Europe Grabs Headlines, But China More Important (LULU, GES, BKS, KSS, CAGC, FNSR)
After yesterday’s huge rally, stocks by and large took a breather, with the major market averages ending mixed. Given data today that officially showed that Chinese PMI fell below 50, which indicates contraction, it was a resilient showing. While Europe has been the headline grabber this year, we’d be more worried if China experiences a hard landing, as the country is a major growth driver of the global economy. However, China’s move yesterday to cut the banking reserve requirements should help spur the Chinese economy, and outweighed today’s news. We continue to remain cautiously bullish.
The Chinese Agriculture Stocks Index was the top performing tickerspy Index on the day, led by China Agritech (CAGC) with a 161% gain. The Optical Networking Stocks Index was the day’s worst performing tickerspy Index, with Finisar (FNSR) down -13%.
Stocks finished the day mixed, with the Nasdaq the sole winner up 6 points to 2,626. The Dow lost -26 points to close at 12,020, while the S&P gave back -2 points to 1,245. Oil fell -16 cents to $100.20 a barrel, while gold dipped -$10.50 to $1,739.80 an ounce.
In economic news, first-time jobless claims rose by 6,000 to 402,000 last week. Economists had expected a reading of 390,000 new claims. Elsewhere, the Institute for Supply Management’s factory index climbed to 52.7 in November from 50.8 in October. Economists had expected a November reading of 51.8.
In earnings news, shares of athletic apparel maker Lululemon (LULU) dropped -5.1% after the company reported fiscal third-quarter sales results that missed Wall Street expectations. For the quarter, the Canadian company saw its revenue jump 30% to $230.2 million, below the $235.7 million analysts were expecting. Same-store sales rose 16%. Lululemon reported a fiscal third-quarter profit of $38.8 million, or 27 cents a share, up from $25.7 million, or 18 cents, a year earlier, and above the 25-cent consensus. The company forecast a fiscal fourth-quarter profit of 40-42 cents a share on sales of $327-$332 million. Analysts were looking for EPS of 42 cents on sales of $327.3 million.
Apparel retailer Guess (GES) said its fiscal third-quarter profit fell to $66.3 million, or 71 cents a share, from $69.1 million, or 75 cents a share, a year earlier. Revenue rose 5% to $642.8 million. Analysts had expected a profit of 73 cents per share on $657.2 million in revenue. Same-store sales fell -3.5%. Guess forecast a fiscal 2012 profit of $2.85-$2.91 a share on revenue of $2.7-$2.71 billion. Analysts were expecting a profit of $3.25 a share on $2.75 billion in revenue. Shares of Guess, nonetheless, rose 5.3%.
Shares of Barnes & Noble (BKS) tumbled -16.8% after the company reported a fiscal third-quarter loss when analysts expected a profit. For the quarter, Barnes & Noble lost -$6.6 million, or -17 cents per share, compared with a loss of -$12.6 million, or -22 cents per share, a year earlier. Revenue declined less than -1% to $1.89 billion. Analysts had expected a profit of 3 cents a share on sales of $1.98 billion. Two pros counted Barnes & Noble among their top holdings at the end of Q3 and more than 100 tickerspy members own the stock in their portfolios.
Shares of department store operator Kohl’s (KSS) slid -6.4% after the company said same-store sales for the four weeks ending November 26th fell -6.2%. Analysts had expected an increase of 2.0%. Total sales for the month slid -4.5% to $1.93 billion from $2.02 billion. Twenty-one pros held Kohl’s in their portfolios at the end of Q3 and nearly 200 tickerspy members own the stock in their portfolios.
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