Retailers, consumers and prices
Check out the better-than-expected results being served up by food companies.
Chocolate maker Hershey posted a quarterly profit above analysts’ expectations, said it was on target to meet its 2010 earnings forecast and boosted its dividend. The company also said it would boost advertising to try to sell more candy, including Almond Joy and York peppermint patties.
Meanwhile, Archer Daniels Midland, one of the largest processors of corn and soybeans, saw its profit slip 2 percent, but the results still topped analysts’ forecasts, and Pepsi Bottling also topped Wall Street’s view as productivity improvements offset a dip in sales. Fruit and vegetable producer Dole Food reported a higher fourth-quarter profit and paid down debt.
Outside the food and beverages sector, Whirlpool’s profit more than doubled on cost cuts and improving sales and the world’s biggest appliance maker offered a stronger-than-expected 2010 forecast. Women’s clothing retailer Ann Taylor said its fourth quarter earnings would top expectations.
Nevertheless, investors have been giving overall U.S. earnings a big yawn up to now, and consumers are saving more and spending less according to the IMF. On the plus side, global employment services company Manpower reported a higher-than-expected profit and said job trends were improving around the world, suggesting the economic recovery would be sustained.
Check out Estee Lauder’s much better-than-expected end to 2009.
The cosmetics maker said fiscal second-quarter results, due next week, will fly past its forecast and Wall Street’s predictions. Sound familiar? That’s because the company did the same thing back in October, before it released results for the first quarter of its fiscal year.
Analysts noticed the similarity. JP Morgan’s John Faucher entitled his research note “Deja Vu” and many said with the stock’s nice run already (up about 56 percent in 2009), big gains from here are likely limited.
Check out retailer’s different views on future profits.
Kohl’s, the mid-priced department store, says it expects third quarter earnings to be better than expected, while upscale Nordstrom cut its forecast range.
That’s not to say that Nordstrom’s consumers are flocking to Kohl’s as the U.S. economy suffers. Kohl’s profit fell in the second quarter. But cutting inventory was enough for it raise its profit estimate for the full year. Deutsche Bank retail analyst William Dreher also said the company will be able to set itself apart with fresh merchandise because it cleaned out its inventory.
Nordstrom, meanwhile, cut its full-year profit outlook. But while its customers are spending less, the retail chain says they are not trading down.
And if they were, they certainly aren’t trading down to J.C. Penney, which saw a 36 percent drop in profit and forecast third quarter earnings below analysts’ estimates. Sales also fell 2.5 percent.
Also in the basket:
H&M defies retail gloom as July sales top forecast
Swatch upbeat on H2 as Olympics boosts sales
Back-to-School discounts are deeper, more creative (N.Y.Times)