anf

Some Tax Rebate Checks Hit Obstacles
To date, the IRS has issued nearly 30 million stimulus checks, totaling more than $27 billion. This is the first time the IRS has used direct deposit to deliver rebates - a step intended to quickly pump money into the struggling economy. But several problems have delayed the process.
Some tax rebate checks run into obstacles - USATODAY.com Some IRS tax rebate checks going to wrong accounts - USATODAY.com
Also: Errors Will Prevent 350,000 Households From Getting Child Credit in Tax Rebate Checks

Selling Off the Core Business
It was quite a surprise to some this week to hear that GE is looking to sell their signature product line --appliances. But, they aren't the first company to move away from their early roots. Here are some companies that decided to cut their roots-the products that fed their early growth to delve into other areas. Companies have mixed results when they stray from their original visions, sometimes stumbling to adjust and others morphing into better creations. Among the companies are IBM which sold off their PC unit, Corning and Corningware, Kodak and 35MM Film, Goodrich and tires and more.
Selling off the core business - BusinessWeek
In the News: GE Confirms It Is Considering Strategic Options for Its Appliance Unit

U.S. stock futures were higher this morning, looking to extend their rally, even though investors will likely not like the upcoming housing data, which probably isn't going to signal a bottom for the housing recession.

U.S. stocks had a nice rally Thursday as oil prices fell, several deals were announced, mainly CBS buying CNet, and Icahn moving forward with his proxy fight for Yahoo's board. The Dow industrials rose 94 points, or 0.73%, the S&P 500 added 14 points, or 1.06%, and the Nasdaq Composite rose 37 points, or 1.48%. Thursday marked the fourth day of gains for the Nasdaq.

This morning, investors will be waiting for the housing data to roll in. Housing starts and building permits figures for April will be reported at 8:30 a.m. EDT. Both are expected to show further declines.
Also at 10:00 a.m. EDT, May University of Michigan's consumer confidence gauge for May is due. Economists expect it to decline marginally.

Meanwhile, Goldman Sachs helped lift oil prices this morning after it raised its forecast for oil to $141 a barrel. The forecast was raised 32% from $107 a barrel and is for the second half of 2008. Oil prices were back above $125 a barrel.

The earnings season continues to roll on, and next week's results offer a peek at the state of fashion retailing, as a variety of companies -- from the discount to the upscale, from the hip to the pedestrian -- are scheduled to report earnings.

Analysts surveyed by Thomson Financial expect earnings growth, compared to the same period in the previous year, from Urban Outfitters (NASDAQ: URBN) to be 22.7% to 22 cents per share, from Wal-Mart Stores (NYSE: WMT) to be 9.3% to 75 cents per share, and from TJX Companies (NYSE: TJX) to be 7.5% to 40 cents per share.

Analysts expect earnings declines from the previous year from JC Penney (NYSE: JCP) by 52.9% to 49 cents per share, from Kohl's (NYSE: KSS) by 34.4% to 42 cents per share, and from Nordstrom (NYSE: JWN) by 18.3% to 49 cents per share.

In the case of Abercrombie & Fitch (NYSE: ANF), analysts expect earnings to remain flat, year over year, at 65 cents per share.

And then there's Macy's (NYSE: M), which is expected to swing to a loss of 2 cents per share, compared to a profit of 16 cents a year ago.

The sample size may be too small to define any significant trends, but the numbers do suggest that analysts expect profit declines to be deeper than profit growth, and that consumers may be more likely, given the current state of the economy, to buy clothes at Wal-Mart or TJ Maxx than at Nordstrom or Abercrombie.

The coming results will reveal if those expectations are correct.

Who can forget the advertising campaign a number of years back that threw social watch dogs into fits over Abercrombie & Fitch (NYSE: ANF). That particular advertising foray employed the lithe bodies of teen and preteen boys and girls in a way which, while certainly drawing attention, underscored today's excessive use of underage sexuality in advertising. Parent groups and child protective agencies were enraged, as well they might be. However, a recent ad campaign launched by Beyonce and her House of Dereon, clothes for girls, makes Abercrombie's misadventures look about as harmless as a day at the zoo.

A blog post presented by our sister blog Styledash, reveals the shocking truth about the clothing ad campaign, which is the brainchild of Beyonce and her mother, Tina Knowles. Blogger Kristen Seymour espouses the danger in this type of advertising by describing the presentation in the terms of "Go on, baby, and earn your lunch money the old-fashioned way."

The gallery provided by Styledash is self-explanatory and might serve to turn the stomachs of little girl's parents everywhere. Certainly, Beyonce and her advertising agency have accomplished what they wanted to. We can also believe that Abercrombie & Fitch shall benefit slightly with a parallel focus to its own questionable advertising strategy. However, we need only to remember the enigmatic fate of JonBenet Ramsey to realize down which road this type of advertising strategy may lead.

(Thanks to Styledash for the tip, Additional thanks to Gawker)

Monday, May 5

• Happy Cinco de Mayo!
• Day one of the two-day FDA Anesthetic/Life Support Drugs & Drug Safety/Risk Management Advisory Committees meeting: Purdue Pharma's NDA for Oxycontin.
  
