Wal-Mart Beats Estimates; Limited Brands' Sales Fall

(Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, said December sales climbed 2.4 percent, higher than analysts' estimates. Limited Brands Inc. cut its fourth-quarter profit forecast after sales declined during what may have been the worst holiday season since 2002.

Women's clothing retailers AnnTaylor Stores Corp., Chico's FAS Inc., and Cato Corp. also projected earnings less than analysts' estimates after December sales at stores open at least a year fell.

A drop in customer visits at American Eagle Outfitters Inc. and other retailers have hurt profit. Consumers facing $3- a-gallon gasoline and the worst housing market in 27 years reined in spending and only bought items on sale. Stores typically count on November and December for about a fifth of their annual sales.

``It's a very challenging period for the retailers,'' Steven Baumgarten, an analyst at PNC Wealth Management in Philadelphia, with $77 billion in assets including retailers' shares, said on Jan. 8. ``The sales numbers obviously don't look that great, and the promotional activity in most cases was above last year, so margins are probably going to suffer.''

The International Council of Shopping Centers on Jan. 8 said same-store sales in November and December probably increased ``a little under'' its 2.5 percent forecast. Same- store sales are considered a key measure of a retailer's performance because they exclude locations that have recently opened or closed.

Food, Drugs

Discounters benefited as cash-strapped consumers sought out lower prices. Wal-Mart's December gains were driven by sales of food, prescription drugs and consumer electronics. The results were within the company's forecast of a 1 percent to 3 percent increase and beat analysts' estimates of a 1.8 percent rise.

Costco Wholesale Corp., the largest U.S. warehouse-club chain, said December sales at stores open at least a year rose 7 percent, exceeding analysts' projections for a 5.5 percent gain. TJX Cos., which sells designer clothes at discounted prices at its Marshalls chain, raised its fourth-quarter forecast.

American Eagle, the U.S. retailer of clothes for 15- to 25-year-olds, fell 6 cents to $17.72 yesterday in New York Stock Exchange composite trading. Limited Brands, based in Columbus, Ohio, dropped 4 cents to $15.69. Wal-Mart, based in Bentonville, Arkansas, climbed 93 cents, or 2 percent, to $46.90.

The Standard & Poor's 500 Retailing Index rose less than 1 percent to 375.15 yesterday. The index has dropped 8.5 percent this year through yesterday following an 18 percent decline in 2007.

Macy's Falls

Macy's Inc., the second-largest department-store company, said sales dropped 7.9 percent, missing analysts' estimate for 6.4 percent fall.

``Macroeconomic trends led customers to spend cautiously for the holiday,'' Chief Executive Officer Terry Lundgren said in a statement.

Gap Inc., the biggest U.S. clothing retailer, said same- store sales fell 6 percent, more than double Retail Metrics LLC's estimate for a 2.4 percent decline. Abercrombie & Fitch Co. said comparable-store sales retreated 2 percent. Analysts estimated a 0.9 percent decline.

December sales may have gained at a pace slower than the council's 1.5 percent estimate as shoppers waiting for discounts spent less at the beginning of the month, Michael Niemira, the ICSC's chief economist, said last week.

A calendar shift moved a week of holiday sales into November from December, hurting last month's results and helping November post a 3.5 percent increase.

 

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Rates yet to halt spending

(Fin24) -  Latest retail sales figures show consumers are   struggling to shell out money for big-ticket items as interest  rates begin to bite.

However, economists point out that retail sales growth is calculated off a high base and credit spending remains robust. 

The retail sales figures for October show that there was an 8.1% decline in sales of household furniture, appliances and equipment in  the three months from August to October compared with the same three months last year.

The Reserve Bank Quarterly Bulletin also says there was a decline year-on-year in real household expenditure on durable goods.  

The bulletin shows overall consumption spending cooled down to a fairly sedate 4.5% in the third quarter of last year from a robust 8.25% for the whole of 2006. 
 

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S.Africa Dec new vehicle sales fall 15.1 pct yr/yr

(Reuters) - South African new vehicle sales dropped 15.1 percent year-on-year in December on higher interest rates and tighter credit laws, and should moderate further this year, the National Association of Automobile Manufacturers said on Wednesday.

NAAMSA said new vehicle sales fell to 41,813 units in December compared to the same month in 2006.

New sales incorporating Associated Motor Holdings were 44,926 vehicles in December compared to 54,874 over the same period the year before.

AMH is an importing and distributing company whose data is reported separately because it does not provide some of the vehicle sale breakdowns required by NAAMSA.

New vehicle sales during the whole of 2007 fell by 5.2 percent to 612,707 compared to 2006, after registering four successive record years previously, NAAMSA added.

