Replies to post #524 on Earning Plays

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Toll Brothers swings to hefty 2Q loss on write-downs
Luxury-home builder Toll Brothers Inc. on Tuesday posted a second-quarter loss that was smaller than Wall Street expected, as a hefty write-down driven by joint ventures was offset by other income.

Shares of Toll Brothers rose 2.8 percent, or 58 cents, to $21.54 in morning trading.

Chief Executive Robert Toll said demand continues to be weak in most markets as buyers stay skittish in the face of continued home price declines.

He said the company will continue to offer incentives to get people to buy homes -- a concession uncharacteristic of Toll Brothers that speaks to the severity of the housing market.

But Deutsche Bank analyst Nishu Sood said the builder should more aggressively discount because "by holding prices the company is just delaying the inevitable as prices are unlikely to revisit boom time levels for a prolonged period."

The company hasn't written off as much as other builders, and as such has a higher share of these charges to come, he wrote in a research note.

For the period ended April 30, Horsham, Pa.-based Toll has reported a loss of $93.7 million, or 59 cents per share, compared with year-ago profit of $36.7 million, or 22 cents per share.

The quarter included a pretax write-down of $288.1 million, which included $85 million from joint ventures with other builders on land development.

Toll also posted $40.2 million in gains from a property condemnation procedure, in which municipalities compensate landowners for taking their parcels to develop parks and other projects.

Without these charges and gain, Toll earned $81.3 million, or 49 cents per share, compared with $109.6 million, or 66 cents, a year ago.

Revenue fell 30 percent to $818.8 million from $1.17 billion last year.

Analysts surveyed by Thomson Financial expected a loss of 89 cents per share including charges on sales of $818.5 million.

Net contracts, an indication of future business, fell by 58 percent to $496.5 million in the quarter from a year ago. Cancellations totaled $234.1 million, down from $274.7 million last year.

The average home price on net contracts fell to $534,000 from $710,000 in 2007's second quarter.

Geographically, sales fell 45 percent in the southern states of Florida, Georgia, the Carolinas and Texas. The mid-Atlantic, covering Pennsylvania, Delaware, Maryland, Virginia and West Virginia, declined by 39 percent. The west, comprising California, Arizona, Colorado and Nevada, was down 28 percent.

Toll's northern region of New Jersey, New York, Connecticut, Rhode Island, Illinois, Massachusetts, Michigan and Minnesota fell 3.3 percent.

Net contracts fell 79 percent in the north, 62 percent in the west, 44 percent in the mid-Atlantic and 31 percent in the south. But the housing meltdown isn't affecting Manhattan, where Toll said homes have temporarily sold out.

The company said its backlog at the end of the second quarter totaled $2.08 billion, down 50 percent year-over-year.
http://www.businessweek.com/ap/financialnews/D912LMQ80.htm

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Guess 1Q profit rises on European, Asian sales
Apparel designer and retailer Guess Inc. said Tuesday its fiscal 2009 first-quarter profit jumped 35 percent, beating Wall Street expectations, on strong growth and better margins in Europe and Asia.

For the quarter ended May 3, the company earned $47.8 million, or 51 cents per share, compared with $35.5 million, or 38 cents per share, during the same period a year earlier. Revenue rose 29 percent to $489.2 million from $377.9 million.

Analysts polled by Thomson Financial expected profit of 46 cents per share on revenue of $453.6 million.

North American sales rose 18 percent to $211.9 million during the quarter. Meanwhile, North American same-store sales during the first quarter rose 7 percent. Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance because it measures growth at existing stores rather than newly opened ones.

At the end of the first quarter, Guess had 391 stores in the U.S. and Canada, compared with 336 a year earlier.

In Europe, sales rose 50 percent to $178.7 million, while sales climbed 27 percent to $75.1 million in Asia. Revenue from licensing rose 16 percent to $23.5 million.

Overall operating margins, meanwhile, rose 31 percent on a mix of favorable currency exchange rates and overall improvements in European margins and a boost in European sales.

"The strength of our brand was evident across all of our businesses, with each of our segments delivering double-digit revenue growth and all contributing to our earnings increase," Chief Executive Paul Marciano said in a statement.

Guess shares rose $2.62, or 6.9 percent, to $40.49 in after-hours trading after falling $1, or 2.6 percent, to close at $37.66 during the regular trading session.