Street Chatter: Steepening Yield Curve?
October retail same-store sales were a mixed bag: some tricks, some treats. It's important to note that estimates have been coming down all month, and only about half have beat the consensus.
Department stores did OK, not great (outerwear had a rough time on the warm weather), but the high end stores did well: SaksSaks up 8.1 percent well ahead of a 4.6 percent gain expected, and Macy'sMacy's also up above expectations, and modestly raised guidance for the second half.
TargetTarget was slightly above expectations, they cited softness in the first two weeks (probably due to warm weather), but also noted sales trends improved in the last two weeks of the month.
Several apparel firms were strong: LimitedLimited was up 9 vs. 6.3 percent expected , and raised Q3 guidance to $0.15-$0.17, well above prior guidance of $0.03-$0.08 and consensus of $0.11. GapGap was up 2 percent, well above expectations of a loss of 3 percent, and also raised guidance for Q3.
Teen & children retailers, which were the leaders earlier in the year, were the real laggards: Aeropostale the real laggards, Abercrombie & Fitch , American Eagle , Hot Topic and Gymboree all reported sales below expectations.
1) With the Fed buying almost everything in the middle of the yield curve, the Street is full of talk about a steepening yield curve, which would benefit banks.
2) Unilever2) Unilever rises 6 percent on strong earnings as volumes rose (up 4.8 percent overall) particularly overseas in emerging markets. Despite higher raw materials costs, the consumer giant saw its margins increase as pricing remained flat. However, CEO Paul Polman expects "price growth to turn positive towards the end of the year."
3) Transocean3) Transocean is up 1 percent despite reporting lower profits and an 18 percent decline in revenues (greater drop than the Street expected). The oil service firm's results were hurt by costs related to the BP oil spill and the government's oil drilling moratorium, which caused the company's utilization rate to fall to 64 percent from 75 percent in the year-ago period.
4) Orbitz Worldwide4) Orbitz Worldwide reported better-than-expected earnings ($0.15 vs. $0.09 consensus), helped by lower costs and higher revenues (up 4 percent, inline with company's earlier guidance). The online travel website saw a 12 percent rise in travel bookings, led by a 57 percent surge in hotel bookings and a more modest 13 percent rise in air travel bookings.
This continues a trend of stronger travel trends over the past few weeks as airlines have returned to profitability and hotel chains have reported higher occupancy as business travel has rebounded.
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