Posts Tagged ‘retail’

UK Government’s Austerity Steps Expected to Pay Off

Tuesday, January 4th, 2011

Britain’s deficit-reduction program will remain on track this year because tax rises and spending cuts will not stunt growth enough to cause a double-dip recession, according to a large majority of economists.

Today’s rise in the rate of value added tax to 20 percent, were a big gamble, but one that was likely to pay off. Their biggest concerns were over Britain’s stubbornly high inflation and the risk of an intensifying euro zone sovereign debt crisis imperiling economic recovery. In the survey of 78 economists, including 10 former members of the Bank of England’s monetary policy committee, 43 thought the deficit reduction plan would be “on track” by the end of the year. Only 13 of those who expressed a clear preference said an alternative “Plan B” was necessary.

The recovery is said to have sufficient momentum to avoid a deep double-dip. Less pleasing for the coalition government and the central bank is rising concern over high inflation, forecast to continue throughout 2011, partly as a result of VAT hikes. The MPC is already concerned that inflation will top 4 percent this spring and that the fear of ingrained inflation might force the Bank to raise interest rates.

Many of the economists surveyed said the Bank had lost credibility as a result of its poor recent inflation-forecasting record. Patrick Minford of Cardiff Business School said: “The Bank has drifted into dangerous nonchalance over stubbornly high inflation.”

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M&A Topic Of The Day Again

Monday, September 27th, 2010

In a sign that the Elite’s are vigorously pursuing growth in untapped markets and efficiency and lower cost. August was the busiest M&A  action in a very long time. There’s doesn’t look to be any slowing down as the cash rich companies are bidding for rivals in grwoth markets.

Wal-Mart Stores Inc., the world’s No. 1 retailer, made a proposal to buy Massmart Holdings Ltd. for $4.26 billion in its biggest deal in more than 10 years, as it seeks entry into the rapidly growing African market. Wal-Mart’s proposed offer for the South Africa-based retailer is 148 rand or $21.13 a share. 

Wal-Mart’s stock dropped 0.4% to $53.85 on Monday. The $400 billion-plus retailer has become increasingly reliant on growth from its international markets, about a quarter of its sales, while growth in the U.S. has slowed. Wal-Mart has bought stakes in local operators in markets from Chile to China to help it penetrate the overseas markets. Its key international unit, Asda in the U.K., came from a $10 billion-plus purchase in 1999.

Wal-Mart International operates in 14 countries and Puerto Rico. Massmart operates 290 stores in 13 African countries, but most of them are in South Africa.

In the airline industry: Several consolidations are taking place: Southwest Airlines Co. plans to buy AirTran Holdings in a $1.4 billion deal that brings it access to the world’s busiest airport along with a foothold for expanding in the Northeast and becoming an international carrier. Dallas-based Southwest’s  (LUV 14.06, +1.78, +14.50%)  agreement to pay $7.69 a share in cash and stock represents a 69% premium over AirTran’s stock before the deal was unveiled Monday morning. The total payout to take over Orlando, Fla.-based AirTran (AAI 7.34, +2.79, +61.30%)  will be $3.4 billion including debt and aircraft operating leases.

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Quiet Morning; Trade News Mixed

Thursday, September 2nd, 2010

The Dow slipped lower, after rising initially, after the government reported a slight drop in jobless claims and news of a stronger-than-expected showing in retail sales for August. 

The Labor Department reported weekly jobless claims fell by 6,000 to 472,000 for the week ended Aug. 28, better than the 475,000 forecast by economists polled by Reuters. Last week’s claims were revised up to 478,000 in Thursday’s report.  The government reported nonfarm productivity fell 1.8 percent, more than previously estimated in the second quarter and the largest drop since the third quarter of 2006. Consensus forecasts called for productivity to have dropped to a 1.9 percent annual rate and unit labor costs to have risen by 1.1 percent.