"During 2007, the automotive industry was buffeted by a series of negative events (including) progressive increases in interest rates, the introduction of the National Credit Legislation ... which introduced stricter disciplines governing the granting of credit," it said.

 

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King Likely to Win New Term Leading Bank of England

(Bloomberg) -- Prime Minister Gordon Brown was speechless when asked yesterday whether he would reappoint Mervyn King as governor of the Bank of England, silently nodding toward Chancellor of the Exchequer Alistair Darling to repeat the promise of a decision in ``the next few weeks.''

When the time does come, Brown will probably say yes.

Brown has little choice but to overlook King's delay in acting on the financial crisis at Northern Rock Plc last year, say former colleagues, economists and lawmakers from the three main parties. They say the political costs of pushing King aside would outweigh any benefit.

 

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Eskom may quit South Dunes

(Fin24) - Another large tranche of export entitlement through the Richards Bay Coal Terminal (RBCT) will soon become available for black empowered coal companies if Eskom Enterprises pulls out of the South Dunes Coal Terminal (SDCT).

Eskom Enterprises is a 50% shareholder in the SDCT which has a six million tonnes (Mt) entitlement to export through the RBCT in terms of its R1.2bn phase five expansion.

It is understood that Eskom is reviewing its participation in the SDCT and is likely to decide to opt out meaning its 3Mt entitlement will be up for grabs.

There should be no shortage of bidders for that entitlement. When the RBCT last year offered 9Mt/year of "subscription quota" coal in terms of the phase five expansion it received 26 applications for a total of 26.85Mt/year.

Of those, 18 applications totalling 19Mt met all the pre-qualification criteria but only eight companies were successful.

 

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Gold Climbs to Record on Higher Oil Prices, Weakening Dollar

(Bloomberg) -- Gold rose to a record as higher crude oil and a weaker dollar spurred demand for the metal as a hedge against inflation.

Gold is off to its best start to the year since 1980. Oil rose to a record $100 last week, U.S. warships were confronted by Iranian boats over the weekend, and the dollar today fell against 15 of 16 major currencies.

``The U.S. dollar is weakening and oil has picked back up,'' said David Thurtell, a metals analyst at BNP Paribas SA in London. ``There are a lot of supportive reasons to buy and not many reasons to sell.''

Gold for immediate delivery rose as much as $17.84, or 2.1 percent, to $876 an ounce in London, exceeding the previous record of $868.89 set Jan. 3. The metal traded at $874.90 as of 12 p.m. in London. Gold for February delivery rose as much as $16.80, or 2 percent, to $878.80 an ounce on the Comex division of the New York Mercantile Exchange.

The metal last reached an all-time high in New York in 1980, when the dollar was weakening, oil prices were rising and the U.S. and Iran were at loggerheads. U.S. Navy warships were approached by Iranian ``fast boats'' in the Straits of Hormuz on Jan. 6, the U.S. Defense Department said yesterday. The straits are the sea route for about a quarter of the world's oil.

 

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U.S. Stocks Climb for Second Day; Chevron, Bear Stearns Advance

(Bloomberg) -- U.S. stocks advanced the most in two weeks, led by miners and energy producers, after gold rose to a record and oil rebounded from its biggest decline in more than a month.

Chevron Corp., the second-largest U.S. energy company, and Schlumberger Ltd., the world's biggest oilfield-services provider, climbed. Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp. rallied as prices for precious and industrial metals increased. Bear Stearns Cos. gained after a person with knowledge of the matter said Chief Executive Officer James Cayne plans to resign.

The Standard & Poor's 500 Index increased 5.45, or 0.4 percent, to 1,420.62 as of 9:39 a.m. in New York. The Dow Jones Industrial Average added 24.22, or 0.2 percent, to 12,851.71. The Nasdaq Composite Index advanced 2.34, or 0.1 percent, to 2,501.8. About 13 shares climbed for every five that fell on the New York Stock Exchange.

Shares rose in Europe and Asia, led by miners and telephone companies. The Dow Jones Stoxx 600 Index of European shares added 0.9 percent for its first gain of the year.

``With oil where it is right now between $90 and $100, the oil companies do pretty darn well and they still look relatively inexpensive,'' Jeffrey Saut, who helps oversee about $190 billion as chief investment strategist at Raymond James & Associates, said in a Bloomberg Television interview.

U.S. equities also got a boost as the cost for banks to borrow in dollars and euros slid, signaling efforts by central banks to restore confidence in money markets is working. Investors will get further clues on the outlook for economic growth and interest rates from a private report today that may show pending home sales fell for the first time in three months.

 

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