Men's Wearhouse shares fall on corporate order delays

Men's Wearhouse shares fall on corporate order delays

Stock Market Predictions

(Global Markets) - Shares of Men's Wearhouse Inc (MW.N) fell their most in more than two years on Thursday after the clothing retailer forecast a weak second-quarter profit due to delays in corporate orders for uniforms in the UK.

The retailer had earlier said corporate apparel sales, which account for about 10 percent of its business, would decline in the first and second quarters, but still disappointed investors on Wednesday with a bigger-than-expected fall.

The company's corporate apparel segment, which provides uniform and workwear, has been dogged by delays in orders from some of its customers, which include Lloyds Banking Group PLC (LLOY.L) and British Gas.

Men's Wearhouse entered into the UK market in 2010 with its acquisition of Dimensions Clothing and certain assets of Alexandra Plc. Since then the business has grown and the company expects it to account for about 15 percent of its total earnings.

Baldwin Anthony Securities analyst William Baldwin said that despite the current weakness in corporate apparel, it remains an attractive business for the retailer.

Baldwin estimates that the global market for corporate apparel is as big as $13 billion and said the retailer may look to do more deals.

Corporate apparel sales fell 16.4 percent to $49.9 million in the first quarter, and are expected to decline by 17-18 percent in the current quarter, though the business is expected to pick up in the second half of the year with the rollout of new uniforms.

Shares of Men's Wearhouse, which rents out one in every three tuxedos in North America, fell 18 percent to $29.08 on Thursday afternoon on the New York Stock Exchange. They touched a six-month low of $29.02 earlier in the day.

(Reporting by Juhi Arora in Bangalore; Editing by Supriya Kurane, Saumyadeb Chakrabarty)

Nokia shares jump 6 percent amid buyout rumors

Nokia shares jump 6 percent amid buyout rumors

Stock Market Predictions

Global Markets - Shares in Finnish mobile phone maker Nokia (NOK1V.HE) rose 6 percent in heavy volume on Friday driven higher by speculation of takeover interest from South Korean rival Samsung Electronics (005930.KS), traders said.

The sharp rise made Nokia the biggest gainer on the FTSEurofirst 300 .FTEU3 index and followed a 40 percent fall in the shares in the past three months.

Analysts played down the chances of a bid from Samsung for Nokia, which has been rapidly losing market share.

"Samsung is flying at the moment and it is hard to see what it would gain from buying Nokia," Ovum analyst Nick Dillon said. "Any benefit it would gain from Nokia's patent portfolio or manufacturing facilities would likely be outweighed by the complexities of integrating the two companies."

Ben Wood, head of research at CCS Insight, said: "This is Friday madness. I can't think of a rational reason why Samsung would want to buy Nokia at present,"

Nokia shares have moved sharply on speculation of possible takeovers since its stock dived last year due to a strategy shift in its smartphone business. Microsoft (MSFT.O), which is partnering Nokia for its new smartphones, has been seen as the most likely buyer.

Nokia declined to comment and Samsung was not immediately available for comment.

(Reporting by Tarmo Virki. Editing by Jane Merriman)

Francesca's Holdings results beat Street, shares rise

Francesca's Holdings results beat Street, shares rise

Stock Market Predictions

(Global Markets) - Women's clothing retailer Francesca's Holdings Corp (FRAN.O) reported a quarterly profit that beat market expectations, helped by strong demand and higher margins, and forecast second-quarter numbers above analysts' estimates.

Shares of the company, which specializes in affordable clothing for customers in the 18-35 age group, rose 21 percent to $27.10 after the bell on Thursday.

Francesca's results were aided by its "broad and shallow merchandising strategy" that enabled it to respond quickly to changes in demand, CEO John De Meritt said in a statement.

The company has a strategy of carrying a broad selection of apparel and accessories but keeps limited quantities, reducing the risk of stocks growing old, and protecting margins by keeping inventory costs under check.

Affordable merchandise and flexible store formats found favor with customers during the quarter, fueling a 15.5 percent rise in the retailer's same-store sales. Overall sales surged 49 percent to $61.3 million.

