Many retailers posted sharply lower November sales at stores open at least a year, prompting some investors to pour into the sector on hopes the dismal results signaled a bottom for share values.
Discounter Wal-Mart Stores Inc bucked the trend with a bigger-than-expected rise, helped by lower gasoline prices and record sales of grocery items close to the U.S. Thanksgiving holiday.
Overall, same-store sales fell 2.1 percent, not quite as bad as the 2.4 percent average forecast, according to Thomson Reuters data.
Excluding results for Wal-Mart, the world’s largest retailer, same-store sales fell 7.8 percent, worse than the 6.9 percent decline forecast by analysts, according to Thomson Reuters. That was the worst monthly performance since it began tracking sales data in 2000.
For example, Wal-Mart rival Target Corp posted a 10.4 percent drop in November same-store sales and forecast a mid-single-digit to low-double-digit drop for December.
The November same-store sales drop was the worst in more than 35 years, according to the International Council of Shopping Centers, which also again cut its forecast for the November-December holiday season. It now is calling for holiday sales to be flat to down 1 percent, compared with its previous forecast of a 1 percent increase.
But in a sign for the better, nearly half of the 35 retailers reviewed by Thomson Reuters beat bleak sales estimates.
“The reaction is that worse than this, we’re unlikely to see cash advance in 1 hour. And when you think in those terms, you begin looking forward positively,” Gilford Securities retail analyst Bernard Sosnick said.
Several clothing retailers, including Gap Inc and Pacific Sunwear of California also surprised forecasts with more moderate-than-expected declines. performed better than analysts had forecast.
Aggressive discounts and deals helped lure consumers into stores on Black Friday, the day after Thanksgiving that kicks off the key holiday shopping season. But that was the lone bright spot for most retailers and the price-cutting was also expected to eat into retailer margins.
Sales on Black Friday, which fell on November 28 this year, were a little better than expected, said Ken Perkins, president of research firm Retail Metrics.
“It caused the early (November) results to just simply be miserable instead of terrible,” he said.
Wal-Mart shares rose 0.86 percent, while the Standard & Poor’s Retail Index surged 2.2 percent. Nordstrom shares rose 8.17 percent, Aeropostale rose 7.97 percent and Gap shares gained 1.24 percent.
WORST MONTHLY DROP
Consumers facing a recession, job losses and tight credit have cut spending on all but the most essential items. During the Black Friday weekend, they mostly bought items that were deeply marked down, analysts said.
Electricite de France SA (EDF.PA: Quote, Profile, Research, Stock Buzz) offered to buy a 50 percent stake in Constellation Energy Group Inc’s (CEG.N: Quote, Profile, Research, Stock Buzz) nuclear business for $4.5 billion, in an attempt to scuttle a $4.7 billion takeover by Warren Buffett’s MidAmerican Energy Holdings Co.
EDF, the world’s largest nuclear utility, said on Wednesday the deal will also include an option for Constellation to sell up to $2 billion in non-nuclear power assets to the utility.
The French company made the offer in a letter to Constellation’s board, which argued the MidAmerican deal was too low.
It said it would also make an immediate $1 billion cash investment to address Constellation’s liquidity needs, but that would be credited against the $4.5 billion payment for the nuclear plants.
Under the terms of the deal, Constellation would remain a standalone company.
Still, completing the deal could be difficult for EDF, because it has to contend with stringent breakup terms set in Buffett’s agreement to buy Constellation, as well as doubts previously voiced by Constellation about the certainty that an EDF-backed deal could close.
“Constellation is fundamentally strong and EDF, like many others, believes that the proposed MidAmerican transaction significantly undervalues Constellation and its future opportunities,” EDF Chairman and Chief Executive Pierre Gadonneix said in a statement.
EDF, Constellation’s largest shareholder with nearly 10 percent of the company’s common shares, could stand to gain more from the deal than just the power generation assets — it might be able to buoy the value of its stake in Constellation above the $26 credit score.50 a share level set in the MidAmerican deal.
EDF claims its deal values the company at around $52 per share. Approval from the Maryland Public Service Commission would not be necessary, EDF said, and it expects to be able to close the deal within six to nine months of the MidAmerican deal’s termination.
It plans to finance the transaction through corporate funds and credit facilities. JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz) is the exclusive financial advisor to EDF.
BUFFETT’S HAUL
Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) (BRKb.N: Quote, Profile, Research, Stock Buzz) subsidiary MidAmerican agreed to buy Constellation in September, rescuing a company that was on the brink of bankruptcy.
The company faced liquidity issues due in part to ties of its trading business to Lehman Brothers (LEHMQ.PK: Quote, Profile, Research, Stock Buzz), and its shares fell as low as $16.70, down from nearly $108 in January.
As part of its deal, MidAmerican gave the power company an immediate $1 billion cash infusion.
If the deal falls through, Constellation would have to issue about 20 million common shares to MidAmerican, or about 9.9 percent of its outstanding shares and pay it about $593 million in cash.
Never got that stimulus check in the mail? It might be as simple as a wrong address, and the IRS deadline to fix the error is today.
The Internal Revenue Service is trying to find 279,000 recipients for more than $163 million in undelivered economic stimulus payments, according to the government. The average undelivered check is worth about $583.
Most undelivered stimulus payments had incorrect or incomplete addresses, according to the IRS. By law, the agency can’t send out any more economic stimulus checks after Dec. 31 of this year.
However, "if you don’t by chance make the deadline, and get your economic stimulus check in time, you can get it as a credit [a recovery rebate credit] on your 2008 tax return," said an IRS spokesman.
The IRS is also looking for the recipients of more than 104,000 regular tax refund checks worth about $103 million that were returned by the U same day payday loans.S. Postal Service due to mailing address errors.
"People across the country are missing tax refunds and stimulus checks. We want to get this money into the hands of taxpayers where it belongs," said IRS Commissioner Doug Shulman in a statement in October.
You can check the status of your stimulus check and get instructions on how to update addresses at http://www.irs.gov/ by clicking on the Where’s My Stimulus Payment? tool. Taxpayers without Internet access can call 1-866-234-2942.
CNNMoney.com staff writer Kenneth Musante contributed to this report.
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