Analysis-deep sound warning for US retail profits discounts

NEW YORK, Dec 6 Reuters) — consumer discounts this holiday season have carousing, but it means thinner profit margins for retailers Wal-Mart Stores Inc., Neiman Marcus and car manufacturer, a red flag for investors who have ridden a sector rally all year round.

This week clothing retailers including Aeropostale Inc ' in the fourth quarter, guess Inc lowered profit forecasts and on Thursday, several big retailers, posted disappointing sales in the United States for November.

"We have an economy which is growing very fast. Prices in most cases come down, "said Jim McNerney, head of the Business Roundtable and Chief Executive of aircraft manufacturer Boeing Co, sharing the Roundtable survey opening on Wednesday.

"Every Member of the Business Roundtable, which represents half the US economy price pressure is confronted," he added.

Discounting is likely to continue as retailers seek to hold onto market share. Shares of retailers, big winners this year begin that look expensive, and some investors position themselves to a decline in profit.

"It is in a sense that the economy is recovering, there is an increase in sales, is still price pressure on retailers, especially the traditional, troubling," said Rick Meckler, President of LibertyView capital management in Jersey City, New Jersey.

Most large retail sectors their margins on earnings before interest and taxes, or EBIT have seen to decline from last year in the last quarter, according to Thomson Reuters StarMine. A group of 11 multiline retailers, including target and Macy's, have seen that this margin drop to 5.2 percent from 6 percent, while the auto companies by 3.6 per cent to 1.5 per cent have fallen.

A remarkable divergence is in stores, includes a series of luxury, clothing name and home improvement companies. Their margin is increased to 9.8 percent from 9.2 percent, partly because of Home Depot, Signet jewelry and O'Reilly automotive.

INVENTORY BUILDING

Great seller of apparel and gift ideas expected to face cost pressure in the entire last quarter. The newest report on the third quarter gross domestic product showed a surprising increase in inventories – specifying a few too optimistic sales lower expectations that through rates are set.

L Brands Inc, that parent of Victoria's secret, reported on Thursday that same store sales fell 5.5 percent, while analysts expected a decline of 1.1 percent. Profit margins had taken a hit due to reinforced offers but would not say how much to say. The company also noted that in the Victoria's secret online store down unsold clothes mark it.

Joel bines, managing director at consulting firm AlixPartners, said that the disorder at some retailers allow clothing suspect that many shops more were easy to sell, ordered, as she can and even luxury boutiques, which usually avoid, holiday discounting, in have gotten over the action for the first time since 2008.

"It will hurt all the edges. It is a "Beggar-thy-neighbour" battle for market share,' "he said."

On Wednesday more than 24 percent express shares fell in afternoon trading, so that the fashion retailer of the top losers on the New York Stock Exchange after it a weaker than expected holiday quarter surrounded by intensive promotions forecast.

Thomson Reuters data for consumer discretionary stocks show estimates of earnings growth for the fourth quarter rose 4.4 percentage points to 9.8 percent since Oct. 1 have fallen. The total saw S & P, its estimates fall 3.1 percentage points to 7.8 percent, but some keep the consumer has way.

"Estimates in this sector, aggressive", Adam Parker, U.S. equity Chief Strategist at Morgan Stanley, said has an "underweight" rating on discretionary within the sector.

The S & P discretionary in the sector of consumer group of stocks has 35.8 percent won this year, which ranks it among the 10 S & P sectors place, asked for only health care shares. But in the last five days discretionary sector 1.1 percent compared with a 0.6 percent decline in the overall S & P 500 has lost.

HEAVY DISCOUNTING

David Strasser at Janney capital markets said he expect stores to deep discounts through the rest of the holiday season offer middle and lower income buyers hesitate, are free to spend.

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Car profits, more than half from China rise

Want global automakers, in the middle of one of its best years ever, is the rest of this decade rake in even greater profits, according to a new report. The challenge arises where revenues returned before the recession stand production in North America are specially designed for the big three (GM, Ford, Chrysler),.

"North America and China are the largest profit pool," said Hans-Werner Kaas from McKinsey & co. "China, in particular the premium market see the greatest growth."

McKinsey notes until 2020 more than half of the Chinese global car will grow profits by 50 per cent. The report projects emerging as the area where auto manufacturer primed to increase yields.

