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Home Depot fiscal Q1 EPS beats estimates; Kohl's lowers FY'19 EPS outlook

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Home Depot fiscal Q1 EPS beats estimates; Kohl's lowers FY'19 EPS outlook

TOP NEWS

* Home Depot Inc. reported earnings that beat analysts' expectations for the first quarter of fiscal 2019, helped by a rise in net sales of 5.7% year over year to $26.38 billion. For the three months to May 5, the company posted GAAP diluted EPS of $2.27, up from $2.08 in the year-ago period and above the S&P Global Market Intelligence consensus normalized EPS estimate $2.19. Home Depot reaffirmed its fiscal 2019 outlook for sales to increase by 3.3%, with 5% comparable sales growth, and diluted EPS to grow about 3.1% year over year to $10.03.

* Kohl's Corp. shares fell more than 10% in premarket trading after the company slashed its diluted EPS guidance for full year 2019 and reported first-quarter earnings that missed analysts' expectations. The Menomonee Falls, Wis.-based department store chain said it now expects adjusted diluted EPS for the year to come in between $5.15 and $5.45, down from its previous guidance of $5.80 to $6.15. For the quarter ended May 4, the omnichannel retailer's non-GAAP diluted EPS fell 5% year over year to 61 cents from 64 cents, lower than the S&P Global Market Intelligence consensus normalized EPS estimate of 67 cents. Revenue also slipped 2.9% to $4.09 billion from $4.21 billion in the same period in 2018. "We are actively addressing the opportunities that impacted our first quarter sales and we have strong initiatives that will enhance our sales performance in the second half," CEO Michelle Gass said in a statement. The company also said it will pay a cash dividend of 67 cents June 26 to shareholders of record June 12, unchanged from the previous quarter.

TEXTILES, APPAREL AND LUXURY GOODS

* Apparel company Ascena Retail Group Inc. announced that it will wind down the operations of its The Dressbarn Inc. brand. The shutdown, which will not impact the company's other brands, will include the eventual closure of Dressbarn's approximately 650 stores and its e-commerce site, the women's clothing retailer said in a separate release. The news comes after Ascena closed the sale of its Maurices Inc. business unit to an affiliate of private equity firm OpCapita LLP.

* Under Armour Inc. tapped Myntra Jabong India Pvt. Ltd. to manage its physical stores in India, The Times of India reported, citing two people aware of the matter, who also said discussions between the two companies are in an advanced stage. One of the sources told the newspaper that the talks could result in a formal deal "in a couple of months." A Myntra spokesperson declined to comment on the reported partnership but told the news outlet that it is "deeply satisfying for us that the brands are also seeing us as an unparalleled and unique channel for their growth and also to strengthen their positioning in India." A spokesperson for Under Armour reportedly said the company does not comment on speculation. Myntra is a unit of Flipkart Online Services Pvt. Ltd., which is majority-owned by U.S. retail giant Walmart Inc.

* U.S. footwear companies, including Nike Inc., Under Armour Inc. and Foot Locker Inc., are urging President Donald Trump to immediately remove footwear from the proposed additional tariff list on goods imported from China. In a May 20 letter, over 170 U.S. footwear companies, brands and retailers, said the proposed additional 25% tariff on footwear would be "catastrophic" for U.S. consumers and companies. "As an industry that faces a $3 billion duty bill every year, we can assure you that any increase in the cost of importing shoes has a direct impact on the American footwear consumer," the companies wrote. Nike and Under Armour did not immediately respond to S&P Global Market Intelligence's request for comment.

* Watches of Switzerland Ltd. priced its IPO in London between £2.50 and £2.77 per share, seeking a market capitalization of up to £660 million, the Financial Times reported, citing a company statement. The Apollo Global Management LLC-backed watchmaker reportedly said it plans to raise at least £200 million in the offering, excluding a 10% greenshoe option that would bring in extra proceeds. Watches of Switzerland reportedly plans to use proceeds from the IPO to reduce leverage to about £120 million of its net debt.

