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GAP Gaps Lower Following 25% EPS Guidance Cut, Loses Fight With Inflation

Tyler Durden's picture




 

Oops. Just out from The Gap: "As stated earlier in the year, the company expects business performance during fiscal year 2011 to be heavily impacted by pressure from sourcing cost inflation, particularly in its value channels. While the company anticipated that the cost of goods would increase during the back half of the year, costs are actualizing above the initial estimates. The company now expects product costs per unit to be up about 20 percent in the back half of the year, which will more than outweigh retail price increases. As a result, the company has revised guidance for fiscal year 2011 diluted earnings per share to be in the range of $1.40 to $1.50." The problem is that previously the company had seen an EPS range of $1.88-$1.93, with a consensus of $1.84. To all those who were wondering why nobody was guiding lower ahead of the Q1 earnings season, the answer is... the waited until it was over. As for how the company plans to mitigate its plunge in earnings: "The company now expects net openings of about 75 stores, including
franchise stores, during fiscal year 2011. This figure is up from the
company’s previous guidance of about 65 stores, driven primarily by
additional Outlet store openings in North America." When you can't control price, you can at least control volume... Even if that means inventory liquidation sales within a month or so of opening the new stores: "The company reported that inventory per store was up 9.9 percent at the
end of the first quarter of fiscal year 2011 compared with last year,
slightly higher than expected driven by decreased sales associated with
the events in Japan." So much for the consumer stepping up. And time to go very short consumer discretionary stocks, just as we suggested three days ago.

 

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Thu, 05/19/2011 - 16:13 | 1293063 Spalding_Smailes
Spalding_Smailes's picture

Got GLUU .... ?

Thu, 05/19/2011 - 16:13 | 1293066 DutchTreat
DutchTreat's picture

GAPping down, just like VIX. Me worried? Of course not!

Thu, 05/19/2011 - 16:11 | 1293068 DutchTreat
DutchTreat's picture

..

Thu, 05/19/2011 - 16:15 | 1293077 Hephasteus
Hephasteus's picture

Total lie. Gap is plunging 60 percent. Tell the truth.

Thu, 05/19/2011 - 16:13 | 1293080 IdioTsincracY
IdioTsincracY's picture

well ... -25% is quite a gap ... isn't it?

Thu, 05/19/2011 - 16:16 | 1293092 ghostfaceinvestah
ghostfaceinvestah's picture

everyone is shopping at BKE, uh, maybe not.

 

Thu, 05/19/2011 - 16:16 | 1293094 firstdivision
firstdivision's picture

This is so that the options expire worthless, and management can load up on the cheap.

Thu, 05/19/2011 - 20:50 | 1294031 Xibalba
Xibalba's picture

mgmt. are net sellers

Thu, 05/19/2011 - 16:21 | 1293102 ghostfaceinvestah
ghostfaceinvestah's picture

what sucks is these momo stocks are getting hammered even before qe2 is over

Thu, 05/19/2011 - 16:22 | 1293110 mynhair
mynhair's picture

Uh oh, LDK $ debt offering postponed.

Leo?

Thu, 05/19/2011 - 16:23 | 1293125 TruthInSunshine
TruthInSunshine's picture

Retail, consumption and MOMO are dead.

Even Bernankincide can't save the Ponzi-fied markets, anymore. QE blah blah won't do shit.

So sorry, RoboFader.

The secular bear just wouldn't die, and not its Grizzly Large (pull up your 8 or 12 year chart, RoboMomoFader).

Look for broken spines and broken technicals in the weeks to come.

Thu, 05/19/2011 - 16:26 | 1293131 Robslob
Robslob's picture

Enter Robo picking a 1 day stock like LinkedIn...have heard much from the fiat lover Robo about GM lately...

 

Better yet GAP down 14% (3.3 points)...but crashing in Robo Terms

Thu, 05/19/2011 - 16:26 | 1293139 Cdad
Cdad's picture

The XRT broke down technically after the close.  Amazing...what with the most efficient creation units machine in the whole market.

Would advise reporting to the XRT top holdings page for selling tips.

Thu, 05/19/2011 - 19:59 | 1293906 Id fight Gandhi
Id fight Gandhi's picture

Xrt is just off it's high last week. You'd think the POS Retail would fall off a cliff now. Whatever.

