.m. – Challenger Gray & Christmas job-cut report
8:30 a.m. – New unemployment benefits claims
10.00 a.m. – Census Bureau quarterly services survey
10:30 a.m. – EIA natural gas storage report
4:30 p.m. – Federal Reserve balance sheet and money supply

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: AAPL, ADGF, ADP,, AEO, BONT, BWS, CHTP, CSIQ, CTIC, HOV, KFT, LULU, MAG, MCO, P, PG, TRCR, VRML

Mid-day Movers (TRCR, DSCO, BONT, P, VRML)

Paul Ausick — Wed, 07 Mar 2012 17:20:44 +0000

Shortly after noon ET today, all three major US stock indexes have risen to intra-day highs, with the DJIA up about 81 points at around12,840, the Nasdaq up about 29 points at 2,938, and the S&P 500 up more than 9 points to around 1,353. This morning’s in-line report from ADP on US employment gains got the day started right, and buyers could be searching for bargains after yesterday’s debacle. The dollar opened weaker today, and has continued to dribble down with the dollar index down -0.21% at 79.702. The weaker dollar is helping push up crude prices, with both Brent and WTI up around 1%.

Among the major movers at around noon today are Transcend Services Inc. (NASDAQ: TRCR), Discovery Laboratories Inc. (NASDAQ: DSCO), The Bon Ton Stores Inc. (NASDAQ: BONT), Pandora Media Inc. (NYSE: P), and Vermillion Inc. (NASDAQ: VRML).

Transcend Services is up nearly 40% at $29.25. Volume is already approaching 20x the daily average of about 65,000 shares traded. The medical transcription service is being acquired by Nuance Communications Inc. (NASDAQ: NUAN) for $300 million in net cash ($29.50/share).

Discovery Laboratories is up nearly 22% at $4.57 after posting a new 52-week high of $5.39 earlier this morning. Volume is already around 25x the daily average of about 656,000 shares traded. The drug maker has received FDA approval for a respiratory drug to treat premature infants.

Bon Ton Stores is up about 32% at $6.94. Volume is already more than 6x the daily average of around 240,000 shares traded. The retailer reported lower-than-expected earnings and revenues, but its forecast is above expectations.

Pandora Media is down more than -23% at $10.97. Volume is already about about 8x the daily average of around 2.1 million shares traded. The Internet radio company posted worse than expected earnings last night. More coverage here.

Vermillion is down about -25% at $2.25. Volume is already more than 11x the daily average of about 290,000 shares traded. The medical device maker’s stock more than doubled yesterday, and today’s action is likely a bit of profit-taking following an analyst’s downgrade. More coverage here.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: BONT, DSCO, P, TRCR, VRML

Morning Movers (TRCR, DSCO, BONT, P, CSIQ)

Paul Ausick — Wed, 07 Mar 2012 15:24:16 +0000

The three major US equities indexes opened higher this morning following an in-line report fromn ADP on employment. The dollar is gaining strength even though the dollar index is down slightly, at -0.03% this morning at 79.839. The DJIA is up nearly 30 points at around 12,789, the Nasdaq Composite is up 16 points at around 2,926, and the S&P 500 is up about 3.5 points at around 1,347.

There are several stocks trading more heavily than usual this morning, and also experiencing large gains or drops in share prices. These include the Transcend Services Inc. (NASDAQ: TRCR), Discovery Laboratories Inc. (NASDAQ: DSCO), The Bon Ton Stores Inc. (NASDAQ: BONT), Pandora Media Inc. (NYSE: P), and Canadian Solar Inc. (NASDAQ: CSIQ).

Transcend Services is up nearly 40% at $29.27. Volume is already more than 12x the daily average of about 65,000 shares traded. The medical transcription service is being acquired by Nuance Communications Inc. (NASDAQ: NUAN) for $300 million in net cash ($29.50/share).

Discovery Laboratories is up nearly 26% at $4.71. Volume is already around 12x the daily average of about 656,000 shares traded. The drug maker has received FDA approval for a respiratory drug to treat premature infants.

Bon Ton Stores is up about 28% at $6.72. Volume is already about 3x the daily average of around 240,000 shares traded. The retailer reported lower-than-expected earnings and revenues, but its forecast is above expectations.

