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Lowe's Q1 earnings fall short of expectations; Target Q1 EPS misses estimates

TOP NEWS

* Lowe's Cos. Inc. delivered fiscal first-quarter earnings that fell short of expectations as bad weather damped demand for outdoor products. The home improvement retailer reported that adjusted diluted EPS for the three months to May 4 rose 15.5% year over year to $1.19 from $1.03 in the period to May 5, 2017, but missed a mean consensus estimate of $1.21, according to data compiled by S&P Capital IQ. Sales rose 3% to $17.36 billion from $16.86 billion, or 0.6% on a comparable-store basis. "Spring has now arrived and we are encouraged by strong sales in the month of May," Chairman and CEO Robert Niblock was quoted as saying.

* In an earlier announcement, Lowe's Cos. Inc. appointed J.C. Penney Co. Inc.'s CEO and chairman, Marvin Ellison, as president and CEO, effective July 2, succeeding Robert Niblock, who previously announced his decision to leave Lowe's. Ellison will resign immediately as the department store chain's chairman but will remain as CEO and director until June 1.

* Target Corp. missed analyst expectations for adjusted EPS in its fiscal first quarter. For the three months ended May 5, the Minneapolis-based retailer reported adjusted EPS of $1.32, lower than the S&P Capital IQ consensus estimate for normalized EPS of $1.39. Net earnings from continuing operations totaled $717 million, up 6.3% from the year-ago quarter but below the S&P Capital IQ consensus estimate for GAAP net income of $743.8 million. For its fiscal second quarter, Target anticipates adjusted EPS of between $1.30 and $1.50, with comparable sales growth in the mid-single-digit range.

TEXTILES, APPAREL AND LUXURY GOODS

* TJX Cos. Inc. wants to eventually increase its total store count to 6,100 from its current level of 4,141, CEO and President Ernie Herrman said during a conference call with analysts to discuss earnings for the first quarter ended May 5. During the period, the off-price retailer reported EPS of 96 cents, excluding a 17-cent benefit due to U.S. federal tax reform, beating its own guidance but falling short of the S&P Capital IQ normalized mean consensus estimate of $1.02. TJX also increased the sales guidance for its Marmaxx division, which includes Marshalls and T.J. Maxx stores, to $22.9 billion after previous execution issues in the sector eased, Herrman said.

MULTILINE RETAIL

* Marks & Spencer Group PLC reported that its transformation plan's first phase, which focuses on downsizing the company's store estate, has affected its full-year 2018 results. For the year ended March 31, the department store operator posted adjusted diluted EPS of 1.6 pence, a 77.8% decrease from 7.2 pence a year earlier. The S&P Capital IQ mean consensus estimate for normalized EPS was 28 pence. Profit attributable to owners of the parent also went down to £25.7 million from £117.1 million in the year ended April 1, 2017.

E-COMMERCE

* Alibaba Group Holding Ltd. will set up a new division for sourcing Japanese products that have yet to gain popularity with consumers in China, CEO Daniel Zhang told the Nikkei Asian Review. Plans for what Zhang called the "great import center" come after Alibaba saw sales of Japanese products surge 120% in 2017. The Chinese e-commerce giant reportedly plans to increase sales of made-in-Japan goods through both its online and physical retail stores.

* Amazon.com Inc. is closing the accounts of shoppers who return too many items, The Wall Street Journal reported, citing multiple customer complaints. A company spokesperson told the Journal that Amazon takes action when "someone abuses [its] service over an extended period of time" in order to protect overall customer experience. Amazon declined to disclose how many customers have been banned from its platform.

* Chinese online retail giant JD.com Inc. has started running a dedicated freight train between Europe and China to accelerate cross-border e-commerce. The train completed its inaugural journey from Hamburg, Germany, to Xi'an, China, on May 21, carrying mostly automotive parts and furniture, according to a statement by the government-run Xi'an International Trade and Logistics Park. The e-commerce company said the dedicated train also functions as a mobile warehouse, where goods logged and loaded for transport are immediately listed for sale on JD.com.

* SoftBank Group Corp. is selling its entire stake in Flipkart Online Services Pvt. Ltd. to Walmart Inc., which plans to buy 77% of the e-commerce firm for $16 billion, a Softbank spokesperson confirmed in an email to S&P Global Market Intelligence. Although the Japanese conglomerate declined to provide further details regarding the transaction, CEO Masayoshi Son said during the company's earnings call May 9 that Softbank values its stake in Flipkart at ¥4 billion.

FOOD AND STAPLES RETAILING

* Tesco PLC will close its loss-making nonfood website Tesco Direct, which sells items including toys, consumer electronics, furniture and household goods, on July 9, a move that puts 500 jobs at risk. As part of the closure, a fulfillment center at Fenny Lock that handles Tesco Direct orders will also close. The group will now focus on a single online platform, Tesco.com.

HYPERMARKETS AND SUPERCENTERS

* Carrefour SA failed to find buyers for 227 of its former DIA stores in France and may have to close them after June 4 after pulling the plug on the loss-making chain in 2016, Reuters reported, citing a company spokesman. The French retail giant could find firm or indicative offers for only 46 of the 273 total stores, which it acquired from Spanish supermarket company DIA in 2014, the report added.

HOUSEHOLD DURABLES AND SPECIALTY RETAIL

* Home furnishing retailer Steinhoff Africa Retail Ltd. completed a refinancing to pay parent Steinhoff International Holdings NV's shareholder loans, which amounted to 16 billion South African rand, and repay the struggling company's debt in South Africa of about €2 billion.

HOTELS, CASINOS AND GAMING

* Shareholders of Wynn Resorts Ltd. rebuffed the executive compensation plan proposed by the company at the annual shareholder meeting. According to a regulatory filing, 13,972,222 votes were in favor of approving the compensation proposal, but there were 55,926,886 votes against it. The shareholders also approved the election of Betsy Atkins and Patricia Mulroy as directors amid pressure from Elaine Wynn, the company's largest shareholder, to overhaul the company's board.

* SeaLink Travel Group Ltd. said it rejected an unsolicited takeover proposal from an undisclosed buyer to acquire 100% of the Australian tourism and transport company for A$4.75 per share, after finding that the bid undervalues the company.

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The day ahead

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

In Asia, the Nikkei 225 dropped 1.18% to 22,689.74.

In Europe, around midday, the FTSE 100 slid 0.73% to 7,819.62, and the Euronext 100 shed 1.01% to 1,076.46.

On the macro front

Reports due out today are the bank reserve settlement, MBA mortgage applications, PMI composite flash, new home sales and EIA petroleum status.

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