First-quarter earnings more than doubled to $8.7 million, or 20 cents per share, from $3.9 million, or 10 cents per share, last year.

Analysts on average had expected earnings of 17 cents per share on revenue of $60.3 million, according to Thomson Global Markets I/B/E/S.

The company, which made its stock market debut in July, has now beaten analysts' profit estimates for three quarters in row.

Gross margin at Francesca's, which competes with chains such as Chico's Fas Inc (CHS.N), Ann Inc's (ANN.N) LOFT, and Urban Outfitters (URBN.O), increased to 53.1 percent from 52.4 percent in the year-ago period.

For the second quarter, Francesca's forecast earnings of 22 to 23 cents per share on sales of $69 million to $71 million.

Analysts were expecting the company to earn 22 cents per share on sales of $68.6 million.

(Reporting by Aditi Shrivastava in Bangalore; Editing by Sreejiraj Eluvangal)

Progress Software shares fall on weak 2nd-quarter results

Progress Software shares fall on weak 2nd-quarter results

Stock Market Predictions

(Global Markets) - Shares of Progress Software Corp (PRGS.O) fell as much as 12 percent on Friday after the company pre-announced second-quarter results that missed estimates by a wide margin.

The company, which has been cutting jobs and selling of assets to save costs, said its restructuring plans had created uncertainty among its customers and partners.

The database management software maker in April said it would sell 10 non-core product lines and cut about 10-15 percent of its workforce.

Progress said it expects second-quarter earnings of 17 cents to 19 cents per share, excluding items, on revenue of $110 million to $115 million.

Analysts on average were expecting earnings of 26 cents per share, excluding items on revenue of $123.7 million, according to Thomson Global Markets I/B/E/S.

Shares of the company fell $2.15 to $17.75 in morning trade on the Nasdaq.

(Reporting by Neha Alawadhi in Bangalore; Editing by Saumyadeb Chakrabarty)

Cooper Companies lowers FY12 profit outlook, shares down

Cooper Companies lowers FY12 profit outlook, shares down

Stock Market Predictions

(Global Markets) - Contact lens maker Cooper Cos (COO.N) posted a rise in quarterly profit, but shares fell 5 percent in aftermarket trading as the company lowered its full-year profit estimate.

For full year 2012, Cooper now expects to report a profit of $4.88 to $5.13 per share, down from its previous estimate of $4.90 to $5.15 per share.

The outlook is largely below the $5.10 that analysts expect on average.

The company, however, raised the lower end of its full-year revenue outlook by $10 million and expects to report $1.40 billion to $1.44 billion. Analysts expect sales of $1.43 billion, according to Thomson Global Markets I/B/E/S.

Second-quarter net income rose to $54.9 million, or $1.12 per share, from $35.4 million, or 73 cents per share, a year ago. Revenue rose 6 percent to $344.6 million.

Analysts had expected earnings, excluding items, of $1.20 per share, on revenue of $349.9 million.

Shares in the Pleasanton, California-based company fell to $75.50 on Thursday after the bell. They had closed at $80.06 on the New York Stock Exchange.

(Reporting by Adithya Venkatesan and Zeba Siddiqui in Bangalore; Editing by Sreejiraj Eluvangal)

Icahn raises Navistar stake to about 12 percent

Icahn raises Navistar stake to about 12 percent

Stock Market Predictions

(Global Markets) - Carl Icahn increased his stake in Navistar International Corp (NAV.N) to 11.87 percent on Thursday, taking advantage of a sharp fall in the truck and engine maker's shares after the company reported a quarterly loss.

Icahn, who had pushed for a merger of Navistar and rival Oshkosh Corp (OSK.N), had earlier reported a stake of 9.99 percent in Navistar.

The billionaire investor bought 883,200 Navistar shares on Thursday, when the company's shares fell as much as 28 percent to $20.21.

Navistar's results have been hit over the last two quarters by warranty costs related to engines built in 2010 and 2011. It is also facing delays in receiving regulatory approval for a new engine that does not comply with current U.S. emission rules.

