A roundup of some of the North American equities making moves in both directions today
On the rise
L Brands Inc. (LB-N) rose 1.2 per cent on Thursday after it forecast a loss for the first quarter, days after it decided to sell a controlling stake in its struggling Victoria’s Secret brand, and said on Wednesday that it took a US$725-million impairment charge related to the struggling lingerie unit in the fourth quarter.
The Columbus, Ohio-based company has seen Victoria’s Secret lingerie sales dwindle in recent quarters as customers increasingly prefer inclusive brands and more comfortable alternatives as those from online startup Third Love.
To cut its losses, L Brands earlier this month said it would sell a 55-per-cent stake in Victoria’s Secret to investment firm Sycamore Partners, a year after offloading its luxury lingerie brand La Senza.
In the fourth quarter ended Feb. 1, comparable sales at Victoria’s Secret fell 10 per cent, while analysts were expecting a 8.89-per-cent decline.
For the current quarter, the Bath & Body Works cosmetics maker expects a loss of 5 US cents per share on an adjusted basis, while analysts on average were expecting it to earn 10 US cents per share, according to IBES data from Refinitiv.
On the decline
Toronto-Dominion Bank (TD-T) lost 3 per cent on Thursday after it posted quarterly profit that fell short of estimates.
TD Bank took a hit from its U.S retail business, which fell 8 percent to $1.15-billion in the first quarter, as Brokerage TD Ameritrade, in which the bank holds a stake, earned 35 per cent less on reduced trading commissions.
The rest of the year will “continue to show the effects” of both the reduction in contributions from TD Ameritrade and the Federal Reserve’s three interest rate cuts last year, TD Bank Chief Financial Officer Riaz Ahmed told Reuters.
Mr. Ahmed also warned that margins will continue to remain at current levels or move lower over the next quarter.
The domestic retail unit of TD Bank posted a 2-per-cent dip in adjusted net income, hit by higher non-interest expenses, provisions for credit losses, and insurance claims.
National Bank of Canada (NA-T) was also down 3 per cent on Thursday after it reported higher earnings and beat analysts’ estimates, driven by growth in its financial markets and wealth management units.
The strong results mirrored those of Royal Bank of Canada , Bank of Montreal, Canadian Imperial Bank of Commerce and Scotiabank, which also benefited from strength in their capital markets business.
Net income at the bank rose 10.5 per cent to $610-million, or $1.67 per share, in the first quarter ended Jan. 31,.
Excluding one-time items, National Bank earned $1.70 per share, beating analysts’ expectations for a profit of $1.66 per share, according to IBES data from Refinitiv.
Oil producer Husky Energy Inc. (HSE-T) plummeted 5.7 per cent after it reported a quarterly loss on Thursday as it took $2.3-billion in charges mainly related to its oil sands assets in North America.
The company said the impairment charges on the assets, which include its Sunrise Energy Project, were primarily related to expectations of lower long-term oil prices and a drop in capital spending.
Calgary-based Husky said in December it would cut its capital spending by $500-million over the next two years, at a time when oil producers have been under pressure to return more cash to shareholders.
Husky reported a net loss of $2.3-billion in the fourth quarter ended Dec. 31, compared with net earnings of $216-million a year earlier.
Average quarterly production rose to 311,300 barrels of oil equivalents per day (boepd) from 304,300 boepd.
AltaCorp Capital analyst Patrick O’Rourke said: “Overall, we view the event positively, with results in-line to better than expected across most key financial and operational metrics, most notably on the cost side of the equation where both operating and capital costs came in well ahead of expectations. Guidance for 2020 remains unchanged. The conversion of 100 Wapiti wells to Nest 2 type curve adds 1.25 years of inventory to the best-in-portfolio type curve, while Nest 3 results remain in-line with prior reporting and public data. On the other side of the coin, walking away from a partial midstream monetization, while not overly surprising given the change in market conditions, means the Company will not be able to actualize the arbitrage in upstream to midstream asset values through the buyback program in the near-term.”
Best Buy Co Inc. (BBY-N) slid 4.7 per cent after it forecast largely lower-than-expected annual profit and sales on Thursday as electronics makers curb manufacturing due the coronavirus epidemic.
The tepid forecast overshadowed robust online demand for smartphones and tablets during the crucial holiday season that helped the company beat quarterly profit and sales estimates.
“This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in supply chain,” Best Buy Chief Executive Officer Corie Barry said.
The company forecast fiscal 2021 adjusted earnings per share of US$6.10 to US$6.30, largely below expectations of US$6.25. It expects same-store sales growth of flat to 2 per cent, compared with expectations of a 1.9-per-cent rise, and said this reflects its best estimate of the coronavirus impact.