Guess load up on .com social blah blah and profit!

Thu, 05/19/2011 - 16:29 | 1293140 achmachat
achmachat's picture

I scrolled all the way down, looking for Robo.

 

Thu, 05/19/2011 - 16:30 | 1293146 ElvisDog
ElvisDog's picture

Robo? Comment?

Thu, 05/19/2011 - 16:34 | 1293159 RobotTrader
RobotTrader's picture

Salesforce up 7% on blowout numbers.

Now has a 280 PE ratio.

The cloud/social networking/gaming bubble continues.

http://www.marketwatch.com/investing/stock/crm

Thu, 05/19/2011 - 16:33 | 1293169 Spalding_Smailes
Spalding_Smailes's picture

Got MPEL ... ? Don't forget the Macau they are printing money ...

Thu, 05/19/2011 - 16:34 | 1293172 Robslob
Robslob's picture

AutoDesk reports 88% Profit increase...

Up .14 cents...or .3%

Thu, 05/19/2011 - 16:49 | 1293237 Cdad
Cdad's picture

Blowout earnings?  Exactly as expected at my broker...with a minor revenue beat.

Of course, on GAAP earnings, they earned $.00.  They will lose money in 2012.

Thu, 05/19/2011 - 16:34 | 1293173 RobotTrader
RobotTrader's picture

Aruba Networks up 4%, Autodesk up 1%.

Another NASDAQ bubble is inflating.

Gradually, when nobody notices.

Everyone is bearish, but the SMH is still pinned at the highs, and HHH not far away.

Thu, 05/19/2011 - 20:09 | 1293938 buzzsaw99
buzzsaw99's picture

Everyone is bearish...

 

That is a freaking lie and you know it! zh routinely reports on sentiment.

Thu, 05/19/2011 - 16:36 | 1293181 Robslob
Robslob's picture

Autodesk up 1%. or .66 cents...go RoboToddler Go!

Thu, 05/19/2011 - 16:36 | 1293184 matthylland
matthylland's picture

GAP stock...so last year. Tech bubbles back baby! putting in my order for 100 shares at $200 for LNKD tomorrow!!!

Thu, 05/19/2011 - 16:41 | 1293187 RobotTrader
RobotTrader's picture

I usually glance at the charts of all the IBD Riverboater's "Top 50" Heatmap Specials to gauge the market health.

They all started taking off yesterday.

http://clearstation.etrade.com/cgi-bin/bbs?post_id=9728339

Thu, 05/19/2011 - 16:42 | 1293199 RobotTrader
RobotTrader's picture

If silver clears $36 and gold clears $1,525 with authority next week, then the Dow is most likely going to be attacking 13,000 next.

Thu, 05/19/2011 - 16:43 | 1293205 lizzy36
lizzy36's picture

And the one dude laughing all the way to the bank.......Mickey Drexler.

Thu, 05/19/2011 - 16:44 | 1293209 RobotTrader
RobotTrader's picture

CRM now up $10.

Some bears are going to be in pain tomorrow.

Thu, 05/19/2011 - 16:49 | 1293262 ghostfaceinvestah
ghostfaceinvestah's picture

ARO now down 10%, some bulls are going to be in pain tomorrow

Thu, 05/19/2011 - 16:48 | 1293232 TooBearish
TooBearish's picture

Will be on St Street hard to borrow list tomorrow and Retai will be up 1%... Right RObo?

Thu, 05/19/2011 - 16:46 | 1293234 RobotTrader
RobotTrader's picture

Foot Locker up 8% after hours on earnings.

Another new high for that stock.

Thu, 05/19/2011 - 16:56 | 1293288 ghostfaceinvestah
ghostfaceinvestah's picture

Teen retailers are getting crushed, what happened, are mommy and daddy now too poor to support their kids?  Guess that's what happens when the foreclosure finally goes through.

GPS

ARO

HOTT

BKE

all getting/got decimated.

Thu, 05/19/2011 - 16:58 | 1293294 Cdad
Cdad's picture

The BlowHorn [CNBC] is getting nervous, obviously.  Covering a rumor of a new iPhone to try to float the sinking ship that is the NASDAQ.  NASDAQ composite lost a technical level today, as well.