September started on a positive note driven by positive news on manufacturing in the U.S. and China, but investors now have their eyes on Friday’s monthly jobs report for insight on the health of the U.S. economy.

In other news; retailers are turning in surprisingly strong monthly sales reports in August, as sales-tax-free holidays and discounting coaxed shoppers to open their wallets and stock up on back-to-school items.  Overall, the Thomson Reuters Same-Store Sales Index is expected to rise 2.5 percent in August, the research firm said. The majority of the retailers reporting monthly sales results have topped analysts’ estimates, according to Thomson Reuters.  Consumers remain cautious about spending as unemployment remains high and questions about the economy persist. The real test for retailers will come in September. That is when investors will see if consumers are truly picking up their spending or if back-to-school sales merely shifted to August from September.

At 10 a.m., the National Association of Realtors will be out with its pending home sales report for July. Economists think home sales that have gone to contract but not yet closed fell 1 percent in July following a 2.6 percent gain in June. Also out at that time is the government’s July factory orders report, seen as rising by 0.2 percent after a 1.2 percent drop in June.

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Markets Up On Retail Earnings

Tuesday, May 18th, 2010

U.S. equities were comfortably in positive territory Tuesday morning following a volatile session that saw stocks in the red throughout much of the prior session, working their way to small gains in the final minutes of trading. The DJIA had fallen more than 180 points in the noon hour Monday on continuing concerns over the European economy, but Tuesday morning investors got a piece of good news on the U.S. housing market and two positive-trending earnings reports from major retailers Home Depot and Wal-Mart.

The Commerce Department said housing starts grew 5.8% last month, better than economists had hoped for, but the positive news was short-lived as applications for new building permits, a measure of future construction, declined.

Wholesale prices fell 0.1% in April while core inflation, which excludes more volatile food and energy prices, rose 0.2%. Without inflationary pressures, the Federal Open Market Committee, the policy-setting arm of the Federal Reserve, will likely not raise key interest rates in the near future. The FOMC’s two-day policy meeting last month didn’t produce any changes to low interest rates, but the bank said that consumer spending had picked up and that hiring was starting to improve.

The major indexes opened higher. Minutes into trading the Dow gained 68 points to 10,694, the S&P 500 added 8 points to 1,145 and the Nasdaq pushed up 11 points to 2,365. The euro continued to drive investor sentiment Tuesday morning as traders look to the currency as an indicator of the pace of the European economy. Concern over sovereign debt issues in the Euro zone have dragged on investors for months as Wall Street weighed the potential long-term impact of a slow economy in Europe after a nearly $1 trillion bailout fund was formed by European leaders and the International Monetary Fund to prop up debt-ridden countries in the region such as Greece, Spain and Portugal. The euro has been reeling as the European debt crisis escalated, hitting fresh four-year lows early Monday. The currency rose slightly to 1.2402 against the dollar Tuesday morning.

Commodity prices also rose. Crude oil contracts for June delivery had dipped below $70 on Monday for the first time since February, but were $2.14 higher at $72.22 per barrel Tuesday morning, leading shares of Dow components Exxon Mobil XOM and Chevron CVX higher as well. Gold futures gained $10.90 to $1,210 per ounce.

On the earnings front

Home Depot HD said its quarterly profits soared 41% to an adjusted 45 cents per share thanks to more customer transactions and higher sales of seasonal items. The figure topped Wall Street’s predictions and the home improvement retailer upped its 2010 sales and earnings outlook, leading investors to bid the company’s stock up 1.4% Tuesday morning. Wal-Mart WMT profits rose 10% to 88 cents per share on cost cuts and worldwide sales growth, beating expectations. The key measure of same-store sales, or sales at stores open at least one year, fell 1.1% and the giant retailer offered a tepid outlook for the rest of 2010. Still, investors bid the retailer’s shares up 2.3% in early trading. Investors continue to await quarterly results from onent Hewlett-Packard HPQ due after the closing bell. Shares gained 0.7% ahead of the report.

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