The company warned investors in March that costs for repairing the engines were taking a heavy toll on profit, but said warranty claims had peaked. Claims, however, have shot up since then.

Navistar Chief Executive Daniel Ustian had said he was open to a merger with Oshkosh, in which Icahn also holds an about 10 percent stake, but the idea was rejected by Oshkosh shareholders.

(Reporting by A. Ananthalakshmi in Bangalore; Editing by Saumyadeb Chakrabarty)

Navistar posts loss, cuts forecast; shares plummet

Navistar posts loss, cuts forecast; shares plummet

Stock Market Predictions

(Global Markets) - Navistar International Corp (NAV.N) reported a second-quarter loss, hit by a hefty charge for warranty costs related to engines built in 2010 and 2011, sending its shares down 25 percent to their lowest level since early 2009.

The U.S. truck and engine maker's revenue also came in shy of Wall Street expectations as a regulatory review of its new model of diesel engine prompted some customers to hold off on ordering.

Navistar said it had promoted Troy Clarke, a former General Motors Co (GM.N) executive who previously ran Navistar's Asian operations, to the new post of president of trucks and engines -- essentially overseeing all Navistar business lines.

"It goes without saying that the start of the year has been a disappointment for us," Chief Executive Daniel Ustian told investors on a conference call. "The influences from outside are there, but it has a lot to do with our own execution."

The company warned investors in March that costs for repairing the 2010 and 2011 engines were taking a heavy toll on profit, but at the time it said warranty claims had peaked. But claims shot even higher in April, executives said on Thursday, prompting it to take a $104 million second-quarter charge.

The Lisle, Illinois-based company is still waiting on a U.S. Environmental Protection Agency review of nitrogen oxide emissions from its new heavy-duty truck engine, and Ustian said he could not predict how long that review would take. The engine does not comply with emission rules and is the subject of an EPA probe launched earlier this year.

The company faces costs of $2,000 per non-compliant engine, JPMorgan said in a recent note to clients.

"Clearly, their engine strategy hasn't worked and that has filtered through to the rest of the business," said Basili Alukos, an analyst at Morningstar in Chicago who follows the company.

Navistar shares fell 25 percent to $20.99 in morning trading on the New York Stock Exchange, knocking close to $500 million off the company's market value.

Shares of its rivals followed the overall market higher, with truck maker Oshkosh Corp (OSK.N) up 1.5 percent to $20.27 and engine maker Cummins Inc (CMI.N) up 2 percent to $97.58. Truck maker Paccar Inc (PCAR.O) was little changed at $37.91.

SWINGS TO LOSS

The second-quarter loss of $172 million, or $2.50 per share, included a pretax charge of $104 million for warranty expenses to repair trucks sold in 2010 and 2011. The company earned $74 million, or 93 cents a share, in the year-earlier quarter.

Revenue fell about 2 percent to $3.3 billion. Analysts had expected $3.63 billion, according to Thomson Global Markets I/B/E/S.

In its second downward revision to guidance this year, the company said it now expects 2012 adjusted earnings to range from breakeven to $2.00 per share, down from an initial forecast of $5.00 to $5.75 a share.

Wall Street had expected 67 cents per share in the second quarter and $3.73 for the year.

Analysts voiced skepticism about the forecast for the rest of the year.

"Management credibility around these numbers is clearly impaired at this point," Jefferies analyst Steve Volkmann wrote in a note to clients on Thursday.

SUCCESSION PLANNING?

He added that he expected further management changes to come: "The board of directors will meet on June 19, where we believe additional management changes are likely to be discussed."

Asked on the call if Clarke's promotion -- which was twinned with changes in the assignments of two other executives -- was the start of a succession plan, the 61-year-old Ustian said, "Some succession throughout the company is in our thought process."

Clarke joined Navistar in January 2010 as a senior vice president for strategic initiatives. He took charge of its Asian operations in April 2011.

