Santa-Rally Stocks Shrug Off Jobs Report (ULTA, PVH, BIG, PAY, KIRK)

The market shrugged off a disappointing jobs report to extend its December rally. The reaction is a bit surprising, and shows the power of the current Santa Claus Rally underway. We’ll see if the market has any second thoughts after investors have a weekend to weigh the data, though. Nonetheless, we are still encouraged that stocks will have a solid final month to the year, and so far that is playing out as we expected.

The Home Furnishing Retailer Stocks Index was the top performing tickerspy Index on the day, led by Kirkland’s (KIRK) with a 16% gain.

Stocks rose to close out the week, with the Dow adding 20 points to 11,382. The S&P added 3 points to 1,225, while the Nasdaq climbed 12 points to 2,591. Oil rose $1.19 to $89.19 a barrel, while gold added $16.90 to $1,406.20 an ounce.

On the economic front, the Labor Department announced that the unemployment rate unexpectedly climbed to 9.8% last month from 9.6%. Economists had thought it would hold steady. Meanwhile, employers added 39,000 jobs in November, significantly less than the 172,000 projected by economists. Separately, the Institute for Supply Management said that its services index rose to 55% from 54.3% in October, matching expectations.

In earnings news, shares of Ulta Salon, Cosmetics & Fragrance (ULTA) slipped -1.4% despite the beauty retailer reporting that its quarterly profit topped estimates. For Q3, net income was $14.2 million, or 23 cents per share, up 68% from $8.5 million, or 14 cents per share, last year. Adjusted EPS came in at 25 cents, a nickel better than expectations. Revenue jumped 19.4% to $339.2 million, while same-store sales climbed 12.2%. Looking forward, Ulta guided for Q4 adjusted EPS of 40-42 cents on sales of $447-$456 million, compared to Wall Street’s forecast of 39 cents and $450.7 million in sales.

Phillips-Van Heusen (PVH) said that its Q2 net income fell, mainly due to several one-time items. The stock dipped -1.7%. For the quarter, the clothing company earned $80.7 million, or $1.12 a share, down from $83.6 million, or $1.58 a share, a year ago. Excluding restructuring and acquisition costs, adjusted EPS was $1.55, which beat estimates of $1.43. Revenue grew to $1.5 million from $697,440. For Q4, the company forecast adjusted EPS of 76-81 cents, compared to the 81-cent consensus. For the full year, it expects adjusted EPS of $3.90-$3.95, above the $3.42 expected by analysts. Ten Pros held the stock in their top-15 U.S.-listed equity positions at the end of Q3, and 49 tickerspy members hold the stock in their portfolios.

Shares of Big Lots (BIG) fell -5.1% after the discount retailer’s Q3 profit came in below expectations. The company also cut its holiday outlook. For the period ended October 30th, net income was $17.7 million, or 23 cents per share, compared with $30.3 million, or 37 cents per share, a year earlier. Analysts were looking for EPS of 24 cents. Revenue rose nearly 2% to $1.06 billion, while comparable-store sales inched down -0.7%. For Q4, Big Lots lowered its EPS forecast to $1.36-$1.42, bracketing the $1.38 consensus, from $1.41-$1.45. For the full year, it now expects EPS of $2.75-$2.81, compared with its prior view of $2.75-$2.85. The Street is looking for full year EPS of $2.77.

VeriFone Systems (PAY) saw its shares rise 8.5% after the company announced better-than-expected Q4 results and gave a positive outlook for 2011. During the three months ended in October, VeriFone posted a profit of $49.4 million, or 55 cents a share, compared with a loss of -$2.2 million, or -3 cents a share, last year. Adjusted EPS was 40 cents, topping the 36-cent consensus. Revenue increased 27% to $276 million, beating analyst estimates of $263 million. Looking forward, the company forecast adjusted EPS of $1.60-$1.70 on revenue of $1.13-$1.15 billion for FY11, coming in above expectations of $1.59 on $1.1 billion in revenue. Fourteen Pros held the stock in their top-15 U.S.-listed equity positions at the end of Q3, and 105 tickerspy members hold the stock in their portfolios.

Tags: BIG, KIRK, PAY, PVH, ZQK