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Costco Q3 EPS exceeds expectations; Dollar General shares rise after Q1 EPS beat

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Costco Q3 EPS exceeds expectations; Dollar General shares rise after Q1 EPS beat

TOP NEWS

* Costco Wholesale Corp.'s fiscal third-quarter as-reported EPS and net income beat analyst expectations as the retailer's comparable sales for the quarter grew faster than expected. Diluted EPS of $2.05 surpassed the S&P Global Market Intelligence mean consensus estimate for GAAP EPS of $1.82. Net income attributable to Costco of $906 million beat the Market Intelligence mean consensus estimate for GAAP net income of $799.7 million.

* Shares in Dollar General Corp. surged 7.16% on May 30 after the discount retailer reported fiscal first-quarter earnings that beat analysts' expectations and maintained its fiscal 2019 guidance. The company reported that diluted EPS for the quarter ended May 3 rose 8.8% to $1.48 from $1.36 in the year-earlier quarter, beating the mean consensus estimate for GAAP EPS of $1.39 according to data compiled by S&P Global Market Intelligence. The retailer continues to expect diluted EPS of between $6.30 and $6.50 assuming an effective tax rate of 22% to 22.5% for fiscal 2019.

TEXTILES, APPAREL AND LUXURY GOODS

* Shares of The Gap Inc. fell 13.3% in after-hours trading after the company issued a profit warning for fiscal 2019. The clothing retailer lowered its adjusted EPS outlook for the full year to a range of $2.05 to $2.15, from its previous guidance of $2.40 to $2.55. For the first quarter ended May 4, Gap posted adjusted diluted EPS of 24 cents, down from 42 cents in the year-ago period and missing the S&P Global Market Intelligence consensus normalized EPS estimate of 32 cents.

* Fast Retailing Co. Ltd.'s Uniqlo brand will launch its first Milan store Sept. 13, marking the Japanese chain's physical debut in Italy. The 1,500-square-meter store, which will have three floors, will be located on Piazza Cordusio in central Milan. Uniqlo already offers its products in the Italian market via its online portal.

* Anta Sports Products Ltd. has come under attack by short-seller Soren Aandahl, who targeted the Chinese athletic-wear maker for accounting and corporate governance irregularities, Bloomberg News reported. Aandahl alleged that Anta overstated the retail revenue of Fila China in 2018 by 41%, according to a May 31 report by The Standard. Anta holds an 85% stake in Full Prospect Ltd. — which owns and manages the Fila trademarks in Hong Kong, Macao and China — through its Motive Force Sports Products Ltd. subsidiary. In a statement filed to the Hong Kong stock exchange, Anta assured shareholders by refuting speculations made by Aandahl, calling them "inaccurate and misleading."

MULTILINE RETAIL

* S&P Global Ratings revised its outlook on Nordstrom Inc. to negative from stable but affirmed its BBB+ issuer credit and issue-level ratings. The negative outlook reflects the risk that the department store chain's credit metrics will remain pressured into fiscal 2020 due to its execution missteps, heavy investments and intense competition.

* Dollar Tree Inc. lowered its diluted EPS guidance for fiscal 2019 to between $4.77 and $5.07, from the range of $4.85 to $5.25 that it provided in March, as it expects $140 million in new costs. In the three months to May 4, the retailer's adjusted net income fell to $273.1 million from $284.1 million in the year-ago period but beat the S&P Global Market Intelligence mean consensus estimate for normalized net income of $272.0 million.

E-COMMERCE

* Amazon.com Inc. is considering buying prepaid cellphone wireless service Boost Mobile LLC from U.S. carriers T-Mobile US Inc. and Sprint Corp., Reuters reported, citing people familiar with the matter. The e-commerce giant is considering the move because it would allow it to use T-Mobile's wireless network for at least six years. Amazon did not immediately respond to S&P Global Market Intelligence's request for comment.

FOOD AND STAPLES RETAILING

* Rite Aid Corp. named Erik Keptner to the newly created role of senior vice president and chief marketing and merchandising officer. Keptner, whose appointment is effective June 24, previously served as senior vice president of marketing at supermarket operator Wakefern Food Corp.

HOUSEHOLD DURABLES AND SPECIALTY RETAIL

* Ulta Beauty Inc. raised its fiscal full-year 2019 EPS outlook after reporting first-quarter results that exceeded analysts' expectations. The beauty products retailer now expects diluted EPS for the year to be in the range of $12.83 to $13.03, compared to its previous outlook range of $12.65 to $12.85. For the first quarter ended May 4, the company's diluted EPS came in at $3.26, up 20.7% year over year and well ahead of the S&P Global Market Intelligence mean consensus estimate for normalized EPS of $3.07.

* Williams-Sonoma Inc. raised its non-GAAP EPS outlook for fiscal 2019 to between $4.55 and $4.75, versus its previous outlook of $4.50 to $4.70, but maintained its net revenue guidance for the year of $5.67 billion to $5.84 billion. For the quarter ended May 5, the company posted non-GAAP diluted EPS of 81 cents, up 21% from 67 cents in the year-ago period and above the S&P Global Market Intelligence consensus normalized EPS estimate of 69 cents.

* Panasonic Corp. will establish Panasonic i-PRO Sensing Solutions Co. Ltd., a new company that will operate its security system business division comprising three main segments: surveillance system business, industry-specific business and module business. The Japanese electronics retailer said it has reached a co-investment agreement with Polaris Capital Group Co. Ltd. to fund the new entity, which will begin operations Oct. 1. Polaris will own 80% of the new company and Panasonic will hold 20%.

CASINOS AND GAMING

* Melco Resorts & Entertainment Ltd. said it agreed to purchase 19.99% of Australian casino operator Crown Resorts Ltd. from CPH Crown Holdings Pty. Ltd. for A$1.76 billion. The deal is expected to close in two equal tranches on June 6 and on or before Sept. 30. According to a Financial Times report, shares of Crown Resorts fell as much as 3.4% following the announcement that casino mogul James Packer is the one selling his 19.99% stake to Melco Resorts.

* U.K. gaming company The Rank Group PLC, which operates bingo clubs and casinos, agreed to acquire online gaming operator Stride Gaming PLC for £115.3 million in a deal that creates a leading British multichannel operator.

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The day ahead

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

In Asia, the Hang Seng was down 0.79% to 26,901.09, and the Nikkei 225 fell 1.63% to 20,601.19.

In Europe, around midday, the FTSE 100 was down 0.92% to 7,151.63, and the Euronext 100 was down 1.58% to 1,014.46.

On the macro front

The personal income and outlays report, the Chicago PMI, the consumer sentiment report, the farm prices report and the Baker-Hughes Rig Count 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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