Pandora Media is down more than -24% at $10.83. Volume is already about about 5x the daily average of around 2.1 million shares traded. The Internet radio company posted worse than expected earnings last night. More coverage here.

Canadian Solar is down about -12% at $2.90. Volume is already about equal to the daily average of around 1.3 million shares traded. The solar panel maker reported very poor earnings this morning and its outlook is also weak. More coverage here.

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: BONT, CSIQ, DSCO, P, TRCR

24/7 Wall St. Closing Bell (NFLX, PAAS, HAL, HD, KORS, APD, BHI, CLWR, APD, BHI, CLWR, EMC, WDC, CSX, ZION, AAPL, BLRX, LEE, BONT, IDCC, ACHN)

Paul Ausick — Tue, 24 Jan 2012 21:11:04 +0000

All three major equity indexes opened lower this morning and while all have tracked back to last night’s close, only the Nasdaq Composite has managed to wobble to a small gain for the day. The stalled negotiations between Greece and its bondholders are weighing down European markets and the effects are felt on this side of the Atlantic. Earnings reports haven’t boosted the market at all today, even though some have been quite good. The euro has hit $1.30 again. In commodities, WTI crude oil is down -0.51% at $99.07/barrel and Brent crude is down -0.36% at $110.18/barrel. Gold closed off -0.77% at $1,665.30/ounce.

The unofficial closing bells put the DJIA down about 33 points to12,675.75 (-0.26%), the NASDAQ rose just 2 points (0.09%) to 2,786.64, and the S&P 500 fell -0.10% or just more than 1 point to 1,314.63.

There were several analyst upgrades and downgrades today, including Netflix Inc. (NASDAQ: NFLX) maintained as ‘outperform’ with a $100 target price at Credit Suisse; Pan American Silver Corp. (NASDAQ: PAAS) maintained as ‘outperform’ but estimates lowered at Credit Suisse; Halliburton Co. (NYSE: HAL) maintained as ‘buy’ but target price lowered to $54 at Argus; Home Depot Inc. (NYSE: HD) reiterated as ‘buy’ and target price raised to $51 at Argus; ;and Michael Kors Holdings Ltd. (NYSE: KORS) started as ‘overweight’ at Morgan Stanley, as ‘outperform’ at Baird, and as ‘buy’ at Goldman Sachs.

Earnings reports since markets closed on last night have led to some price changes as of the last half hour of trading today: Air Products and Chemicals Inc. (NYSE: APD) is down nearly -3% at $87.29; Baker Hughes Inc. (NYSE: BHI) is down -0.57% at $47.46; Clearwire Corp. (NASDAQ: CLWR) is up 2% at $1.79; EMC Corp. (NYSE: EMC) is up 6.7% at $25.01; Western Digital Corp. (NYSE: WDC) is up 6.2% at $36.85; CSX Corp. (NYSE: CSX) is down -3.5% at $21.89; and Zions Bancorp. (NYSE: ZION) is down -7.6% at $17.15. Apple Inc. (NASDAQ: AAPL) reports earnings after markets close today. See our coverage here.

Other standouts from today include the following stocks:

BioLineRx Ltd. (NASDAQ: BLRX) is up nearly 79% at $5.88 after posting a new 52-week high today of $6.87. The biopharmaceutical company has signed an exclusive worldwide licensing agreement with a French company to develop and market its hepatitis C drug.

Lee Enterprises Inc. (NYSE: LEE) is up more than 26% at $1.39. The newspaper company has been granted permission to exit bankruptcy protection.

The Bon-Ton Stores Inc. (NASDAQ: BONT) is up nearly 18% at $3.81. The department store operator has hired a new CEO who was previously the CEO at Lord & Taylor, before that chain was acquired by a Canadian company.

InterDigital Inc. (NASDAQ: IDCC) is down nearly -20% at $35.68. The wireless technology developed has shut down its “strategic review” without finding a buyer and will continue to seek additional patent sales and licensing agreements.

Achillion Pharmaceuticals Inc. (NASDAQ: ACHN) is up more than 17% at $10.79. The drug company, which is developing its own hepatitis C drug, is enjoying a halo effect from BioLineRx’s announcement.

