Archive for March, 2009

Costco profit drops 27 percent (Reuters)

Wednesday, March 4th, 2009 | Finance News

(Reuters) –
Costco Wholesale Corp (COST.O) said on Wednesday its second-quarter profit fell 27 percent, as the No.1 U.S. warehouse club operator cut prices to win market share during the year-end holiday season.

Costco said profit was $239.7 million, or 55 cents per share, for its fiscal second quarter ended February 15, compared with $327.9 million, or 74 cents per share, a year earlier.

Analysts had on average expected earnings of 60 cents per share, according to Reuters Estimates.

Quarterly sales fell 1 percent to $16.49 billion, excluding membership fees, which increased about 4 percent to $355.6 million. Sales at clubs open at least a year, a key retail gauge known as same-store sales, fell 3 percent.

The retailer said same-store sales in February also fell 3 percent. Analysts were expecting February same-store sales to fall 2.7 percent.

"Our quarterly results were hurt by the continued weakness in non-foods sales and related margins. Margins in foods and non-foods were also negatively affected by increased pre-holiday seasonal markdowns and other selective price reductions to drive sales and increase market share," Chief Financial Officer Richard Galanti said in a statement.

Costco has said it would be aggressive in cutting prices or delaying price increases to retain its shoppers during the recession, though Wall Street analysts have said that strategy would hurt profits.

Last month, it said second-quarter results would be "substantially below" the First Call consensus of 70 cents a share after it reduced prices to attract shoppers during the holiday season.

(Reporting by Ratul Ray Chaudhuri in Bangalore, additional reporting by Nicole Maestri in New York, editing by Will Waterman)


Best Buy to delay launch of first UK store: report (Reuters)

Wednesday, March 4th, 2009 | Finance News

LONDON (Reuters) –
U.S. electronics retailer Best Buy (BBY.N) and joint venture partner Carphone Warehouse (CPW.L) have postponed the launch of their first UK store until the first quarter of 2010, the Financial Times reported.

"If it makes more commercial sense to open three or four months later, that is what we will do," Roger Taylor, Carphone Warehouse's finance director, told the newspaper.

The joint venture had planned to open its first store in the UK this summer.

"Because of the economic climate more sensible to wait for better sites ... the quality of the sites is getting better, not just the locations, but also the economics," said Taylor.

He added that the postponement was "unrelated" to Best Buy's woes. The group issued a profit warning in November.

The delay comes as rival DSG International Plc (DSGI.L) received a positive reaction on Tuesday to its announcement it would roll out its new format stores.

(Reporting by James Davey; editing by Mark Potter)


Trump and lenders temporarily suspend litigation: report (Reuters)

Wednesday, March 4th, 2009 | Finance News

(Reuters) –
Real estate developer Donald Trump and his lenders agreed to temporarily suspend litigation on the Trump International Hotel & Tower project in Chicago, the Wall Street Journal said.

The agreement with the project's lenders, a group led by Deutsche Bank AG (DBKGn.DE), gives the parties at least 90 days to negotiate a settlement over the 92-story development, where sales have fallen short of what is required to pay back a $640 million construction loan, the Journal said.

The agreement also gives Trump breathing room to finish construction without imminent fear of foreclosure, it said.

Sales of 339 hotel rooms and 486 condominium units have come in below original estimates and the project's current projected revenue remains short by nearly $100 million needed to pay off the senior first mortgage loan, the paper said, citing court documents and people familiar with the project.

"I see this as a very positive development," the Journal quoted Trump saying in a statement. A Deutsche Bank spokesman confirmed the agreement to the paper.

In litigation started last November, Trump demanded that Deutsche Bank extend the construction loan, claiming the overall economic financial crisis triggered a "force majeure" clause, the paper said.

Deutsche Bank countersued, demanding Trump make good on a $40 million personal guarantee he made to complete the building, it said.

A spokesman for Trump could not be immediately reached by Reuters for comment.

(Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by David Cowell)