Moving the Market

AnnTaylor (ANN 19.45) reported fourth quarter earnings of $0.05 per share, excluding non-recurring items, $0.06 better Thomson Reuters consensus of ($0.01); revenues fell 2.9% year/year to $469.1 million vs. the $472.3 million consensus.

Comparable store sales for the quarter were essentially flat, at negative 0.6% vs. the prior year. At Ann Taylor, comparable store sales declined 7.3% while at LOFT, comparable stores sales increased 2.1%.

Gross margin, as a percentage of sales, was 52.5%, reflecting a 1,680 basis point increase vs. the gross margin rate achieved in 4Q08.

Co issued in-line guidance for first quarter, saying they see first quarter revs of  approximately $445.0 million vs. $443.72 million Thomson Reuters consensus. The co currently expects fiscal 2010 total net sales to improve over the levels achieved in 2009. In addition, the co anticipates a return to positive comparable store sales at both brands in each of the fiscal quarters of 2010, as a result of more compelling product assortments, strategic marketing initiatives and a disciplined approach to inventory management.

Gross margin is expected to remain approximately equivalent to level achieved in fiscal 2009.

After the close last night, Potash (POT 116.93) raised first quarter EPS guidance to $1.30-1.50 vs. $0.94 Thomson Reuters consensus, up from the company's prior guidance of $0.70-1.00.

The upward revision reflects a sharp rebound in potash demand that is expected to drive a record quarter for North American sales volumes and strong offshore shipments, as well as higher-than-expected margins in nitrogen and phosphate.

The company said that any revisions to annual guidance will be addressed in their first-quarter news release, which is currently scheduled to be released on April 29, 2010.

The company said, "Strong farmer returns, a depleted distributor pipeline and the agronomic need to replace soil nutrients have kick-started a potash rebound from 2009 lows. While we know that growth does not follow a straight upward line, we believe the increase in potash sales volumes this quarter represents the beginning of a return to long-term growth in demand".

Before the open, Lions Gate Entertainment (LGF 5.67) announced that its Board of Directors, in consultation with its financial and legal advisors, has determined, by unanimous vote of the directors present, that the unsolicited partial tender offer from Carl Icahn and certain of his affiliated entities to purchase up to 13,164,420 common shares of Lions gate for $6.00 per share is financially inadequate and coercive and is not in the best interests of Lionsgate and its shareholders and other stakeholders.

The Board strongly recommends that Lionsgate shareholders not tender their shares into the Icahn Group offer.

The reasons for Lionsgate Board's recommendation to reject the Icahn Group's include: 1) The Icahn Group's offer is inadequate from a financial point of view and does not reflect the full value of the Lionsgate shares; 2) As the owner of 29.9% of Lionsgate's outstanding shares, the Icahn Group would likely have the power to effectively veto certain significant transactions and other matters requiring approval by a special resolution of shareholders; 3) The purchase price offered by the Icahn Group represents an effort to acquire control of Lionsgate without paying a control premium; 4)The acquisition by the Icahn Group of 29.9% of Lionsgate's outstanding shares would constitute an event of default under Lionsgate's credit facilities; 5) The Icahn Group lack industry experience; 6) The Icahn Group's "partial bid" is inherently coercive to other shareholders; and 7) The offer is highly conditional and creates substantial uncertainty for Lionsgate's shareholders.

Retail sales unexpectedly grew by 0.3% in February. The consensus expected sales to fall by 0.2%.

This is the third piece of data, after the previously released initial claims figure and employment situation report, to verify that the inclement winter weather in February had no lasting effect on economic growth during the month.

Core retail sales, which are sales excluding auto dealers, building materials and supplier firms, and gasoline stations, jumped 0.9% in February. The jump followed a strong 0.6% gain in January.

The core data confirm that consumers are feeling very bullish about the economy. Out of the 13 retail sectors, 11 posted positive gains, including an unexpected 3.7% increase in electronic and appliance stores.

Auto dealer expenditures declined 2.4%. The drop in expenditures was in-line with the 4.0% plunge in February's motor vehicle sales numbers.

Before the open, Nokia (NOK 14.85, +0.36) announced that beginning in 2010, it is revising its definition of the industry mobile device market that it uses to estimate industry volumes.

This revision is due to improved measurement processes and tools that enable Nokia to have better visibility to estimate the number of mobile devices sold by certain new entrants in the global mobile device market. These include vendors of legitimate, as well as unlicensed and counterfeit, products with manufacturing facilities primarily centered around certain locations in Asia and other emerging markets.

For comparative purposes only going forward, applying the revised definition and improved measurement processes and tools that we are using beginning in 2010 retrospectively to 2009, Nokia estimates that industry mobile device volumes in 2009 would have been 1.26 billion units.

Applying its revised definition of the industry mobile device market applicable beginning in 2010 on a comparable year-over-year basis, Nokia expects industry mobile device volumes to be up approximately 10% in 2010, compared to 2009.

The preliminary reading of the University of Michigan Consumer Sentiment Index slipped from 73.6 in February to 72.5 in March. The consensus expected the index to increase to 74.0.

In a somewhat surprising move, the current economic conditions index fell from 81.8 to 80.8. This was the first downward move in the index since November. Given the growing strength in the labor market, it was expected that the index would at least maintain its previous level. One possible explanation for the decline was the 3.9% increase in gasoline prices over the past few weeks. Typically, an increase in gasoline prices would have a negative effect on consumer sentiment.

The economic outlook index fell for the second consecutive month, dropping from 68.4 in February to 67.2 in March. While there are no details that explain the decline, consumers may be getting worried about future tax increases as state and federal deficits balloon in 2010.

Please note: Movements in the consumer confidence index play no role in predicting consumption growth.