Stay tuned for Wednesday. President Barack Obama delivers his state of the union address at 9:00 P.M ET tonight. We have noted the following events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
10:00 a.m. – Federal Housing Finance Agency (FHFA) house price index
10:30 a.m. – EIA weekly petroleum status report
10:30 a.m. – 5-year Treasury note auction
2:15 p.m. – Fed chairman Ben Bernanke press conference

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: AAPL, ACHN, APD, BHI, BLRX, BONT, CLWR, CSX, EMC, HAL, HD, IDCC, KORS, LEE, NFLX, PAAS, WDC, ZION

24/7 Wall St. Closing Bell (HPQ, KO, LEN, PEP, CREE, ANN, CPWM, HNZ, CRMT, CRM, BONT, CF, MOS, FSCI, CLWR, MTOR, MRVL)

Paul Ausick — Fri, 18 Nov 2011 21:09:39 +0000

Stocks got off on a positive note this morning, but resisted the temptation to climb based on a positive reading of the leading econonmic indicators and higher estimates of US GDP growth in the fourth quarter. Consumer spending appears to be higher than expected and retailers’ inventories are falling which should lead to some re-stocking before the holiday shopping season kicks in with real force. Crude oil prices have fallen about -1.4% today, to below $97.50/barrel. Volume has been reasonably heavy as today brings the expiration of options. Gold prices are up a bit at $1,725.80. See our earlier story on the countries that own the world’s gold.

The unofficial closing bells put the DJIA up more than 25 points to 11,796.23 (0.22%), the NASDAQ fell more than 15 points (-0.60%) to 2,572.50, and the S&P 500 fell 0.04% or about 0.48 points to 1,215.65.

There were several analyst upgrades and downgrades today, including Hewlett-Packard Co. (NYSE: HPQ), which was raised to ‘buy’ at Sterne Agee. Other action included The Coca-Cola Co. (NYSE: KO) started as ‘buy’ at Jefferies; Lennar Corp. (NYSE: LEN) cut to ‘neutral’ at Citigroup; Pepsico Inc. (NYSE: PEP) started as ‘hold’ at Jefferies; and Cree Inc. (NASDAQ: CREE) started as ‘buy’ at Goldman Sachs.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: Ann Inc. (NYSE: ANN) is down more than -6.6%, at $23.63; Cost Plus Inc. (NASDAQ: CPWM) is up more than 3%, at $7.88; H.J. Heinz Co. (NYSE: HNZ) is down more than -3%, at $51.06; America’s Car Mart, Inc. (NASDAQ: CRMT) is up more than 10%, at $35.84; Salesforce.com (NYSE: CRM) is down more than -10.5%, at $112.67; and The Bon-Ton Stores, Inc. (NASDAQ: BONT) is down more than -8%, at $2.84, after posting a new 52-week low of $2.70 earlier today.

Several other standouts from today are as follows…

CF Industries Holdings, Inc. (NYSE: CF) is up about 2.9%, at $152.46. The company’s stock got pounded yesterday on news that the corn prices fell, but are recovering a bit today as investors remember that falling corn prices don’t necessarily mean that less corn will be planted and, thus, less fertilizer will be used.

The Mosaic Co. (NYSE: MOS) is up more than 4.6%, at $53.12. Another fertilizer maker that got slammed yesterday and is recovering somewhat today.

Fisher Communications Inc. (NASDAQ: FSCI) is up about 12.7%, at $29.20. The broadcast TV station operator has sold its Fisher Plaza building in Seattle for $160 million in cash to Hines Global REIT, Inc.

Clearwire Corp. (NASDAQ: CLWR) is down nearly -21%, at $1.47. The company is reported to be considering skipping a $237 million debt payment due in two weeks, raising fears that the wireless broadband provider could end up in bankruptcy.

Meritor, Inc. (NYSE: MTOR) is down about -9.7%, at $5.12, after posting a new 52-week low of $5.11 earlier in the day. Shares lost -17% earlier this week when the company lowered its guidance for 2012 and the stock was downgraded today from ‘buy’ to ‘hold’ at KeyBanc.

Marvell Technology Group Ltd. (NASDAQ: MRVL) is up more than ;6.8%, at $14.70. The chip maker reported so-so earnings yesterday, but strong positive statements by analysts at FBR and Citi have turned broken eggs into an omelette.