In the fourth quarter, Best Buy’s overall same-store sales rose 3.2 per cent, beating analysts’ average estimate of a 1.9-per-cent increase, according to IBES data from Refinitiv.
The company says it will now pay a quarterly dividend of 16 cents per share, up from its previous rate of 14.5 cents per share.
Maple Leaf says its profit for the quarter ended Dec. 31 amounted to 14 cents per share compared with a profit of $11.9-million or 10 cents per share in the last three months of 2018.
Sales totalled $1 billion, up from $893.9-million in the fourth quarter of 2018.
On an adjusted basis, Maple Leaf says it earned 12 cents per share, down from an adjusted profit of 29 cents per share in the same quarter a year earlier.
Analysts on average had expected a profit of 17 cents per share and revenue of $986.5-million, according to financial markets data firm Refinitiv.
Microsoft Inc. (MSFT-Q) slid 7.3 per cent after announcing after the bell on Wednesday it does not expect to meet its quarterly revenue forecast for its Windows and personal computing business as a result of the coronavirus outbreak.
The company said the remaining elements of its fiscal third-quarter outlook were unchanged.
“Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated,” the company said in a statement.
Microsoft is the second company in the trillion dollar club to withdraw outlook. Earlier this month, Apple said that it may not be able to meet its March-quarter sales forecast.
Citi analyst Brad Zelnick said: “While we anticipate a quick recovery given strong end demand, timing still remains uncertain as it could take time for the supply chain to ramp back up and the impact to [More Personal Computing] could continue into F4Q and beyond. We note earlier today Nikkei reported Microsoft was planning on migrating Surface production to Vietnam which could help alleviate supply constraints.”
Gilead Sciences Inc. (GILD-Q) erased early gains and sat down 2.7 per cent as the California-based drugmaker said on Wednesday it has started two late-stage studies to test its drug in patients with coronavirus.
Beginning March, the studies will test the drug, remdesivir, among approximately 1,000 patients at medical centers primarily across Asian countries, as well as in other countries with high numbers of diagnosed cases, the company said
J.C. Penney Co Inc. (JCP-N) declined 5.5 per cent on Thursday after it projected a bigger comparable sales fall than market expectations for fiscal 2020, even after reporting better-than expected results for the holiday-quarter on strength of its women’s apparel business.
Shares of the 117-year-old department store chain have lost 35 per cent this year alone.
Plano, Texas-based Penney has struggled for years to excite consumers with its mid-priced range of apparel, and has lost a lot of shoppers to online behemoths like Amazon and off-price retailers like TJX Cos Inc as it reworks its business strategy.
Under Chief Executive Officer Jill Soltau, Penney has shut unprofitable stores, ditched selling major appliances last year to sharpen its focus on more profitable apparel sales, and is testing a new store model that includes a yoga studio, a videogame lounge and lifestyle workshops.
The retailer has also partnered with resale clothing company thredUP and relaunched its a.n.a brand with new all-inclusive sizes of jeans, fits and fabrics to appeal to younger consumers.
Shares of Tesla Inc. (TSLA-Q) fell as much as 14 per cent on Thursday on concerns about the impact of the coronavirus on the electric-car maker’s vehicle registrations in China.
Data from LMC Automotive showed that 3,563 Tesla vehicles were registered in China in January, up from 853 vehicles a year earlier, but down from the 6,613 vehicles registered in December.
Tesla registrations fluctuate significantly from month to month, LMC data showed. The automaker typically delivers many more vehicles in the final month of a quarter than in the first month. In October 2019, Tesla owners registered just 763 vehicles, LMC data showed.
Tesla did not respond to requests for comment.
The selloff in Tesla shares highlights the growing concern about the health of the Chinese auto market as the government and companies contend with the disruption of the coronavirus outbreak.
Marriott International Inc. (MAR-Q) finished down 0.5 per cent after saying on Wednesday it expects a roughly US$25-million hit to its monthly fee revenue, as the hotel operator faces low occupancy rates in the Asia Pacific region due to the coronavirus outbreak.
U.S. airlines and hotels are extending options for customers to rebook travel to a growing list of countries, including Italy, as coronavirus cases spike outside of China and spark fears of a global pandemic.
Marriott said room additions in 2020 could also be delayed as a result of the outbreak.
“Due to the uncertainty regarding the duration and extent of the coronavirus outbreak, Marriott cannot fully estimate the financial impact from the virus, which could be material to first quarter and full year 2020 results,” the company said.
Marriott said it expects 2020 earnings, excluding the impact of the virus, to be between US$6.30 and US$6.53 per share. Analysts were expecting US$6.47 per share, according to Refinitiv data.
With files from staff and wires