Thu, 05/19/2011 - 17:03 | 1293318 John Law Lives
John Law Lives's picture

CNBS should be turned off.  I think watching it is bad for you...

Thu, 05/19/2011 - 17:00 | 1293310 John Law Lives
John Law Lives's picture

That's okay.  Macroeconomic data no longer matters.  The Fed will print money, Congress will spend money, the Treasury will raid the Thrift Savings Plan's "G" fund, and the PPT will pump the futures in pre-market tomorrow.

What a fvcked up world we live in...

Thu, 05/19/2011 - 17:03 | 1293338 mule_play
mule_play's picture

WHERE IS BEEKS? 

Thu, 05/19/2011 - 17:17 | 1293396 BORT
BORT's picture
In a somewhat related matter:

Hon Hai Q1 operating margin falls to 1.7 percent
2011/05/14 16:46:28 Taipei, May 14 (CNA) Hon Hai Precision Industry Co. Ltd. said Saturday its operating margin for the first quarter of this year on a consolidated basis fell to 1.7 percent from 3.7 percent registered a year earlier on rising operating costs.

Market observers said Hon Hai, the flagship subsidiary of the world’s largest contract electronics maker Hon Hai Group, shouldered higher operating expenses largely on wage hikes in its production facilities in China.

They also cited massive costs as a reason for Hon Hai to relocate its production further into China's interior, to inland cities including Zhengzhou of Henan Province, and away from the costal city Shenzhen, where employers have witnessed sharp increases in wages.

They added the squeezed operating profit showed contract electronics firms, like Hon Hai, which manufacturers iPhones and iPads for Apple, are faced with greater challenges on how to maintain their profitability amid fierce competition.

Hon Hai $171 mn bond auction fails to attract demand The world's largest electronics contract maker will restart the auction on May 24, selling the same amount of bonds but keeping only the five- and seven-year tenors Wednesday, May 18, 2011

TAIPEI, INDIA: Hon Hai Precision Industry's $171.6 million unsecured corporate bond failed to attract enough demand, three market sources with direct knowledge of the deal told Reuters on Wednesday, due to declining interest in the tech sector among investors.

The world's largest electronics contract maker will restart the auction on May 24, selling the same amount of bonds but keeping only the five- and seven-year tenure. A 10-year tenure was included in the auction last Friday.

"Investors hold a rather conservative view on the tech sector outlook, they are inclined not to hold a long tenor bond," said one underwriter.

Hon Hai announced the T$12 billion unsecured corporate bond issue plan at the beginning of this year. The latest auction would have been the last phase of that plan. The previous two sales in the plan had gone smoothly

Thu, 05/19/2011 - 17:14 | 1293399 Twice a Day
Twice a Day's picture

Spalding and RobotT,

Ok, Ok, Ok, Great Calls, very scary to say the least. Your runners are much better than those at the old Hawthorne Track in Cicero. That was a long time ago.

Did someone DSK'd someone to quit posting charts so we can visualize the activity, if so that's bad.

Keep posting and post the damn charts.

Twice a Day

Thu, 05/19/2011 - 17:39 | 1293505 Twice a Day
Twice a Day's picture

Now that's chemistry!!!

Twice a Day

Thu, 05/19/2011 - 18:16 | 1293619 SoCalBusted
SoCalBusted's picture

"Fall innn toooo the GAP"

Thu, 05/19/2011 - 18:29 | 1293659 chartcruzer
chartcruzer's picture

interesting.  however, the retail sector is on fire.   Check the RETL ETF (bottom of the chart). 

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s223086149]&disp=P

hugely overbought on the longer term chart

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3225058&cmd=show[s223085872]&disp=P

Fri, 05/20/2011 - 01:12 | 1294676 PulauHantu29
PulauHantu29's picture

Cotton was up 70% in 2010...that gotta hurt.

Fri, 05/20/2011 - 06:11 | 1294869 aeiou260199038
aeiou260199038's picture

The first time in your life then let me tell you that you are not doing batterie anything crazy or fussy...

Do NOT follow this link or you will be banned from the site!