Ultimate Market Recap: Sour Outlook for Lululemon, Best Buy Takes a Tumble
Wall St. Brief: Lululemon LAGS, Facebook’s Pre-IPO Investors UNDERWATER
In after-hours trading on Wednesday, Men’s Wearhouse (NYSE:MW) shares dropped 16 percent after the retailer said for the second quarter, it expects to earn $1.12 to $1.13 per share, lower than the $1.22 analysts’ estimates. It had also predicted fiscal full-year earnings of $2.70 to $2.78, also coming in below the $2.80 expectations.
Early buyers of Facebook (NASDAQ:FB) who purchased the stock in the secondary market prior to the IPO are among those investors very disappointed. After the stock went up to $44.10 in March on the secondary market SharesPost, Facebook is in red on Thursday at $26.74, down .26 percent. These pre-IPO investors desiring to dump the stock now will have to hope for a recovery as they can’t really sell out until Facebook employees are allowed to do so in November, reported The Wall Street Journal.
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Carlyle Group (NYSE:CG) said on Wednesday will sell off its final equity position in Triumph Group Inc. (NYSE:TGI) through a public offering of almost early 4.7 shares of common stock; it will be conducted by investment funds and other entities associated with Carlyle with Credit Suisse Securities USA LLC acting as the underwriter. Triumph Group won’t receive proceeds from the offering but it is expected to close and settle on June 12, said MarketWatch.
Lululemon Athletica Inc. (NASDAQ:LULU) reported its first quarter earnings on Thursday and said its profit increased to $43.6 million ($0.32 per share), from $33.4 million ($0.23 cents per share) from the previous year. Sales rose to $285.7 million from $186.8 million. Analysts had forecast earnings per share of $0.30 cents per share from $270.9 million in sales. For the second quarter, Lululemon sees second-quarter earnings at $0.28 to $0.30 cents per share while for the year, it expects $1.55 to $1.60 earnings per share.
Vodafone Group PLC (NASDAQ:VOD) said on Thursday that Telefonica U.K. (NYSE:TEF) and Vodafone U.K. have entered into a new partnership agreement that will create one national grid running each company’s independent spectrum. Network infrastructure will be combined to create a national grid of 18,500 sites. With the joint venture, the companies will look to lessen the digital division between rural and urban areas as it targets 98 percent of the indoor population coverage across 2G and 3G by 2015, reported MarketWatch.
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Early Equity Buzzers: Facebook Fades, Apple Accelerates, Lululemon and Best Buy DROP
Shares of Facebook (NASDAQ:FB) dropped 1 percent in morning trading. In an interview with CNBC after the closing bell, Nasdaq (NASDAQ:NDAQ) CEO Robert Greifeld said the exchange has been “embarrassed” over the Facebook initial public offering debacle and has “apologized to the industry.”
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Men’s Wearhouse Inc. (NYSE:MW) shares crashed more than 15 percent after the opening bell. The company reported that first-quarter earnings came in at 52 cents per share, compared to estimates of 55 cents per share. The company also guided lower for the second-quarter, expecting earnings of $1.12-$1.13 per share, compared to estimates of $1.22 per share.
Apple Inc. (NASDAQ:AAPL) shares increased .40 percent in early trading. A new spec sheet — the kind Apple puts on the packaging of its computers — was sent anonymously to 9to5Mac on Wednesday, detailing a thinner and lighter notebook featuring a higher-resolution display. Though the information is unconfirmed, the spec sheet image describes the new 15-inch model as being 0.74 inches thick and weighing 4.7 pounds, putting it in the same league as the MacBook Air.
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Lululemon Athletica Inc. (NASDAQ:LULU) shares dropped more than 9 percent in a.m. trading. Despite reporting that first-quarter net income increased 40 percent to $46.6 million (32 cents per share) from a year earlier, the company offered a cautious outlook. In the current quarter, Lululemon expects to earn 28 cents to 30 cents per share, below estimates of 33 cents per share by analysts.
