Archive for May, 2009

Costco net falls on weak discretionary spending (Reuters)

Thursday, May 28th, 2009 | Finance News

(Reuters) –
Costco Wholesale Corp on Thursday said its third-quarter net profit fell 29 percent, as shoppers stuck to buying basics like food and medicine, and pared back discretionary purchases of clothes or jewelry.

Costco, the No.1 U.S. warehouse club, said its profit was $209.6 million, or 48 cents a share, for its fiscal third quarter ended May 10, 2009, compared with $295.1 million, or 67 cents per share, a year earlier.

Quarterly sales fell 5 percent to $15.48 billion, excluding membership fees, which decreased 6 percent to $328.4 million, the company said in a statement.

Analysts had on average expected earnings of 53 cents per share, excluding special items, according to Reuters Estimates.

As the recession curtails household budgets, warehouse clubs like Costco, Wal-Mart Stores Inc's Sam's Club and BJ's Wholesale Club Inc have attracted shoppers looking for low prices on necessities like groceries and toiletries.

Shoppers pay an annual fee to shop in the clubs and get discounts on everything from fresh fruit to flat panel TVs to bulk sized packages of paper towels.

But the clubs are facing greater challenges compared with a year ago when high gas prices drove sales at their fuel stations, and a weak U.S. dollar boosted Costco's international results.

Costco has seen its sales slip recently as shoppers avoid spending on nonessential items, and it has also said that it intends to keep its prices low to win market share, even if that crimps profits.

Same-store sales, or sales at clubs open at least a year, fell 7 percent. Excluding the negative impact from gasoline deflation and foreign exchange, same-store sales rose 2 percent.

The latest third quarter was hit by a pretax charge of $34 million related to a litigation settlement, higher employee benefits costs and lower international profits, Chief Financial Officer Richard Galanti said.

(Reporting by Esha Dey in Bangalore; Editing by David Cowell and Jon Loades-Carter)

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Asia markets muted as data, GM fate dim recovery (AP)

Wednesday, May 27th, 2009 | Finance News

BANGKOK – Asian markets were mixed Thursday as sliding retail sales in Japan and the looming bankruptcy of auto giant General Motors undercut optimism about a global recovery.

Global markets have soared since March, with some gaining 30 percent or more, as investors bet a global recovery is taking shape, though nagging fears the optimism is premature are never far from the surface.

The big gains have led some analysts to warn that markets will slump again if the economic upswing that eventually emerges isn't as strong as hoped for.

"What we are seeing is the ongoing debate about green shoots versus brown weeds. Whether the improvement in recent economic data is going to lead to a sustainable recovery," said Song Seng Wun, head of research at CIMB in Singapore.

Japan's Nikkei 225 stock average was up 41.96 points, or 0.4 percent, at 9,490.73, while Singapore's Straits Times index fell 0.6 percent to 2,292.60. Australia's key benchmark declined 1.2 percent.

South Korea's Kospi, hit the past few days by rising tensions with communist North Korea, rose 1.7 percent to 1,385.16.

Elsewhere, New Zealand's index shed 1.7 percent and Malaysian shares fell 0.7 percent.

Markets in Hong Kong and mainland China are closed for holidays Thursday.

Fragile sentiment took another hit overnight after General Motors Corp. said not enough bondholders agreed to swap their debt for company stock, meaning the automaker is almost certainly headed for bankruptcy protection.

The fate of GM is a "reality check that even as the economy seems to improve, big companies are going to fail and that's going to hurt confidence and jeopardize a recovery," said Song.

Worries about threats to an incipient recovery in the U.S. — a huge export market for Asia — have also been fanned by oil climbing above $60 and rising borrowing costs, as seeing in the jump in Treasury yields, a benchmark for home mortgage rates and other consumer loans.

Economic news in Asia also dimmed recovery hopes with retail sales in Japan, the world's second-biggest economy, falling for an eighth straight month in April as consumers stayed cautious amid growing jitters about jobs and wages.

Overnight in the U.S., the Dow lost ground for the fifth time in six days, falling 173.47, or 2.1 percent, to 8,300.02 after rising 196 points on Tuesday. The Standard & Poor's 500 index fell 17.27, or 1.9 percent, to 893.06, and the technology-laden Nasdaq composite index fell 19.35, or 1.1 percent, to 1,731.08.

U.S. stock futures pointed to slim gains Thursday on Wall Street. Dow futures rose 13 points, or 0.2 percent, to 8,310 and S&P futures gained 1.4, or 0.2 percent, to 893.90.

In oil, crude prices eased from six-month highs as investors looked to a weekly U.S. inventory report for signs that crude demand may be recovering. Benchmark crude for July delivery was down 53 cents to $62.92 a barrel by midday in Singapore.

Among currencies, the dollar was higher at 96.43 yen from 95.35 yen in late Asian trade Wednesday. The euro was little changed at $1.3829.

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Citi, SEC in talks to settle asset disclosure probe: report (Reuters)

Wednesday, May 27th, 2009 | Finance News

(Reuters) –
Citigroup Inc (C.N) is in early negotiations with the U.S. Securities and Exchange Commission (SEC) to settle a probe into whether it misled investors by not properly disclosing the amount of troubled mortgage assets it held as the markets started to fall in 2007, the Wall Street Journal said, citing people familiar with the matter.

An issue being debated inside the SEC is whether Citigroup, as a recipient of government-rescue funds, should pay a large penalty in the case, according to the paper.

A Citigroup spokesman told the paper that it is against the firm's policy to comment on such regulatory issues.

The SEC is also considering bringing cases against individuals related to disclosure of mortgage assets, the paper said, citing people close to the situation.

A Citigroup spokesman in Hong Kong was not immediately available for comment, while the SEC did not immediately return a Reuters email seeking comment that was sent outside of normal business hours.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Muralikumar Anantharaman)

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