Waiting For SEC Report; Retail Report Mixed

The SEC is expected to release its preliminary report on the causes of the May 6th drop in stocks this morning. They will also likely promulgate rules on single stock circuit breakers, as well as new rules on a macro circuit breaker and specific rules on breaking trades.


Big day for retail earnings, with mixed results. Retailers seem to be taking a cautious outlook, expressing uncertainty that consumers will continue to spend at the same levels as they did in February and March.

1) Wal-Mart rises 1 percent despite a mixed earnings report. Q1 earnings of $0.88 topped expectations of $0.85, but guidance for the current quarter disappointed the Street ($0.93-$0.98 vs. $0.98 consensus).

While top line growth slightly exceeded Street estimates, same-store sales continued recent trends of weakness, falling 1.1 percent in the quarter, citing lower traffic at its namesake stores.

2) Same disappointing guidance with TJX: earnings slightly better than consensus, but is trading down because Q2 guidance of $0.67-$0.72 is at the low end of consensus of $0.72, and comparable store sales of 2 to 4 percent is also a bit disappointing.

3) Dick's Sporting Goods is up 4 percent as Q1 earnings way exceeded expectations ($0.22 vs. $0.14 consensus) on improved sales and margins. Comps jumped 8 percent, significantly higher than forecasts for low single-digit growth.

Looking ahead, the sporting goods retail sees Q2 earnings of $0.37 vs. $0.39, again low end of consensus of $0.39 and also raised its full-year guidance well ahead of the Street's current estimates.

4) Home Depot reported slightly better earnings of $0.45, a nickel ahead of consensus. Comp store sales at up 4.8 percent was ahead of consensus. Full year guidance was increase to $1.88, up 10 cents from previous guidance and about in line with consensus of $1.87; sales are expected to be up 3.5 percent.

5) Abercrombie & Fitch's Q1 loss of $0.13 was in-line with expectations. Although same-store sales edged up 1 percent in the quarter, margins were pressured as more value-conscious consumers sought out lower priced items.

Higher comps at its namesake (up 3 percent) and abercrombie kids (up 6 percent) helped offset continued weakness at its Hollister stores (down 2 percent).

6) Saks Q1 earnings beat estimates ($0.11 vs. $0.05 consensus) as same-store sales grew 6 percent Margins continued to improve from better inventory management and a reduced discounting.

Although the economic environment remains "uncertain," the high-end department store raises same-store sales growth for the year, as sales trends are expected to improve even more in the second half of the year.

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