A short week on Wall Street brings a fairly light earnings slate, with one huge Dow component arriving at an anxious time for the retail sector.
Hasbro’s stock tumbles after adjusted earnings miss, revenue falls below expectations
Shares of Hasbro Inc. tumbled 9.8% in premarket trade Friday, after the toy maker missed fourth-quarter profit and revenue expectations, citing the disruptive effect of the Toys “R” Us bankruptcy and the shifting consumer and retail landscape. The company swung to net income of $8.8 million, or 7 cents a share, from a loss of $5.3 million, or 4 cents a share, in the same period a year ago. Excluding non-recurring items, adjusted earnings per share came to $1.33, well below the FactSet consensus of $1.67. Revenue fell 13% to $1.39 billion, missing the FactSet consensus of $1.52 billion, as franchise brands, partner brands and gaming revenue all fell more than expected. “We were not…able to recapture as much of the Toys “R” Us business during the holiday period as we anticipated as the effect of its liquidated inventory in the market was more impactful than we and industry experts expected,” said Chief Executive Brian Goldner. Separately, the company raised its quarterly dividend to 68 cents a share from 63 cents a share. The stock has lost 8.3% over the past three months through Thursday, while the S&P 500 has slipped 3.6%.
The toy maker’s stock suffered its worst loss of the millennium on Friday, exactly a week after its best trading session of the 2000s the previous Friday. The boomerang trade was the result of splitting holiday-season earnings from Mattel’s MAT, -18.27% forecast for 2019 — neither held great news, but last week’s earnings were at least better than expected.
H&R Block’s stock gains after results beat expectations
Shares of H&R Block Inc. edged up 0.5% in premarket trade Thursday, after the tax preparation services company reported a narrower-than-expected loss and beat revenue expectations. The net loss for the quarter to Oct. 31 widened to $176.3 million, or 86 cents a share, from $153.6 million, or 74 cents a share, in the same period a year ago. The loss per share excluding discontinued operations was 83 cents. The FactSet per-share loss consensus was 93 cents. Revenue rose to $148.9 million from $140.9 million, above the FactSet consensus of $139.8 million. “The fiscal second quarter results reflect planned increases in expenses related to strategic investments being made in the business,” said Chief Financial Officer Tony Bowen. The stock has gained 4.0% over the past three months through Tuesday, while the S&P 500 has lost 6.2%.
Mattel Inc. MAT, -18.27% shares dove more than 16% late in Friday's trading session after the toy maker revealed that sales would remain flat this year. In a presentation, Chief Financial Officer Joseph Euteneuer said that sales would remain flat in constant currency this year, which was called a "significant improvement" for the company, which has struggled of late. The forecast said that the American Girl line would continue to decline as the company entered a multiyear turnaround plan for the dolls, while a decline in Thomas the Train Engine toys should at least decelerate. Barbie and Hot Wheels toys are expected to grow, while Fisher-Price is expected to stabilize by the end of the year, the presentation claimed. Mattel also said it was looking to transition to a "capital-light" manufacturing plan in 2019, which should begin to pay off in 2020. Mattel's stock was headed toward its biggest one-day percentage loss since Jan. 26, 2017, when it declined more than 17%. Mattel shares had been enjoying a rebound so far this year, rising 43.7% as the S&P 500 index SPX, +1.09% gained 9.5%.
President Donald Trump on Friday signed a spending bill for government agencies that will avert a partial shutdown just after midnight. The bill also contains money for border security, though less than the president wanted. Earlier Friday Trump declared a national emergency to build more of his long-proposed border wall.
Gold futures finished at a two-week high on Friday to post a modest gain for the week as progress in trade talks between the U.S. and China was seen as bullish for the metal. China is one of the world's biggest buyers of gold. April gold GCJ9, +0.80% settled at $1,322.10 an ounce, up $8.20, or 0.6% for the session. For the week, prices based on the most-active contract rose 0.3%.
Baker Hughes BHGE, +0.86% on Friday reported that the number of active U.S. rigs drilling for oil rose by 3 to 857 this week. That followed a climb of 7 in the oil-rig count a week earlier. The total active U.S. rig count also edged up by 2 to 1,051, according to Baker Hughes. March West Texas Intermediate crude CLH9, +1.62% was up 95 cents, or 1.8%, at $55.36 a barrel from Thursday's finish. It was trading at $55.50 before the rig data Friday.
Trump on National Emergency Declaration: ‘I Expect to Be Sued’
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The U.S. and China have made "important progress for the current stage" of their trade negotiations after Chinese President Xi Jinping met with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Beijing Friday, the state-run Xinhua reported. President Xi referred to the U.S.-China relationship as among the most important partnerships in the world and therefore, the two countries should maintain healthy and stable ties, according to the Chinese government's official media agency. Xi also said his country is ready to resolve its trade differences with the U.S. through cooperation and reach a deal that is acceptable to both sides. U.S. and Chinese negotiators are scheduled to meet again next week in Washington D.C. in a bid to hammer out an agreement ahead of the March 1 deadline. After the date, the U.S. has warned that it could further raise tariffs on Chinese imports although in recent days President Donald Trump has indicated that a grace period is possible if negotiations go well. U.S. stocks rallied on optimism over the bilateral talks with the S&P 500 SPX, +0.72% rising 0.8% to 2,767, the Dow Jones Industrial Average DJIA, +1.22% gaining 1.2% to 25,752 and the Nasdaq COMP, +0.34% adding 0.5% to 7,460.
European bank stocks rally as ECB considers restarting stimulus mechanism
European banks rallied on Friday after European Central Bank executive board member Benoit Coeure said a new targeted longer-term refinancing operation, or TLTRO was possible, according to reports. “There might be scope for another TLTRO,” Coeure said, according to Reuters. The TLTRO are essentially cheap loans provided by the ECB, that served to temporarily calm the eurozone debt crisis early in 2012. Coeure also characterized the eurozone’s inflation path as shallow, meaning the central bank would have to adapt. The Stoxx Europe 600 Banks Index climbed some 2% on the back of the remarks. The biggest gainers in the index were Italian Banco BPM SpA and German Comerzbank Ag , which gained 4.9% and 4.7% respectively.
Apple Inc. AAPL, +0.36% appears ready to launch its long-awaited video streaming service in the spring, but Jefferies analyst Tim O'Shea isn't yet convinced that the efforts will help Apple achieve an inflection in growth. "Even with video, services growth is not enough to offset iPhone unit declines, which should persist through 2019 and beyond," he wrote. Apple is reportedly having trouble signing big potential video partners such as Netflix Inc. NFLX, +2.08% which has been pushing back in general against Apple's take rate. "The 30% revenue share could reduce the amount of third party video content in this service, limiting its potential," O'Shea said, though it's still not clear exactly what the company's revenue-sharing arrangements for the video service will be as the company has yet to announce the offering. While publishers like Netflix are rebelling against Apple's 30% cut of App Store revenue, the largest app there only accounts for 0.3% of total services revenue. " For video, if a single major producer pulls out it would be a much bigger problem," O'Shea wrote. Apple shares are off 0.4% in premarket trading Friday. The stock has fallen 11% over the past three months, as the Dow Jones Industrial Average DJIA, -0.41% has risen 0.6%.
An employee at the Precision Neon studio in the Brooklyn borough of New York..
The numbers: The Empire State manufacturing index rebounded in February after hitting the lowest level in a year. The index rose 4.9 points to 8.8 in February, the New York Fed said Friday. Economists had expected a reading of 7.6, according to a survey by Econoday.