Trader Talk

Pisani: Joblessness Outweighs Good Retail Sales

S&P 500 futures lost about 4 points on the disappointing weekly initial jobless claims number, and is now raising concerns that the positive downward trend in claims is stalling out.

Sovereign debt issues, which popped up again yesterday, are back down in a big way today: Portugal down 3.2 percent, Spain down 2.6 percent, Greece down 1.7 percent.

European banks are weak: Bank of Ireland, IRE LAD SXL MWW and Barclays all down 4 to 8 percent.


1) January same-store sales were generally better than expected, in some cases far better than expected.

73 percent beat estimates, far better than the norm of 58 percent, according to Retail Metrics.

Macy's is up 5 percent pre-open, sales were up 3.4 percent, far better than the loss of 0.2 percent expected. They guided higher, to $1.35-$1.37, consensus is $1.18.

Kohl's, TJX, American Eagle, Stage Stores, Gymboree and Gap all raised guidance!

Other big beats on sales included:

Limited , up 6.0 percent, loss of 0.1 percent expected;

Gap , up 5.0 percent, better than 3.7 percent expected;

Abercrombie & Fitch , up 8 percent, far better than a loss of 9.0 percent expected (their first positive comp since April 2008)

Aeropostale , up 11 percent, far better than gain of 5.7 percent expected;

TJX , up 12.0 percent, far better than 7.1 percent gain expected.

The bottom line: inventories are much more under control, and markdowns are not as great. As Dana Telsey noted, it's not that the consumer is doing better, it's just the companies are being managed better. Macy's CEO Terry Lundgren said they were not factoring in any job growth for 2010.

2) MasterCard is down 4 percent after earnings fell short of expectations ($2.43 vs. $2.46 consensus). Just like Visa , the credit card company saw increases in transactions and purchase volumes.

3) Starwood Hotels is up 3 percent after Q4 results beat Street estimates ($0.51 vs. $0.22 consensus), largely due to further cost controls. Revenues per available room (RevPAR) were still down high single digits, but that decline was less than in previous quarters.

The hotel chain sees demand picking up, raising its RevPAR forecast to flat to UP 5 percent, from flat to DOWN 5 percent. It also gives an earnings outlook of $0.63, ahead of the consensus estimate of $0.56.

4) Sony falls 1 percent despite turning in much stronger than expected Q3 earnings. Results were boosted by strong PlayStation 3 sales, but consumer electronics sales (TVs and cameras) fell 11 percent.

Sony CFO shared some optimism, saying, "we think we've bottomed out." Loss for the current year is narrower than prior guidance. Also, Sony sees a 33 percent rise in flat-panel TVs shipments in its next fiscal year.

5) Yum! Brands beats estimates as margins improved for the fast food operator (Taco Bell, KFC, Pizza Hut). Good news: China sales jumped 8 percent, while its international operations saw sales growth of 2 percent. Bad news: Overseas growth was offset by very poor U.S. sales, which dropped 7 percent.

6) IPO market gets tougher: one IPO was delayed last night: Patriot Risk Management, a worker compensation risk management company managed by Gen Re. FriendFinder Networks, an "Internet-based social networking" company (they own Penthouse, folks) had its deal size cut in half, pricing 15 million shares at $7 ($105 million), from 20 million at $10-$12. Not clear if it will open today — what the—?!

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