Navistar management has had a lot going on over the past year. Activist investor Carl Icahn in late 2011 and early 2012 pushed for it to merge with Oshkosh, a proposal that Ustian said he was open to considering. Oshkosh management and shareholders rejected the idea.

Navistar is also in the midst of developing natural gas-powered trucks, with a goal of having a natural gas option on all its trucks by the end of 2013, betting that more commercial truckers would opt for that fuel over more expensive diesel.

(Additional reporting by Nick Zieminski in New York and Bijoy Koyitty in Bangalore; Editing by Bernadette Baum and John Wallace)

Best Buy founder resigns, puts large stake in play

Best Buy founder resigns, puts large stake in play

Stock Market Predictions

(Global Markets) - Best Buy Co Inc founder and chairman Richard Schulze resigned from the retailer's board on Thursday and said he was exploring options for his 20.1 percent ownership stake, a move seen as a possible precursor of a Schulze-led private takeover.

The news came just two months after CEO Brian Dunn abruptly left the electronics chain, and adds to management distractions as Best Buy struggles to compete with online and discount retailers.

"To some extent, people are saying to themselves maybe what he is doing is he is getting off the board so he can team up with some private equity guys and make a run at the company," said BB&T Capital Markets analyst Anthony Chukumba.

But that is only one option.

In a filing with the U.S. Securities and Exchange Commission, Schulze laid out a wide array of potential moves, including selling shares, buying more shares, helping to engineer a reorganization or even an outright takeover. He said he may engage in talks with one or more shareholders, officers and board members of Best Buy.

There are no SEC rules to prevent a person serving on the board of a public company from considering plans to sell their stake. However, leaving the board could make such a process easier as Schulze would no longer be bound by the need to wait for approved trading windows.

The 71-year-old Schulze is by far Best Buy's largest shareholder, with 69.78 million shares as of April 11, according to Thomson Global Markets data. He served as the retailer's chief executive for 36 years, until 2002.

Last month, Best Buy said Schulze would step down as chairman after the June 21 annual meeting, following an internal probe that found he failed to tell the board about allegations that former CEO Dunn had engaged in an improper relationship with a female employee. Schulze had planned to remain a director through the 2013 annual meeting.

Some analysts, investors and corporate governance experts have also criticized Schulze in the past for what they said were potential conflicts of interest, including favoritism granted to Schulze's relatives, and transactions connected to his immediate family and some board members.

A HAIRY DEAL?

While Schulze's move could lead to his shares being sold, the public announcement on Thursday could mean there was little interest so far in his stake from private equity firms, said Bernstein Research analyst Colin McGranahan. Still, the "fire sale" element of this process could attract new bidders, he added.

"It is not obvious who or if there are buyers for such a substantial (though non-controlling) stake" at this point, said McGranahan.

A leveraged buyout of Best Buy would be tough to pull off, considering current market conditions and the challenges faced by the company, ranging from weak sales to a lackluster product cycle to large lease obligations, said BB&T's Chukumba.

"Even as depressed as their share price is right now, to (make an offer for) Best Buy, you're talking about probably a $10 billion deal," he said. As of Wednesday, Best Buy's market capitalization was $6.56 billion.

"It has to be somebody big, preferably somebody with a lot of experience with retail, with a deep Rolodex," Chukumba said, citing private equity firms like KKR, Thomas H. Lee Partners, Bain Capital or a smaller firm like Leonard Green in tandem with another firm. The private equity firms could not be immediately reached for comment.

Chukumba sees little chances of an activist investor like Bill Ackman, Carl Icahn or Nelson Peltz coming forward to take Best Buy private.

"This is a hairy deal," he said, referring to the company's declining same-store sales, tough competition and strategic challenges.

CHALLENGES

Best Buy is struggling with the trend of customers visiting stores to test pricey electronics, only to end up buying the items online from Amazon.com Inc and others. At the same time, Wal-Mart Stores Inc and Target Corp are flexing their competitive muscle by devoting space to popular Apple Inc devices in some of their stores.

