Home Depot Forecasts Trouble in 2008; Apple Becomes No. 2 Music Retailer; Consumer Confidence Plummets; U.S. Banks Set Aside Record Amounts for Loan Losses; Target Reports Drop in Profit; IBM Soars on Planned Buyback; Starbucks Shutdown; RadioShack Delivers
Net earnings fell to $671 million, down 27% from $925 million, and sales rose a meager 1.5% for Home Depot Inc. (HD), which released earnings yesterday (Tuesday). The home supply retailer said continuing turbulence in the U.S. housing market would affect sales and operations in 2008, Reuters reported. Its capital spending would drop to $2.3 billion from $3 billion in 2007, and the company its share buyback program on hold.
Apple Inc.'s (APPL) iTunes digital media store leaped over Best Buy Co. Inc. (BBY) and Target Corp. (TGT) to become the second largest music retailer in the United States behind Wal-Mart Stores, Inc. (WMT), Reuters reported. But despite the popularity of online music shopping, spending rates across the music industry declined 10%.
The Conference Board's consumer confidence index plunged to a reading of 75 yesterday (Tuesday) its lowest since March 2003. It stood at 87.3 in January. "With so few consumers expecting conditions to turn around in the months ahead, the outlook for the economy continues to worsen and the risk of a recession continues to increase,” Lynn Franco, director of the Conference Board's consumer research center, said in a statement.
U.S. banks set aside a record $31.3 billion for loan losses in the fourth quarter of 2007 to offset weakening conditions in the housing and credit markets. According to the Federal Deposit Insurance Corp., the U.S. bank industry set aside $68.2 billion for potential loan losses for all of 2007.
Target Corp. (TGT) reported a drop in quarterly profit of more than 8% yesterday (Tuesday) as consumers cut back on unnecessary spending. "Our financial performance in 2007 fell short of our expectations as the pace of sales and earnings slowed considerably in the second half of the year,” said Bob Ulrich, chairman and chief executive officer, in a statement. The No. 2 U.S. discount retailer behind Wal-Mart Stores Inc. (WMT), said profit fell to $1.028 billion, or $1.23 per share for its fiscal fourth quarter ended Feb. 2, from $1.119 billion, or $1.29 per share, a year earlier.
Shares of International Business Machines Corp. (IBM) rose $4.30 [a 3.91% increase] to close at $114.38 yesterday (Tuesday) after the firm announced a $15 billion share buyback plan. The closing price marked a fourth-month high for the largest computer-services company and sparked a rally in the technology sector.
In a massive training initiative, Starbucks Corp. (SBUX) planned to close all 7,100 locations nationwide for three hours yesterday (Tuesday) evening. Stores were scheduled to be closed from 5:30pm to 9:00pm local time. More than 135,000 baristas were to receive training on brewing a better espresso and enhancing the customer service experience.
Shares of RadioShack Corp. (RSH) surged almost 22% yesterday (Tuesday) on a fourth quarter earnings report that beat analyst expectations. Net income increased to $101 million, or 77 cents per share, from $84.5 million, or 62 cents per share, the year prior. Earnings per share beat average analyst estimates of 72 cents per share. Shares rose $3.39 to close at $19.13.