The retail news is better today than yesterday; Home Depot, Saks and Target all reported earnings and commentary better than Lowe's did yesterday.
That's the good news. The bad news is that the story continues to be about margin improvement; no one is seeing any notable increase in consumer spending.
1) Home Depot is up 3 percent after beating Q2 estimates and raising full-year guidance. Despite an 8.5 percent decline in same-store sales, CEO Frank Blake noted the home improvement retailer "captured market share" in the latest quarter. Much of the beat on earnings came from a reduction in operating expenses.
Unlike Lowe's, which provided a weak outlook, Home Depot boosts its full-year earnings forecast. It now sees full-year earnings falling 15-20 percent, up from its previous expectation of a 20-26 percent decline (vs. Street estimates of down 19 percent).
Still, HD's topline was below expectations. The average ticket declined, most likely because bigger ticket items were fewer. Comp. store sales declined by 6.9 percent, that is better than the 9.5 comp. store decline at Lowe's, but nothing to write home about.
2) Target up 5 percent on a strong Q2 earnings beat ($0.79 vs. $0.66 est.), but topline was again a tad light. Comp. store sales fell 6.2 percent in the quarter, but the discounter's bottom line was helped by "very strong operating margin" at its retail stores.
3) Saks up 8 percent after reporting a significantly smaller-than-expected Q2 loss (loss of $0.23 vs. loss of $0.52 est.). A hefty 18 percent reduction in costs and better-than-expected gross margins offset a 15.5 percent decline in same-store sales during the quarter.
Looking ahead, the high-end department store chain reaffirms sales forecasts. It continues to see second half same-store sales declines moderating to "mid-to-high single digit range," helped by expectations for a stronger fourth quarter.
4) Investor confidence in Germany reached a 3.5 year high on expectations of future economic growth.
5) The Shanghai Composite, which is a closed market openly only to Chinese investors, has dropped 18 percent in the latest correction during the past two weeks. Hong Kong's Hang Seng Index, which is open to outside investors, has fallen only 5 percent during the latest correction.
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