Best Buy's sales at stores open at least 14 months, or same-store sales, have fallen in seven of the last eight quarters.

Under Dunn and Schulze, the company had taken steps to try to fix the problem, though analysts deemed plans to shut 50 of the company's roughly 1,100 U.S. stores to be far short of what was needed.

"We surmise that Schulze had some disagreement with the board and current management team around the strategies being considered," said McGranahan, who has a "market-perform" rating on Best Buy shares.

In May, interim CEO Mike Mikan said that Best Buy needs to "change substantially" to fend off rivals and that it would shed more light on a turnaround plan later this summer.

OTHER BIG SHAREHOLDERS

Best Buy began in 1966 when Schulze opened the first Sound of Music store in Minnesota, and went public in 1985. It has had just three permanent CEOs, and all were insiders with long tenures at Best Buy.

Back in 1988, Best Buy hired Goldman Sachs to evaluate business options after dismal quarterly results. A few weeks later Schulze changed course, saying that Best Buy would press on with its own five-year growth plan.

After Schulze, Best Buy's largest shareholder is Fidelity Management & Research Co, which owned 24.2 million shares, or 7.06 percent, as of March 31, according to Thomson Global Markets data. Tradewinds Global Investors LLC owned 14.9 million shares, or 4.3 percent, and Vanguard Group Inc owned 11.8 million shares, or 3.5 percent.

Best Buy named Hatim Tyabji as chairman, two weeks earlier than planned. Tyabji has been a Best Buy director since 1998. He is also chairman and CEO of Bytemobile Inc and chairman of Jasper Wireless Inc.

Best Buy shares fell as much as 8.5 percent on Thursday, but pared losses to close down 1 percent at $19.70 on the New York Stock Exchange.

(This version of the story has been refiled to add attribution in 12th paragraph)

(Reporting by Jessica Wohl in Chicago and Dhanya Skariachan and Phil Wahba in New York; Editing by John Wallace, Maureen Bavdek and Matthew Lewis)

Ferrellgas profit beats Street; shares rise

Ferrellgas profit beats Street; shares rise

Stock Market Predictions

(Global Markets) - Propane distributor Ferrellgas Partners LP (FGP.N) said third-quarter profit jumped 84 percent, beating analyst estimates, as a fall in wholesale propane costs improved margins, sending its shares up 9 percent.

Ferrellgas's gross profit margins increased about 6 percent to 79 cents per gallon sold.

While propane has long been used to fire up barbecue grills, U.S. households and offices are increasingly using it as a heating fuel.

Net earnings rose to $21.1 million, or 26 cents per unit, from $3.4 million, or 4 cents per unit, a year ago.

Analysts had expected a profit of 19 cents a share, according to Thomson Global Markets I/B/E/S.

Revenue was $629.6 million, lower than market estimates of $688 million.

Ferrellgas shares were up 7 percent at $17.29 in morning trading on Friday on the New York Stock Exchange. They touched a ten-day high of $17.65 earlier.

(Reporting by Swetha Gopinath in Bangalore; Editing by Maju Samuel)

Genting takes stake in Australia's Echo, sparks takeover talk

Genting takes stake in Australia's Echo, sparks takeover talk

Stock Market Predictions

MELBOURNE/SINGAPORE (Global Markets) - Singapore gaming operator Genting (GENS.SI) said on Friday it had taken a stake in Echo Entertainment (EGP.AX), raising the prospect of a battle for control over the $3 billion Australian casino company with billionaire rival James Packer.

Packer, who wants to use Echo's license to build a new casino complex in Sydney to attract more Asian high-rollers, has been agitating for change at Echo after building a 10 percent stake in the company, and on Friday succeeded in ousting the company's chairman.

Analysts speculated that Genting, Southeast Asia's largest gaming group, was preparing for an acquisition, having built up a war chest of S$3.9 billion ($3.1 billion), and said Echo's Sydney casino would be the prize.

Genting, like its rivals such as Las Vegas titans Sands (LVS.N) and MGM Resorts (MGM.N), are racing to dominate the Asian casino world รข€" considered the most fertile ground for gambling with about $45 billion in annual revenue up for grabs.