Stay tuned for Monday. Atlanta Federal Reserve Bank president Dennis Lockhart is speaking in Brazil. Here’s a list of other noteworthy events (all times Eastern):

8:30 a.m. – Chicago Federal Reserve Bank national activity index
10:00 a.m. – National Association of Retailers existing home sales report

Have a great weekend.

Paul Ausick

Filed under: Analyst Calls, HI/LOW, Market Close Tagged: ANN, BONT, CF, CLWR, CPWM, CREE, CRM, CRMT, FSCI, HNZ, HPQ, KO, LEN, MOS, MRVL, MTOR, PEP

Another Look At The Fate Of The US Retail Industry

247wallst — Tue, 10 Mar 2009 09:26:18 +0000

AlixPartners, a turnaround firm, said at the beginning of the year that 10% to 26% of retailers were in financial distress and were in danger of filing for Chapter 11. It is worth considering how the researchers came up with that number, given that there are tens of thousands of retailers and hundreds of thousands of stores in America. Why wasn’t the number 9% or 27%? The answer is that the forecast is virtually useless, something like counting the number of poisonous snakes in an “Indian Jones” movie.

The only way to see what will happen in the retail industry in the next several quarters is to watch it like a hawk today. The first impression that many people get is that the retail business is OK because Wal-Mart is doing so well. But, Wal-Mart is the exception to the rule. Sam Walton’s company continues do well because its tremendous buying power, distribution, and brand allows it to attract customers who get relatively high quality products for very little money. Its success removes a great deal of the foot traffic from the rest of the industry.

For a more realistic view of how stores are fairing under the withering decrease in demand caused by the recession, Ann Taylor (ANN) is a good example for analysis. In the fourth quarter, its sales dropped 20% to $483 million. It will close 163 of its stores. That is from a total of 935. The company’s stock now trades at $2.82, down from a 52-week high of $29.23. Most of that collapse occurred over the last six months.

Ann Taylor does not sell expensive clothes and accessories and it does not sell cheap ones. That puts it right in the center of the drop-off in middle class buying power. Firms including Liz Claiborne (LIZ) and Talbot’s (TAL) are in about the same spot. Ann Taylor is probably much better off than genuinely failing retailers including Bon-Ton (BONT) and Gap (GPS). Ann Taylor, of course, is not Wal-Mart which will most likely stay in a world all its own for the duration of the downturn.

In the meantime, Ann Taylor will close nearly 20% of its stores. The company has 5,500 workers. A lot of those people will lose their jobs. Closing 20% of the Ann Taylor stores is probably about right. This forecast is as accurate as any available because it is based on real trends in the retail industry.

If large retailers close 20% or so of their stores, most of them will avoid becoming distressed or candidates for Chapter 11. The AjixPartner’s estimate was too high and did not take into account the rate at which the industry could cut off limbs to save the body.

Is the fate of retailers likely to be better than some of the most pessimistic forecasts? Yes. But, for this to happen big retail operations will have to do the hard thing and lots of people will lose their jobs.

Douglas A. McIntyre

Posted in Retail Tagged: ANN, BONT, GPS, LIZ, TAL, WMT

S&P Pans Retailer Ratings (DDS, M, JWN, JCP, SHLD, BONT, KSS, SKS)

247wallst — Thu, 05 Feb 2009 22:04:08 +0000

Standard & Poor’s Ratings Services has put six department store companies on CreditWatch with negative implications and has changed the outlook on three department store companies to negative from stable. Moody’s & Fitch either downgraded or warned of possible downgrades. Dillard’s Inc. (NYSE: DDS), Macy’s Inc. (NYSE: M), Nordstrom Inc. (NYSE: JWN), J.C. Penney Co. Inc. (NYSE: JCP), Sears Holdings Corp. (NASDAQ: SHLD), Bon-Ton Stores Inc. (NASDAQ: BONT), Kohl’s Corp. (NYSE: KSS), and Saks Inc. (NYSE: SKS) were all part of the S&P call late today.

This is over a deepening concern about the impact of the recession on department stores. More importantly,it expects that the downturn to get worse in first half of2009. This is based upon weakening employment, a declining housingmarket and continuing financial market turmoil. The ratingsagency expects cost cutting and inventory management to protect marginsbut expects that margins will continue to erode based on weak consumerdemand, little sales leverage, and over discounted sales expectations.