Chesapeake Energy Corp. (NYSE:CHK) fade 1.81 percent Thursday morning. According to a report by Reuters, chief executive officer Aubrey McClendon and his family made flights to Paris and Amsterdam that cost $108,000 and counted the trips as a business expense. He also mixed his basketball passion with the company. Reuters reports, “Closer to home, McClendon pursues another of his passions: the Oklahoma City Thunder, the NBA franchise in which he owns a 19 percent stake. As with other assets, McClendon has melded his Thunder interest with Chesapeake business. The energy company signed a $36 million sponsorship deal, and it pays up to $4 million annually to brand the stadium Chesapeake Energy Arena.”
Best Buy Co. Inc. (NYSE:BBY) shares plunged 7.89 percent in morning trading. Company founder Richard Schulze announced he would resign as chairman, which takes effect immediately. The decision was made in order to explore options for his 20 percent stake in the company. “I continue to believe in Best Buy and its future—and care deeply about its customers, employees and shareholders,” Mr. Schulze said. “There is an urgent need for Best Buy to reinvigorate growth by reconnecting with today’s customers and building pathways to the next generation of consumers.”
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Bank of America (NYSE:BAC): HousingWire reports that because of his former employment as Bank of America’s top lawyer, Fannie Mae’s (FNMA) new CEO Tim Mayopoulos will exclude himself from all matters concerning the bank. A team of Fannie’s top executives will handle decisions regarding repurchase issues between the GSE and Bank of America. Shares of Bank of America are trading 1.31% lower today.
Apple Inc. (NASDAQ:AAPL): According to the WSJ, Apple has filed a lawsuit requesting that Samsung Electronics’s Galaxy S III, Samsung’s new smartphone. Apple accuses Samsung of infringing Apple’s user interface patents. Shares of Apple Inc. are trading 0.62% higher today.
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Facebook, Inc. (NASDAQ:FB): Following NASDAQ’s (NASDAQ:NDAQ) announcement that it plans to allocate $40M in order to compensate customers who lost money due to technical problems connected with Facebook’s IPO. Stifel says that the sum is lower than they had feared and is “highly manageable.” The firm reiterates a Buy rating on shares stating that Facebook’s worst conflicts are most likely over. Shares of Facebook, Inc. are trading .45% lower today.
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Nokia Corporation (NYSE:NOK): Bloomberg reports that after the loss of the majority of its smartphone market share, Nokia attempts to make a turnaround in North America by expanding its deals with AT&T (NYSE:T) and T-Mobile USA (DTEGY). Shares of Nokia Corporation are trading .69% lower today.
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Best Buy (NYSE:BBY): According to JPMorgan’s expectations, Best Buy Chairman Dick Schulze will not sell his 20.1% stake, and opposing interpretations are incorrect. The firm believes that Schulze’s announcement from today is an attempt to gain more control over Best Buy’s strategic direction.
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Titan Machinery Inc. (NASDAQ:TITN): The company reports a Q1 revenue totaling $421.72M, consensus $393.73M, while the farm equipment retailer’s rises from $7.2M to $7.5M. Costs increase 39%, and agricultural revenue rises 26%. The company maintains its FY 2013 EPS outlook of $2.55-$2.75 on a revenue of $1.95B-$2.1B.
Isle of Capri Casinos (NASDAQ:ISLE): The company’s FQ4 EPS of $0.38 beats by $0.09, and its revenue totaled $291M, a 13.4% increase year over year, 19M higher than expected. Isle of Capri expects to incur $5.5M worth of expenses in relation to Cap Girardeau. The company expects the FY13 CapEx to be $140M-$150M.
Nokia (NYSE:NOK): Today, Nokia announced that Woodcraft Rangers, a non-profit organization based in Los Angeles that provides education and enrichment to over 16,500 youth from needy neighborhoods via after school programs, chose the Lumia 900 to support field operations and to better operational efficiencies as well as to provide a user experiences for the various age groups of site coordinators.
Citrix Systems (CTSX): Citrix Systems expects to increase its operations in the Raleigh area creating over 300 jobs within the next five years.
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Lululemon Athletica inc. (NASDAQ:LULU): The company predicts a Q2 revenue of $273M-278M, consensus $289.78M. This guidance is based on a comparable-store sales percentage, which has risen 25% year over year, increase in the low double digits on a constant-dollar basis. Direct to customer revenue has increased to $38.4M, up 179%. SG&A expenses as a percentage of revenue fell to 29.4% from last years 31%. The company predicts a Q2 EPS of $0.28-$0.30 instead of $0.33 and an FY12 EPS of $1.55 vs. $1.62 consensus. Shares of Lululemon Athletica inc. are trading 8.44% lower today.
