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This Morning's Retail Surprise

Surprise! Retail sales for January, up 1 percent, was significantly stronger than the decline of 0.8 percent expected, particularly after 6 straight months of declines.

The main theme remains: 1) lower-than-expected guidance for the first quarter, and 2) almost no visibility beyond that, with many companies simply declining to provide guidance.


1) Marriott down 8 percent pre-open, at $0.34 for the fourth quarter, was well below expectations of $0.39. It wasn't just hotels: timeshare sales really fell off a cliff (down 40 percent).

For the first quarter, earnings are projected at $0.13 to $0.15 (consensus estimate of $0.21). Full year guidance of $0.86 to $1.04 is below expectations of $1.10. They are expecting comparable Revenue per Available Room (RevPAR, the key metric for hotels) for the first quarter to decline 15 percent.

2) Terex --which makes cranes and construction equipment--down 23 percent pre-open. Net sales dropped 20 percent in the fourth quarter. Terex says it may likely be in violation of a covenant in its credit agreement by the end of the first quarter.

They are expecting net sales for 2009 to decline by 30 to 35 percent from 2008, and as with so many companies foreign currency exchange headwinds will contributed 13 percent of that decline.

3) Some good news. Coke up 3 percent, beat expectations; with Coke, the key metric is case volume, and here there was clearly growth, with the exception of North America: worldwide unit case volume up 4 percent, Europe unit case volume up 2 percent, Latin America up 6 percent (!), while North America unit case volume was down 3 percent.

Foreign exchange negatively impacted operating income by 9 percent. Coke, remember, does not give guidance, so traders will look to the conference call for comments on volume. Don't be surprised if they forecast that foreign exchange will continue to be a significant headwind for them.

4) A little more good news: 3 mid-priced restaurants reported better than expected results: Chipotle Mexican Grill , Buffalo Wild Wings , and PF Chang's . Chipotle up 10 percent pre-open.

    • Retail Sales Unexpectedly Rebound in January



Questions? Comments? tradertalk@cnbc.com

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