MULTILINE RETAIL

* J. C. Penney Co. Inc. reported that adjusted net loss for the first quarter of 2019 widened to $147 million, or 46 cents per share, from $69 million, or 22 cents per share, in the year-ago period. The S&P Global Market Intelligence net loss estimate for the quarter was $123.9 million. For the three-month period to May 4, net sales declined 5.6% year over year to $2.44 billion from $2.58 billion as comparable sales fell 5.5%. The company's exit of major appliances and in-store furniture categories negatively impacted the retailer's comparable sales during the period by 20 basis points. Separately, J. C. Penney announced that Shawn Gensch will join the retailer as executive vice president and chief customer officer, effective June 3. He previously served in the same role at Sprouts Farmers Market Inc.

E-COMMERCE

* Amazon.com Inc.'s Indian arm has partnered with Cleartrip Pvt. Ltd. to start offering domestic flight booking services in the country through Amazon's existing e-commerce app and website. Amazon already offers shopping, money transfers, utility bill payments and mobile recharging services in India. The new flight booking option can be found on the Amazon Pay page in the retailer's mobile app and on the company's website.

FOOD AND STAPLES RETAILING

* Whole Foods Market Inc. announced a number of initiatives that will help the company reduce plastic use across its stores. The Amazon.com Inc.-owned fresh foods retailer said it will phase out plastic straws from its U.S., U.K. and Canada stores by July and offer recyclable and compostable paper straws instead. In addition, Whole Foods said it will switch to smaller plastic bags in its produce department this year and replace its hard plastic rotisserie chicken containers with new bags that use about 70% less plastic.

HYPERMARKETS AND SUPERCENTERS

* LetterOne Holdings SA Founder and Chairman Mikhail Fridman finally reached an agreement with Distribuidora Internacional de Alimentación SA's larger creditor, Banco Santander SA, according to a tweet from Santander Executive Chair Ana Botín. LetterOne's retail division, L1 Retail, secured control of Spanish grocer DIA on May 17. "The chairman of Letter One has committed to work to eliminate discrimination between DIA's bondholders and lenders which we believe is the fair thing to do," Botín wrote on Twitter. The statement comes after the executive reportedly told the Financial Times that LetterOne was favoring its overseas bondholders over local lenders by asking only the Spanish banks to extend the maturity date of DIA's debt until 2023.

* Walmart Inc., Target Corp. and Bed Bath & Beyond Inc. must face a lawsuit that claims they sold items mislabeled as "100% Egyptian Cotton" or "100% Long-Staple Egyptian cotton," Reuters reported, citing a 39-page decision by federal judge Vincent Briccetti. The retailers sourced the cotton products from Indian textile company Welspun India Ltd., the report said. Briccetti reportedly ruled that the customers who overpaid for the products can sue Welspun for fraud and the U.S. retailers for breach of warranty and negligent misrepresentation. A lawyer for Welspun and Bed Bath & Beyond declined to comment on the matter, while Walmart, Target and their respective lawyers did not immediately respond to comment requests, Reuters added.

HOUSEHOLD DURABLES AND SPECIALTY RETAIL

* Sports Direct International PLC, which owned 4.8% of MySale Group PLC, dissolved its stake in the Australian online retailer.

* WH Smith PLC announced that group CEO Stephen Clarke will step down from his position on Oct. 31. Carl Cowling, managing director of WH Smith's high-street business, is expected to succeed Clarke as CEO, effective Nov. 1. Cowling has also been a board member of the company since February.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, Hang Seng fell 0.47% at 27,657.24, while the Nikkei 225 shed 0.14% to 21,272.45.

In Europe, around midday, the FTSE 100 gained 0.76% to 7,366.61, and the Euronext 100 lifted 0.59% to 1,050.67.

On the macro front

The Redbook Index for retail sales and the existing home sales report are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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