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Navistar International Corporation (NYSE:NAV): The company’s FQ2 results were a disappointment causing them to restructure management. During the period, profits were reduced by $104M by warranty cost. The results were also affected by the need to use the warranty reserve during the quarter and Navistar chairman, president and CEO Daniel C. Ustian added, “We were also affected by speculation surrounding our engine certification for our Class 8 engine, which is why we are working tirelessly with the U.S. EPA to get resolution.”Although there were lower sales, the cost of sold products rose 9% to $2.94B. The adjusted estimates for FY12 EPS are now $0.00-$2.00. Shares of Navistar International Corporation are trading 14.76% lower today.
The Men’s Wearhouse, Inc. (NYSE:MW): According to Cowen, the sell-off of Men’s Wearhouse after hours as a result of its Q1 earnings miss is an overreaction. After the company decreased guidance, the firm lowered expectations, but states that the story will move to the 2H2012 during which they believe sales trends will improve and comps will be easier. Men’s Wearhouse holds an Outperform rating. Shares of The Men’s Wearhouse, Inc. are trading 18.70% lower today.
Molina Healthcare, Inc. (NYSE:MOH): In a regulatory filing last night, Molina Healthcare revealed that it will expand its Texas health plan, Molina Healthcare of Texas, has expanded into multiple new service areas, which include Hidalgo and El Paso. The company has also began providing to members in other service areas, including pharmacy and inpatient benefits that had been previously provided by the state. In all, this service and benefit expansion has increased Molina of Texas’ premium by neary $900M on an annual basis. Shares of Molina Healthcare, Inc. are trading 30.82% lower today.
The J.M. Smucker Company (NYSE:SJM): The acquisition of Rowland Coffee has added almost $24M to segment net sales, adding 5% of the segment net sales increase. Folgers’ volume declined 7% and Dunkin’ Donuts (NASDAQ:DNKN) packaged coffee has fallen 13%. These coffee volume declines are mostly a result of both lower consumer purchases due to higher retail prices and inventory level management by key retailers as they anticipate a price decline. Shares of The J.M. Smucker Company are trading 0.18% higher today.
Late Buzzers: Banks Decline on New Capital Rules, Facebook Still Struggling
After closing nearly 3 percent lower in regular trading, Bank of America (NYSE:BAC) shares continued to edge lower in late trading. In the final hour of trading, the Federal Reserve unveiled a plan that places tougher capital rules on banks with at least $500 million in assets. The new rules require banks to maintain a level of common equity equal to 4.5 percent of their risk-weighted assets, plus another 2.5 percent for a capital conservation buffer. Bank of America was the worst performing company in the Dow Jones Industrial Average. Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) also closed lower on Thursday.
Quiksilver Inc. (NYSE:ZQK) shares bounced .82 percent in late trading. The company narrowed its loss in the second-quarter to $5.1 million, compared to a loss of $83.3 million a year earlier. Robert B. McKnight, Jr., Chairman of the Board, Chief Executive Officer and President of Quiksilver, Inc., commented, “I’m proud of the Quiksilver team’s performance in the second quarter amid inconsistent economic conditions around the world. We continue to see examples of solid growth in our emerging markets while some established markets, particularly in Europe, have been impacted by regional economic uncertainty. Especially against this backdrop, we’re pleased to see that the improvements we’ve made to our retail presence continue to drive positive comparable store sales in all three regions.”
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Facebook (NASDAQ:FB) shares continued to decline in extended trading after close down 1.86 percent. The social-media giant is still having trouble building momentum and is one of the most popular short plays in the market. However, JMP Securities recently initiated coverage on Facebook with a Market Outperform rating and a price target of $37. “Valuation appears high but Facebook has plenty of opportunities to monetize its vast user base,” analyst Mark Harding wrote.
RF Micro Devices Inc. (NASDAQ:RFMD) shares edged higher after the closing bell. The company received an upgrade from Neutral to Buy from Davenport, citing strong demand for the chip maker’s products. RFMD is a top supplier to smartphone companies such as Samsung and Apple Inc. (NASDAQ:AAPL).
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