"I don't think they are going to work with Packer. Echo's main asset is Sydney and there is no reason for either Packer or Genting to want to give up Sydney," said an analyst in Hong King who was not authorized to talk to the media. "Both of them are going to be fighting for Echo's crown jewel," he said.

A Genting spokeswoman declined to comment on whether the company was considering a takeover offer or disclose its stake, but Genting said in a statement the total value of its investment in publicly quoted securities was S$298 million ($234 million). The Australian newspaper said earlier that Genting had built up a 4.9 percent stake in Echo, which runs Sydney's Star casino and Jupiter's on the Gold Coast of Australia.

Echo said separately that its chairman, John Story, has resigned, bowing to a destabilizing campaign run by Packer who owns a rival casino operator and wanted to sack the Echo chairman.

A full takeover would cost more than A$3 billion ($2.96 billion) and both Packer and Genting would face tough regulatory scrutiny.

"At this juncture it does seems like a possibility," Loke Wei Wern, a CIMB Research analyst based in Kuala Lumpur, said of a Genting takeover bid. "They have that war chest and will have to deploy it soon."

ECHO SHARES JUMP

Shares in Echo topped the gainers in a broadly weaker S&P/ASX 200 Index .AXJO, rising 4.4 percent to value the company around $3 billion.

But Genting Singapore shares fell 3 percent on concerns the firm could get involved in a costly takeover battle.

Genting Group, whose biggest assets are Malaysia's Genting Highlands casino complex and Singapore's S$6.6 billion Resorts World at Sentosa, also has stakes in Resorts World Manila and several UK casinos.

Genting missed out on a concession in Macau over a decade ago and has been aggressively raising its game across the region, with its parent company planting itself in countries such as the Philippines and Vietnam to help it secure revenues in what are expected to be fast-growing emerging casino markets.

The group is headed by Lim Kok Thay, who is chairman and chief executive of Malaysia's Genting Bhd and executive chairman of Genting Singapore, and knows Australia well.

The Malaysian Genting Group was a founding shareholder in the Burswood casino in Perth, which is now owned by Packer's company.

A source familiar with the situation said the board of Echo had not had any discussions with Genting ahead of the news about its stake.

Packer, who has stakes in casinos in Australia, London and Macau, wants to increase his company Crown Ltd's (CWN.AX) 10 percent stake in Echo and win a board seat. Crown had put forward a resolution to remove Story at a July 20 shareholders meeting.

CHAIRMAN RESIGNS

Echo said in a statement on Friday that Story wanted the shareholders to vote on his position, but accepted the board's view that he should resign.

"The board of Echo has formed the view that the ongoing disruptive campaign concerning the resolution proposed to be put to an Extraordinary General Meeting of Echo for the removal of Mr Story was damaging to the company, and that it was in the best interests of shareholders that Mr Story not contest the resolution," Echo said.

Crown, which had argued that Echo was underperforming under Story's leadership, said in a statement on Friday that it would drop its call for a shareholders meeting.

"Our shareholding in Echo is a material investment for Crown and we look forward to having discussions with Echo and exploring opportunities to work together," Packer, Crown's executive chairman, said in the statement.

Echo completed a costly A$870 million refurbishment of its Sydney Star casino last year but has not yet seen a substantial pick-up in revenues, according to analysts.

Crown owns casinos in Melbourne and in Perth, and about a third of Melco Crown Entertainment (6883.HK), which has casinos in Macau. It wants Echo's casino licenses in Sydney and the Gold Coast because they are more likely to attract Asian high-rollers than Melbourne and Perth.

Echo's licenses are "irreplaceable," UBS analyst Sam Theodore said recently, adding that Sydney and the Gold Coast would be especially attractive to international VIP players. ($1 = 1.0063 Australian dollars) ($1 = 1.2754 Singapore dollars)

(Additional reporting by Farah Master in Hong Kong and Charmian Kok in Singapore; Editing by Chris Gallagher)