• Anadarko Petroleum (NYSE:APC) to report Q1 earnings; conference call Tuesday at 10:00am.

Tuesday, May 6

• Day two of the two-day FDA Anesthetic/Life Support Drugs & Drug Safety/Risk Mgmt Advisory Committees meeting: Cephalon's (NASDAQ:CEPH) sNDA for Fentora.
• Molson Coors (NYSE:TAP) to report Q1 earnings; conference call at 12:00pm.
• Walt Disney Company (NYSE:DIS) to report Q2 earnings; conference call at 4:30pm.

Wednesday, May 7

• Marsh & McLennan (NYSE:MMC) to report Q1 earnings; conference call at 8:30am.
• Transocean (NYSE:RIG) to report Q1 earnings; conference call at 10:00am.
• Hot Topic (NASDAQ:HOTT) and Zumiez (NASDAQ:ZUMZ) to report April sales at 4:00pm.

Thursday, May 8

• Wal-Mart (NYSE:WMT) to report April sales at 8:00am. Abercrombie & Fitch (NYSE:ANF) to report sales at 8:15am. Target (NYSE:TGT) to report sales at 8:30am.
  
• NVidia (NADAQ:NVDA) to report Q1 earnings; conference call at 5:00pm.

Friday, May 9

• PDUFA date for Adolor Corp (NYSE:ADLR) and GlaxoSmithKline's (NYSE:GSK) Entereg for management of Post-operative Ileus.
• American International Group (NYSE:AIG) to report Q1 earnings; conference call at 8:30am.
• Sotheby's (NYSE:BID) to report Q1 earnings; conference call at 9:00am.

Corn Products International (NYSE: CPO) manufactures and markets food ingredients and industrial products derived from corn and other starch-based materials. Major offerings include sweeteners, corn oil, salad dressings, shortening, vitamins, corn gluten feed, food-grade starches and industrial starches. The firm operates manufacturing plants in the Americas, Africa and Asia, serving customers in the food, beverage, pharmaceutical, paper, textile, and brewing industries. Archer Daniels Midland (NYSE: ADM) is a major competitor.

Investors were pleased last week, when the company reported fiscal Q1 EPS of 85 cents and revenues of $930.9 million. Analysts had been looking for 71 cents and $867.9 million. Net sales set a record, for the ninth consecutive quarter. The firm also guided FY08 EPS to $2.90-$3.10 ($2.87 consensus) and FY08 revenues to $4.0 billion ($3.78 billion consensus).

Abercrombie & Fitch Co. (NYSE: ANF) shares are trading higher today along with many other retailers on news that the first US economic-stimulus rebate checks will be sent out by the government on Monday. The Bush Administration says that they expect the rebate will spark consumer spending. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ANF.

After hitting a one-year high of $85.77 in October, the stock hit a one-year low of $66.05 in January. ANF opened this morning at $75.02. So far today the stock has hit a low of $73.96 and a high of $76.32. As of 12:10, ANF is trading at $74.75, up 24 cents(0.3%). The chart for ANF looks bearish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $65 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just three weeks as long as ANF is above $65 at May expiration. Abercrombie would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.

ANF hasn't been below $66 at all in the past year and has shown support around $70 recently. This trade could be risky if the company's earnings (due out on 5/16) disappoint, but even if that happens, this position could be protected by the support the stock might find around $70, where it has bottomed out four times in the past six months.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in ANF.

MOST NOTEWORTHY: Abercrombie & Fitch, ENGlobal Corp and Wausau Paper were today's noteworthy initiations:

• Morgan Keegan initiated Abercrombie & Fitch (NYSE:ANF) with a Market Perform citing lack of comp momentum and the outlook for consumer spending.
  
• Jesup & Lamont expects ENGlobal's (NASDAQ:ENG) earnings momentum to remain in place due to sustained demand for energy products. Shares were initiated with a Buy rating and $13.25 target.
  
• Soleil expects Wausau Paper (NASDAQ:WPP) shares to be driven by its value-added market focus, product innovation and improved mix. Shares were assumed with a Buy rating.

OTHER INITIATIONS:

• Citigroup assumed coverage of XM Satellite Radio (NASDAQ:XMSR) with a Hold rating from Buy, and a $12.25 target from $17. The firm also assumed Sirius Satellite (NASDAQ:SIRI) with a Buy rating and $8 target from $4.25.
  
• Morgan Stanley initiated MarkWest Energy (NYSE:MWE) with an Overweight rating.
  
• Soleil initiated Potash (NYSE:POT) with a Hold rating.

The euro climbed to a record-high $1.6020 versus the dollar Tuesday, after the European Central Bank signaled that they'll increase interest rates -- despite slowing growth -- if inflation accelerates, Bloomberg News reported.

The euro rose about 1.5 cents to $1.6020 versus the dollar before paring some gains to trade around $1.5985 in Tuesday afternoon trading. The Euro also rose about four-tenths of a pence against the British pound to 80.20 pence.

