UPDATE: US Retail Sector Lower, Weighed Down By Econ Outlook
2009年1月21日 - 5:22AM
Dow Jones News
By Andria Cheng
U.S. retail stocks headed lower Tuesday, weighed by concerns
about the economic and financial sector outlook as Barack Obama was
sworn in as the 44th U.S. president.
Department stores led decliners, with J.C. Penney Co. (JCP)
shares down 8.5% at $17.63. In a statement released Tuesday
afternoon, the company said there's no basis for any concern about
its credit line and said it expects to have more than $2 billion of
cash on its balance sheet in the year ending Jan. 31. J.C. Penney
also said it expects its cash flow metric to improve further and be
positive in the new year.
J.C. Penney said it has no debt maturities coming due in 2009
and that it expects to fund its next maturity of about $500 million
due in March 2010 from its cash balances. It also said it won't be
required to make a contribution to its primary pension plan in 2009
and doesn't expect to be required to contribute in 2010.
The company's remarks came after J.P. Morgan analyst Charles
Grom cut his profit estimates on the department store retailer.
Grom said deep discounts taken during the holiday season and
after Christmas are likely to hurt the company's profit margins.
Moreover, the stock market's decline in the past year is likely to
lead to "sizable pension expense" this year. He said the company
also may breach terms of its revolver expiring in April 2010 by the
second half of 2009 based on his estimate that profit before items
may drop 44.5% this year. He said in a research note Tuesday
morning while Penney will likely seek some amendment to its credit
line some time over the next six months, which will likely come at
a cost.
Macy's Inc. (M) shares fell 9.6% in mid-afternoon trading while
Nordstrom Inc. (JWN) shares declined 6.8%.
The S&P Retail Index (RLX) fell 5% to 265.55, pacing a
broader market decline. Major indexes were dragged down by
financial stocks and also tracked losses in Europe, amid renewed
worries about the health the financial sector, while oil prices
continued their decline on a gloomy outlook for global energy
demand.
Best Buy Co. (BBY) shares fell 6.3%. J.P. Morgan analyst
Christopher Horvers said that the liquidation of bankrupt retailer
Circuit City Stores Inc. (CCTYQ) is likely to give a 57-cent
per-share profit lift to Best Buy in fiscal 2010 as it takes share
from Circuit City. The analyst, however, said investor concerns
regarding liquidation pressures will weigh on the stock in the near
term.
Discounters and wholesale clubs including Costco Wholesale Corp.
(COST) would also benefit from Circuit City's downfall, the analyst
said.
-Andria Cheng; 415-439-6400; AskNewswires@dowjones.com
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