Tuesday, January 15, 2008

Williams-Sonoma Shares Fall Most in 5 Years on Lower Forecast

(Bloomberg) -- Williams-Sonoma Inc., the U.S. gourmet-cookware retailer, fell the most in five years in New York trading after reducing its fourth-quarter profit forecast on an unexpected decline in holiday sales.

Fourth-quarter earnings per share, excluding some items, will probably be $1.12 to $1.15, compared with an earlier forecast of no less than $1.20, the San Francisco-based retailer said today in a statement. Sales at Williams-Sonoma's stores open more than a year fell 0.4 percent for the nine weeks through Dec. 30, the company said.

Customer visits to home-furnishings stores slowed more than Williams-Sonoma expected, and 2008 may be ``increasingly challenging,'' Chief Executive Officer Howard Lester said in the statement. The retailer cut prices and offered cheaper shipping at its Pottery Barn home-furnishings unit during the holidays to lure shoppers discouraged by falling house prices.

``Home furnishings retailers in general were highly promotional this holiday period,'' Laura Champine, a New York- based analyst with Morgan Keegan Inc. said in an interview Jan. 11.

Williams-Sonoma declined $2.30, or 10 percent, to $19.90 at 9:53 a.m. in New York Stock Exchange trading. It was the biggest decline since July 2002.

Three analysts surveyed by Bloomberg estimated an average gain of about 0.8 percent in comparable-store sales during the November-December period. For the fourth quarter, 21 analysts expected profit of $1.20 a share, on average.
 

Soros Hires BlackRock's Anderson as Investment Chief

(Bloomberg) -- George Soros's hedge-fund firm named BlackRock Inc. co-founder Keith Anderson as its new chief investment officer, according to a letter sent to shareholders.

``Keith will assume responsibility for managing all investment activities at Soros Fund Management,'' said the letter, dated yesterday and signed by Soros's sons Robert, 44, and Jonathan, 37, deputy chairmen of the New York-based fund- management group. Anderson, 48, starts his job next month.

Anderson takes the helm after a year in which the $17 billion fund returned 32 percent, outpacing the average hedge- fund gain of 10.4 percent. In 2007, the senior Soros, 77, was more involved in Quantum Endowment Fund's investments than he has been in years. Money-making trades in the portfolio included investments in China and India and in the currency markets.

Robert, who stepped down at the end of July as chief investment officer but continues to manage money, also contributed to the outsize return.

Anderson is the fourth chief investment officer at Soros since the billionaire philanthropist decided to scale back risk at the Quantum Endowment Fund following the departures of star traders Stanley Druckenmiller and Nicholas Roditi in April 2000.

In addition to Robert, the other investment executives were Robert Bishop, previously a principal at hedge fund Maverick Capital Ltd., and former Goldman Sachs Group Inc. partner Jacob Goldfield.
 
 

U.S. Retail Sales Unexpectedly Declined in December

(Bloomberg) -- Sales at U.S. retailers unexpectedly fell in December, capping the weakest year since 2002.

Sales dropped 0.4 percent, the first decline since June, following a revised 1 percent gain in November, the Commerce Department said today in Washington. Purchases excluding automobiles also decreased 0.4 percent.

Treasury notes rose and stock-index futures dropped as the figures underscored Federal Reserve Chairman Ben S. Bernanke's concern that risks to growth are intensifying. A sustained slump in consumer spending brought on by falling property values and rising unemployment would mean the end of the six-year expansion, economists say.

``Consumer spending slowed down pretty dramatically'' in the fourth quarter, said Brian Bethune, director of financial economics at Global Insight Inc. in Lexington, Massachusetts, who correctly forecast the drop in sales. ``We are kind of flying very close to a stall speed.''

Economists forecast retail sales would be unchanged, according to the median of 74 estimates. Projections ranged from a decline of 0.8 percent to a gain of 0.5 percent.

Yields on benchmark 10-year notes dropped to 3.72 percent at 8:55 a.m. in New York, from 3.77 percent late yesterday. Futures contracts on the Standard & Poor's 500 stock index expiring in March declined 1.1 percent to 1, 404.40.

Producer Prices

Producer prices in the U.S. also dropped in December, against economists' forecasts for an increase. Wholesale prices fell 0.1 percent after a 3.2 percent surge in November that was the biggest in 34 years, a Labor Department report showed.

For all of 2007, retailers posted a 4.2 percent sales increase, the smallest in five years. Purchases rose 5.9 percent in 2006.

``Growth stalled out at the end of the fourth quarter and into the new year,'' Joshua Feinman, chief U.S. economist at Deutsche Asset Management in New York, said before the report. ``The economy will narrowly be able to avoid recession.''

Sales excluding automobiles were forecast to decrease 0.1 percent from the prior month, according to the survey median.

The drop in sales was led by a 2.9 percent decline at building-material stores, the biggest since February 2003, reflecting the slump in housing. Sales at clothing, electronics and sporting-goods stores were among those that also decreased.

Gas Stations

Purchases at service stations dropped 1.7 percent, which economists said reflected lower gasoline prices. The price of a gallon of regular gasoline in December averaged $3.01, down from $3.07 the previous month, according to AAA, a group representing motorists. Excluding gas, retail sales fell 0.2 percent.

Auto dealers saw a 0.4 percent decline in sales.

AutoNation Inc., the largest publicly traded U.S. car dealer, doesn't expect the nation's auto market to pull out of its slump until 2009, Chief Executive Officer Michael Jackson said from Fort Lauderdale, Florida.

The drop in housing and the slowing economy usually take ``30 to 40 months to work through,'' Jackson said in a Bloomberg Radio interview yesterday. ``So we've had declines in 2006, 2007 and 2008, but I'm feeling pretty good about 2009.''

Excluding autos, gasoline and building materials, the figures the government uses to calculate gross domestic product, sales increased 0.1 percent, following a 0.7 percent gain the month before. The government uses data from other sources to calculate the contribution from the three categories excluded.

Spending Outlook

Consumer spending, which accounts for more than two-thirds of the economy, is likely to cool rather than collapse in coming months as the housing slump worsens and hiring slows, according to the median estimate of economists surveyed by Bloomberg News earlier this month.

Spending will grow at an annual rate of 1.6 percent this quarter, down from an estimated 2.6 percent pace in the last three months of 2007, according to the median estimate of economists surveyed by Bloomberg News this month. Spending expanded at an average 3.5 percent pace per quarter over the past decade.

The continued gains, together with increasing exports, will help the economy avoid recession, economists said. Fed rate cuts will ensure a short downturn should one occur, they said.

Bernanke on Jan. 10 pledged ``substantive additional action'' to insure against ``downside risks'' to the economic expansion.

Investors are certain the Fed will lower the benchmark interest rate by at least a half percentage point following two days of meetings of Jan. 29-30.