Dollar falls, again

Meanwhile, the dollar retreated across the board, falling about 1.5 cents to $1.9950 versus the British pound and about one-half yen to 102.95 versus Japan's yen. Independent currency trader Andrew Resnick told BloggingStocks Tuesday that traders responded to the ECB's announcement by doing what you'd expect: they bought the euro.

"The only thing holding back the euro was the possibility the ECB would cut rates. The fundamentals have been in the euro's favor for several years. The market had priced-in a possible rate cut by the ECB, but when ECB comments came in today the market quickly bid up the euro," Resnick said. He added that he is presently long with the euro against the dollar.

Abercrombie & Fitch Co. (NYSE: ANF) shares opened lower this morning after the retailer posted a 10% drop in March same-store sales. Analysts had been expecting a drop of 4.5%. However, the stock is trading higher now as positive results from other retail outlets like Aeropostale (NYSE: ARO) have encouraged the markets. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ANF.

After hitting a one-year high of $85.77 in October, the stock hit a one-year low of $66.05 in January. ANF opened this morning at $72.65. So far today the stock has hit a low of $72.36 and a high of $75.89. As of 12:50, ANF is trading at $74.81, up 0.79 (1.1%). The chart for ANF looks bearish and steady, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $65 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in just five weeks as long as ANF is above $65 at May expiration. Abercrombie would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.

Monday, April 7

• PDUFA date for Bristol-Myers Squibb Co. (NYSE: BMY)'s supplemental Biologics License Application for Orencia for the treatment of Juvenile Rheumatoid Arthritis.
• Alcoa Inc. (NYSE: AA) to report Q1 earnings; conference call at 5pm.

Tuesday, April 8

• Chattem Inc. (NASDAQ: CHTT) to report Q1 earnings; conference call at 9:00am.
• FOMC to release minutes of the March 18th meeting at 2:00pm.
• Embraer-Empr Bras Aeronautica (ADR) (NYSE: ERJ) conference call to announce new midsize & midlight executive jet concepts at 6:00pm.

Investors will want to take at least a quick read through Patricia Aburdene's recently revised book Megatrends 2010: The Rise of Conscious Capitalism. Aburdene has isolated seven trends she sees will drive business and investor behavior for the near future.

1) Power of Spirituality in individual lives. People do not want their work and their personal morality to be in opposition to one another.

2) Strengthening of Conscious Capitalism that is responsible to both shareholders AND stakeholders.

3) Leading from the Middle in which middle managers acquire more voice and moral authority over business decisions.

4) Spirituality in Business leading to a wider acceptance of faith at work.

5) Values Driven Consumers who shop with their values as well as their dollars.

J. Crew Group (NYSE: JCG) is a multi-channel retailer of women's and men's apparel, shoes and accessories. Known for its preppy fashions, the firm targets young professionals through 203 retail stores, a catalog business, a Web site and 63 factory outlet stores. Asian contractors produce about eighty percent of the company's merchandise. Competitors include Gap (NYSE: GPS) and Abercrombie and Fitch (NYSE: ANF).

The company pleased investors last month, when it reported Q4 EPS of 41 cents (ex-items). That topped the average Street estimate by two cents. Revenues rose 53.5% (yr/yr) to $399.9 million ($400.9M consensus). Gross margins improved 50 basis points to 41.3% and operating margins increased 60 basis points to 10.8%. Management guided FY09 EPS to $1.85-$1.87, versus consensus of $1.83.

Guess? Inc. (NYSE: GES) designs, markets, distributes and licenses a trendy, upscale collection of contemporary apparel, accessories and related consumer products. The company operates 373 retail stores in the United States and Canada and also distributes its products through department and specialty stores around the world. Competitors include Gap Inc. (NYSE: GPS) and Abercrombie & Fitch (NYSE: ANF).

Guess? surprised investors last week, when it reported Q4 EPS of 59 cents and revenues of $514.6 million. Both totals were company records. Analysts had been looking for 57 cents and $470 million. Management also issued Q1 and FY09 estimates that were essentially in-line with Street views and the Board approved a $200 million share repurchase program. Wedbush Morgan subsequently reiterated its "buy" recommendation on the stock.

The Columbus Children's Hospital in Ohio is under fire after accepting a $10 million donation from Abercrombie & Fitch (NYSE: ANF) -- and agreeing to christen a new building The Abercrombie & Fitch Emergency Department and Trauma Center.

Not surprisingly, the Campaign for a Commercial-Free Childhood is up in arms. In a press release, the group urged the hospital to "rescind the naming rights because of Abercrombie's long history of using highly sexualized images to market its brand to teens and preteens and selling clothing that objectifies and demeans young people."

They certainly have a point. Given how sexually charged Abercrombie's advertising is, an Abercrombie children's hospital certainly is an interesting juxtaposition.

But the truth is that Abercrombie doesn't really harm children. This isn't like a hospital building the Philip Morris Cancer Ward. And if this is a deal with the devil, it's a deal that will provide $10 million for helping children.

It would be a lot worse if the hospital turned down money to help children as a matter of principal. Abercrombie isn't that evil.