US EQUITIES WEEK AHEAD: Luxury Retail Earnings; August Same-Store Sales

Date : 08/24/2012 @ 3:25PM
Source : Dow Jones News
Stock : Tiffany & Co. (TIF)
Quote : 94.54  0.94 (1.00%) @ 4:01PM

US EQUITIES WEEK AHEAD: Luxury Retail Earnings; August Same-Store Sales

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   By Nathalie Tadena 

In a light week ahead for corporate earnings, reports from jewelers Tiffany & Co. (TIF) and Zale Corp. (ZLC) and watchmaker Movado Group Inc. (MOV) will shed light on the state of luxury spending amid an uncertain global economic environment.

Several retailers are also due to report their same-store sales results for August, an important month for back-to-school sales and an indicator for holiday spending.

Among the barrage of economic reports on tap for next week, news from the Federal Reserve will provide investors and traders with signs about another round of quantitative easing.

   Quarterly Earnings Due From Tiffany's, Zale 

Among the companies due to report their latest quarterly results next week are jewelers Tiffany and Zale as well as watchmaker Movado. Analysts polled by Thomson Reuters expect Tiffany and Zale to report weaker bottom-line results from a year earlier, while Movado is projected to record an increase in profits.

Worries about the European sovereign debt crisis have weighed on consumer confidence and luxury spending of late.

After better-than-anticipated sales and earnings growth in the first three quarters of 2011, Tiffany saw sales weaken markedly in the U.S. and Europe during the critical holiday season. In May, the company reduced its full-year expectations, citing slowing economic growth in many countries and softness in U.S. operations. Zale continues to recover from declines spurred by the recession and its own missteps. It has recorded six consecutive quarters of same-store sales growth, though it hasn't had a profitable fiscal year since before the recession ended.

Meanwhile, Movado, whose brands include Concord and Tommy Hilfiger, has shifted its recent focus to its more profitable wholesale business. It has also embarked on a multiyear plan to improve profitability by capitalizing on its Movado and licensed brands.

   Heinz Projected to Post Slight Improvement in Earnings 

Ketchup maker H.J. Heinz Co. (HNZ) is expected to post a slight improvement in earnings and flat revenue as the company continues to deal with a weak global economy.

Heinz, which makes its namesake ketchup, Ore-Ida frozen potatoes and Weight Watchers Smart Ones frozen meals, is looking to spend more on marketing and increase its presence in emerging markets, where the company expects to generate more sales than it will in the U.S. this fiscal year.

The company in May dialed down its long-term earnings growth rates. Heinz, like other packaged-food companies, is seeing limited growth in large and profitable developed markets, where consumers remain thrifty with their grocery shopping.

Other notable companies reporting next week include apparel retailer J. Crew Group Inc., Internet radio firm Pandora Media Inc. (P), oil-and-gas equipment company Seadrill Ltd. (SDRL), data-analysis software company Splunk Inc. (SPLK) and digital-video-recorder company TiVo Inc. (TIVO).

   Retailers to Report Same-Store Sales Thursday 

Investors will look for signs of robust back-to-school sales when retailers report their August same-store sales results on Thursday.

Same-store sales in July were mixed for U.S. retailers, though teen retailers like Wet Seal Inc. (WTSLA) and Buckle Inc. (BKE) had a soft start to the back-to-school season.

Last August's sales were affected by Hurricane Irene, which slammed the U.S. East Coast on one of the biggest back-to-school shopping weekends and forced store closures in one of the nation's most populous regions.

   Fed News To Offer Signs About Another Round of Easing 

The upcoming Federal Reserve Jackson Hole symposium and the Beige Book on Wednesday should offer clues to how central bankers view the economy and possible further accommodation. Those hints will be of interest to investors and traders who are hoping for another round of easing.

The data side of next week's calendar will be dominated by factory surveys by regional Feds as well as a second look at second-quarter growth and consumer attitudes about the economy.

   Energy Markets Seeing Mild Impact from Tropical Storm Isaac 

Tropical Storm Isaac is already disrupting oil and gas production in the U.S. Gulf of Mexico, but its impact on energy markets is likely to be mild compared with storms in previous years, traders and analysts say.

The storm is forecast to strengthen by the time it reaches the Gulf early Monday, and seems headed toward the Alabama coast, passing near the heart of energy production in the Gulf and threatening refineries in Louisiana and Mississippi. BP PLC (BP, BP.LN) said Friday it is pulling all personnel from its large Thunder Horse offshore platform, interrupting production there, and evacuating nonessential staff from a host of other nearby facilities. Royal Dutch Shell PLC (RDSA, RDSA.LN), also a major Gulf producer, said it is preparing to evacuate nonessential staff from some of its operations in the area, although production so far remained unaffected.

Analysts expect other producers to also evacuate facilities and disrupt production, a move that just a few years ago could have triggered major spikes in energy prices, coming in the height of driving and air-conditioning season. But thanks to an unprecedented boom in shale natural-gas production onshore, Gulf natural-gas production is just 6% of the total produced in the continental U.S., down from 17% when Hurricanes Katrina and Rita wrought havoc with energy infrastructure there in 2005. A similar surge in onshore U.S. oil production has lowered the Gulf's share of lower-48 state production to one fifth, from 29% in 2005, according to analysts with Simmons & Co. International.

   K-V Pharmaceutical to Fight for Use of Cash Collateral 

K-V Pharmaceutical Co. (KVPBQ, KVPHQ) on Wednesday will fight for the continued use of the cash collateral securing its loans, against the wishes of a key creditor.

A Manhattan bankruptcy judge authorized K-V to tap the cash at the start of its Chapter 11 case earlier this month on the condition K-V come back to secure approval of long-term use.

Creditor Hologic Inc. (HOLX) is fighting the cash request on the grounds that its $95 million claim against K-V is secured by some of that same cash.

Hologic's claim is tied to K-V's Makena drug, which is meant to prevent premature birth.

K-V blamed its Aug. 4 Chapter 11 filing on the Food and Drug Administration for failing to enforce Makena's exclusive status.


Among the significant conferences next week are the Jefferies Semiconductor & Hardware Corporate Access Summit on Tuesday in Chicago; the Morgan Stanley Summer Houston Energy Summit Tuesday through Thursday in Houston; and the J.P. Morgan LED General Lighting Symposium on Thursday in New York.

-Kathleen Madigan, Jacqueline Palank, Ben Lefebvre, Alison Sider and Dow Jones Newswires staff contributed to this article.

Write to Nathalie Tadena at

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