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Updated 11-Mar-10
Quotes at time of story, top stories today:
Trade Deficit Unexpectedly Narrows
The U.S. trade deficit unexpectedly narrowed by $2.6 billion in January to $37.3 billion. The consensus estimate called for it to increase to $41.0 billion. Exports in January fell by $0.5 billion to $142.7 billion while imports declined by $3.1 billion to $180.0 billion.
The increasing value of the dollar did not seem to play a major role in the export decline. Civilian aircraft, which are typically hedged against changes in foreign exchange, led the export decline as shipments fell by $0.474 billion.
Petroleum imports declined by $0.878 billion in January. This was surprising considering the personal consumption data showed gasoline consumption surging by 7.0% during the month.
While the problems with Toyota did not occur until the end of the month, nonseasonally adjusted passenger car imports from Japan fell by $0.513 billion.
DVN Announces $7.0 Bln Joint Venture
Devon Energy (DVN 72.56, +0.87) announced that it had entered into agreements to sell all of its assets in the deepwater Gulf of Mexico, Brazil and Azerbaijan to BP (BP) for $7.0 billion.
In addition, BP will assume Devon's leases of the Seadrill West Sirius and Transocean Deepwater Discovery drilling rigs for the duration of the contract terms.
The company also announced that Devon and BP will form a heavy oil joint venture to develop BP's Kirby oil sands leases in Alberta, Canada.
"These sales, combined with our previously announced divestitures of $1.3 billion of deepwater Gulf of Mexico assets, put Devon well on the way to completing its strategic repositioning," said Larry Nichols, Devon CEO.
"Given any reasonable sales price for Devon's remaining divestiture assets, the transactions to date suggest that our total after-tax proceeds for the entire divestiture program will exceed our previously announced range of $4.5 billion to $7.5 billion."
U.S. Foreclosure Activity Falls 2% in February
RealtyTrac released its February 2010 U.S. Foreclosure Market Report, which shows foreclosure filings were reported on 308,524 U.S. properties during the month, a decrease of 2% from the previous month, but still 6% above the level reported in February 2009.
The report also shows one in every 418 U.S. housing units received a foreclosure filing in February.
"The 6% year-over-year increase we saw in February was the smallest annual increase we've seen since January 2006, when we began calculating year-over-year increases, but it still marked the 50th consecutive month of year-over-year increases in foreclosure activity," said James J. Saccacio, chief executive officer of RealtyTrac.
"This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity -- albeit at a historically high level that will likely continue for an extended period. "In addition, severe winter weather appears to have temporarily slowed the processing of foreclosure records in some Northeastern and Mid-Atlantic states."
HOTT Reports In-line Q4 Results
After the close yesterday, Hot Topic (HOTT 6.34, -0.21) reported fourth quarter results, which were in-line with consensus.
The company reported fourth quarter earnings of $0.18 per share, which is in-line with the First Call consensus of $0.18. Revenues fell 10.0% year-over-year to $214.2 million versus the $214.6 million consensus.
Looking ahead to the first quarter, the company expects to report earnings in the range of ($0.05) - ($0.02). However, this may not be comparable to the current consensus of ($0.02) because the company's guidance includes approximately $0.02 of expenses related to ShockHound. This guidance is based upon a comp store sales decline in the high-single-digit percentage range.
For the quarter, the company reported that total company comparable store sales fell 11.5%, below the 5.2% growth in the prior year's fourth quarter.
GYMB Guides Q1 Earnings In-line
Gymboree (GYMB 46.29) reported fourth quarter earnings results after the close yesterday, which slightly beat Wall Street expectations. Separately, the company provided in-line earnings guidance for the first quarter.
Gymboree reported fourth quarter earnings of $1.11 per share, $0.01 better than the First Call consensus of $1.10. Revenues rose 3.8% year-over-year to $299.6 million versus the $299.9 million consensus.
For the first quarter, the company expects earnings will be in the range of $0.90 to $0.94, in-line with the current consensus of $0.90.
As previously reported, comparable store sales for the quarter decreased 2% versus the fourth quarter of the prior year. Gross profit for the fourth fiscal quarter of 2009 was $140.0 million or 46.7% of net sales compared to $124.3 million or 43.0% of net sales for the fourth fiscal quarter of 2008.
Excluding the impact of the prior year $6.0 million write-off of merchandise inventories, gross profit increased 180 basis points.
During the first quarter, the company plans to open 35 new stores consisting of 3 Gymboree stores, 6 Gymboree Outlets, and 26 Crazy 8 stores. Co announces it has entered into a multi-year franchise agreement with Azadea G Group Limited, a wholly-owned subsidiary of Azadea Group Holding SAL, to launch the Gymboree retail brand in the Middle East. The first stores are scheduled to open in Dubai during the third fiscal quarter of 2010.
Initial Claims In-line with Expectations
Initial claims inched lower for the week ending March 6, falling from 468,000 to 462,000. The drop was in-line with the consensus estimate of 460,000.
It seems that the volatility over the past month due to inclement weather conditions has ended and 460,000 new claims may be the new equilibrium point.
Continuing claims increased from 4.521 million to 4.558 million for the week ending Feb. 27. The consensus expected claims to hold at 4.500 million.
The nonseasonally adjusted data is again showing limited to no job growth.
Continuing claims increased by 50,729 and emergency claims recipients declined by 159,659 for the week ending Feb. 20. Most of the drop in emergency benefits can be attributed to workers running out of unemployment benefits.
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