3 Stocks
Gap Stores (GPS)
Gap Stores saw its net income decline 8% to $0.34 on revenue of $4.1 billion, which is -13% year over year. These are sobering results to be sure, but better than the Wall Street consensus of $0.32 earnings per share. Same-store sales storewide -14% and Old Navy -17% (isn’t this the discount brand). The company is closing 100 stores, but will open 50 new stores -- half outside the United States (I wonder if they’ll get penalized for doing that). Management is proud of the $1.8 billion cash it had in the kitty at the end of the fiscal year.
Kohl's (KSS)
Kohl’s had sales of $5.2 billion, -4.6% year over year, as same store sales decreased 9.1%. Revenues were in line with the Street but earnings of $1.10 beat the consensus of $1.02. Still, management calls the current environment “challenging” because of macro conditions. FY09 guidance sees sales -1% to 4% and same-store sales -5% to 8% while earnings will be $2.00 to $2.30. The Street modeled for $2.40.
Decker's (DECK)
Decker’stook a crushing hit in the aftermarket when it initially reported earnings results that actually beat the Street by $0.10 on revenue that increased 5.6% from the year-ago period. Ugg sales were strong and should continue to enjoy robust demand in FY09 but higher marketing costs and stock compensation expenses (plus I told my wife “no more of those ugly boots”) will sees earnings come in at $7.27 against the consensus of $8.05 billion.
Some Democrats May Fight Back
The slow train wreck continues.
(I swear, I don’t know if its just me, but I can move around in this train wreck in normal speed even though the train is moving at 1/1,000 normal speed. I get up and make a drink, read the newspaper, and read messages on my BlackBerry, but I can’t change the course of history. Moreover, at some point I have to brace for impact.)
And the train wreck not only promises to be devastating, but there is the element of fear associated with waiting for the inevitable. Talk about insult to injury this will eventually be injury to insult. Thursday, the battle against Wall Street took another turn toward entities making loans to students. Considering the huge default rate of these loans, many companies were only able to be in the business because of the fees the government was paying.
Not making headlines Thursday but lurking like a radon on steroids waiting to wipe out the little value left on your home is the cram-down bill that the president has already factored into his budget.
Essentially, mortgages will be lowered to current values as determined by a bankruptcy judge and the bank would have to sallow the difference and the borrower would also be allowed to pay a lower monthly payment. This would force banks to try to accommodate borrowers before it reached that stage. This is a crazy idea because it’s going to hurt all home buyers. There is no way a bank or other lending institutions would make loans in the future without adding in this risk.
This is a Pandora’s Box that nobody wants to open. It wasn’t too long ago that liberal democrats were beefing about cram-downs on pension obligations. The great news is this wholesale onslaught on business may have finally awakened the cavalry. The reason the provision wasn’t crammed down our throats yesterday was a concerned group of law makers know as the New Democrat Coalition.
Led by Rep Ellen Tauscher of California the group believes the plan goes too far (what’s next…keep Guantanamo open and ship banking executives there) and could have unintended consequences. According to the Web site this group of moderate, pro-growth lawmakers has 58 members (including an Adam Smith, naturally) and they are pushing for a more reasonable plan that might only include subprime mortgages.
Who knows -- throw in the co-called Blue Dog democrats and maybe there will be some moderation in this otherwise frontal assault on capitalism and success. If the plan isn’t modified at some point experts say it will add an extra 2% onto future mortgage rates. It’s not the best way to turn housing around especially coupled with lower mortgage deductions for the would-be wealthy ($250,000) and no incentives for first time home buyers making more than $75,000 a year.
Talk about moral dilemma. This is scary stuff. I’m really surprised the market didn't come down even more.
That being said, voting across party lines is extremely high and there is incredible pressure on any democrat to step out of the shadow of the White House. I’m against most of the stuff coming out of the White House but what I dislike more than anything else is unevenness when it comes to being fair.
There are two sets of standards that not only promote bad behavior but discourage anyone trying dreaming of moving to the next level. Interestingly that means the president must believe rich people will still make chartable contributions even with smaller deductions.
Doesn’t that imply these folks have hearts and really care? Hmm…doesn’t that mean less fortunate people benefit from those that have been lucky enough (and committed enough and hard working enough and relentless enough and sacrificed enough and never gave up enough) to climb the ladder of success? Gosh, why are these people vilified and ridiculed?
Macy’s to cut 7,000 jobs as consumer spending falls
Net Income Sliced in Half for J.C. Penney, Lowe’s
