Retailer’s Sales Slump But Not Its Stock; Stay-at-Home Diners Hurts Darden; Oil’s Dollar Jump on Weather and Political Unrest; FDIC’s Bad Bank List Bulges; HP Closes Deal with EDS; Citi Pays Restitution; GT Solar Swings to Profit; Rio Digs Record Results
- U.S. retailer American Eagle Outfitters (AEO) announced yesterday (Tuesday) that second-quarter earnings fell to $59.8 million, or 29 cents a share, from $81.3 million, or 37 cents a share for the same period the year prior, MarketWatch reported. Despite the drop, American Eagle stock gained 55 cents, an increase of 4%, to close at $14.29 the day of the announcement.
- Darden Restaurants Inc. (DRI) warned investors that quarterly profit would not meet expectations due to a drop in traffic at its chain restaurants such as Red Lobster and the Olive Garden, Reuters reported. Darden stock dropped over 12% with a decline of $4.01 to close at $28.25 yesterday (Tuesday).
- Crude oil for October delivery gained over $1 to cross the $116 per barrel threshold yesterday (Tuesday) on the threat of Hurricane Gustav disrupting supply chains and continued unrest in Georgia. “Prices surged because Gustav appears to be strengthening as it moves toward the Gulf,” Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. (MF) in New York told Bloomberg News. “The news from Georgia is also helping send prices higher. Tension is ratcheting up instead of cooling down.”
- The U.S. Federal Deposit Insurance Corp. had 117 banks on its “problem list” of banks in its quarterly report released yesterday (Tuesday). It’s the highest level since mid-2003 for the list and up from 90 banks in the first quarter, Bloomberg News reported. “Quite frankly, the results were pretty dismal, and we don't see a return to the high earnings levels of previous years any time soon,” FDIC Chairman Sheila Bair said at a news conference.
- Hewlett-Packard Company (HPQ) yesterday (Tuesday) completed its $13 billion acquisition of Electronic Data Systems Corp. (EDS), a move expected to increase competition with rival IBM Corp. (IBM). The EDS acquisition is H-P's largest since the company bought Compaq Computer for $19 billion in 2002, according to MarketWatch.
- Citigroup Inc. (C) will pay nearly $18 million in refunds and settlement charges for taking $14 million from customers' credit card accounts from 1992 to 2003, The Associated Press reported yesterday (Tuesday). Citi will issue refunds to the 53,000 customers and will pay $3.5 million in damages and civil penalties to the state of California.
- GT Solar International Inc. (SOLR) said yesterday (Tuesday) that it swung to a $5.1 million profit for the quarter ended June 28. The company lost $5 million over the same period last year. Revenue nearly quadrupled from $15.4 million in 2007, to $57.1 million.
- Mining giant Rio Tinto PLC (RTP) announced a 55% jump in first-half profit, boosted by its takeover of Alcan Inc. and strong Chinese demand. "While the equity markets are currently focused on downside risks, we believe there are potential offsets on the upside based on continued strength in commodity demand, low inventory levels and a supply side which continues to face multiple constraints," Chairman Paul Skinner said in a statement. "The group continues to perform strongly, and the outlook remains positive."