Further, the declining profitability is expected to hurt enough toresult in downgrades in some cases. This is not written in sand andthe CreditWatch listings should be resolved within 90 days.

S&P also noted that companies which forgo discretionary capitalspending and which reduce costs to preserve balance-sheet strengthshould be viewed favorably in this ongoing review.

Here are the ratings under review:

Ratings Placed On CreditWatch             To                From
Dillard’s Inc.
Corporate Credit Rating             B+/Watch Neg/– B+/Stable/–
Macy’s Inc.
Corporate Credit Rating             BBB-/Watch Neg/A-3 BBB-/Negative/A-3
Neiman Marcus Group Inc. (The)
Corporate Credit Rating             B+/Watch Neg/– B+/Negative/–
Nordstrom Inc.
Corporate Credit Rating             A-/Watch Neg/A-2 A-/Negative/A-2
Penney (J.C.) Co. Inc.
Corporate Credit Rating             BBB-/Watch Neg/– BBB-/Negative/–
Sears Holdings Corp.
Corporate Credit Rating             BB-/Watch Neg/– BB-/Negative/–
Ratings Affirmed; Outlook Action          To                From
Bon-Ton Stores Inc.
Corporate Credit Rating             B-/Negative/–    B-/Stable/–
Kohl’s Corp.
Corporate Credit Rating             BBB+/Negative/– BBB+/Stable/–
Saks Inc.
Corporate Credit Rating             B/Negative/–    B/Stable/–

Our only problem with the S&P warning here is that there is justabout no way that things will get better at ANY of these stores. We do not disagree with any of the reviewed issues, but we doubt these and most other retailers can or will take the necessary steps to pinch costs and to operate better. Evenif the Obama stimulus package handed out checks of a hypothetical$3,000.00 to families, this might go under the mattress or go towardpaying off debt and creditors. It feels like a no-win scenario.

Hoping is always a poor investment and business strategy.

Jon C. Ogg
February 5, 2009

Posted in Analyst Calls, Retail Tagged: BONT, DDS, JCP, JWN, KSS, M, SHLD, SKS

If 25% Of American Retailers Go Bankrupt, Which Companies Make The List?

247wallst — Sun, 28 Dec 2008 15:26:17 +0000

24/7 Wall St. has already provided a list of retailers who may well not make it through 2009. According to The Wall Street Journal, "AlixPartners LLP, a Michigan-based turnaround consulting firm, estimates that 25.8% of 182 large retailers it tracks are at significant risk of filing for bankruptcy or facing financial distress in 2009 or 2010."

So, which chains are at risk as the year draws to a close, especially now that holiday numbers are even worse than expected?

The "easy" list that many analysts come up with includes Bon-Ton (BONT), Talbots (TLB), and Saks (SKS). These chains were mentioned in both the 24/7 Wall St. and Wall Street Journal articles.

One of the most pressing issues for the industry is whether a very large retail operation will go into Chapter 11 or be sold, putting tens of thousands of people out of work with one stroke. Six months ago, that seemed very unlikely. With 2008 being the worst holiday sales period in decades and 2009 shaping up to be even worse, the number of jobs at risk has become significantly more considerable.

One weak operation which could end up being sold is Gap (GPS). The company has 150,000 workers. The firm’s shares were nearly $22 a year ago. They now trade under $13. Gap’s chains, Gap, Old Navy and Banana Republic, have posted double-digit same-store sales declines for many of the months during 2008. Friedman Billings Ramsey recently said that its expects sales to get worse in 2009. If that is true, Gap may not make it through the year as an independent company.

The other large retail operator that will almost certainly suffer double-digit same-store declines in 2009 is Sears (SHLD). It has already posted frightening numbers for most of 2008. A really hard holiday season means that the company will either have to close hundreds of stores or perhaps eliminate one of its two huge brands–K-Mart or Sears. Over the last year, shares of Sears have dropped from a 52-week high of $114 to $37. Moody’s recently warned it may cut Moody’s Sears’s corporate credit rating from "Ba1," one step below investment grade, according to Reuters. Sears is unlikely to go out of business but a lot of its 337,000 employees could be out of work next year.

In 2009, retail may shed more jobs that any other segment of economy.

Douglas A. McIntyre

Posted in Retail Tagged: BONT, GPS, SHLD, SKS, TLB