With U.S. auto sales surging this summer, grows, to build pressure on the automaker to add capacity, more cars and trucks. At the end of the year, half will be will be sold in the United States that operated North American by the big 3 models, which run three layers according to IHS automotive.

So when will the big 3 and add other car manufacturers, more assembly lines and plants?

"I'm sure that these discussions are already underway," said Kaas. "But the domestic automakers will expand carefully over the capacity."

Auto executives in Detroit and elsewhere in the near future have to make a decision, he added. It takes 18 to 24 months to bring a plant online. If sales at their current grow, North American car production are as far as possible extended period of a few years.

"Domestic automakers will hit the limits of capacity in North America by 2015, so is it no doubt executives have to start talking about the expansion of," Kaas said.

Volkswagen is building Audi models for the United States will provide a final assembly plant in Mexico.

China and emerging markets

McKinsey projects that emerging markets generated a larger share of the global auto sales in the next seven years. Such markets, including China, Russia and India, are responsible for half of all cars and trucks that are sold each year. The consulting firm expects that this share will rise to 60 percent by 2020.

The growth, particularly in China, that's why Kaas says that car manufacturers must still move more production to this country and emerging markets.

"Urbanization and industrialization drive growth in China and that will continue for many years," he said

General Motors, Ford, and Volkswagen all races to new plants, and run in China are General.

On Friday, standard and Poors raised Ford Credit rating to investment grade and picked up General Motors Outlook positive because of the success, which have both companies in China partly.

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Profits slip, but Toyota offers brighter outlook

Surrounded by reporters, the Japanese car manufacturer answers Toyota (C) Managing Director Takahiko Ichiji to questions during a press conference in Tokyo on 7 February 2012.

By Paul Eisenstein, the Detroit Bureau

Toyota's profits slipped another 13.5 percent should reflect ongoing production problems in the last quarter of the manufacturer and the effects of the lopsided exchange rates - but the Japanese giant also pointed out that it has begun a long-awaited recovery, turning profits upward, during the last three months of the fiscal year Japanese started see.

Toyota profits slipped to 80.9 billion, or $1.05 billion for the October-December quarter, down from $93,6 billion yen the year before.  Sales in the quarter rose 4.1 per cent, 4.865 trillion yen or allusions to the manufacturer's slow return to normal production after the hammering it due to the 11 March Japan took $ 63.4 billion earthquake and tsunami and subsequent floods in Thailand.

Toyota Managing Director Takashi Ijichi specified during a Conference that continued during the current quarter back to normal again. Helps in the meantime "company-wide profit improvement efforts" cost trimming of approximately 60 billion yen in the fourth quarter.  As a result, Toyota raised its financial guidance for the full year to 200 billion yen, or $2.6 billion, up from 180 billion yen, or $2.3 billion, in an earlier forecast.

"We are confident that the basis of our business is now stronger," he said.

However, that is still less than half of the profit 408 billion yen in the previous year reported Toyota completed the only a few weeks after the last week Japanese natural disaster.

Toyota refused to a forecast for sales and earnings for the coming financial year but company representatives have recently showed optimistic that global production system of the manufacturer is now back to normal.

A modest rise in the number of vehicles which is expected now to sell Toyota for the whole financial year should reach the 7.410 million, up from a previous forecast of 7.380 million reflects that.  But thats also down heavily on the year of earlier levels.

For the calendar year 2011, Toyota slipped worldwide sales at only 7.9 million, a decrease of 6 percent.  As a result, it lost the global sales Crown, overthrow, fourth behind resurgent General Motors - which saw demand rise on 9,03 million vehicles Volkswagen, Renault-Nissan alliance.

For the first three quarters of fiscal year Toyota reports strong sales in most of its major markets, including Japan from 131,000 units to 1,357 million and North America after below 280,000 to 1,268 million. A notable exception is Europe, where the 4,000 vehicles sales rose to 580.000.

The manufacturer hopes to capture need to catch up with Toyota loyalists that might be made to wait rather than during last year to a different brand of product deficiency now switch to an aggressive catch-up mode.

This very week, announced Toyota ramp-up of production of compact Corolla - the company's all-time successful model - at a new plant in Mississippi.  Add a second layer will increase to 150,000 a year.

But industry analysts warn that Toyota should assume automatically that it can easily regain their previous dynamics.  "I buy back isn't the idea that they come, yell," Aaron Bragman, analyst at IHS automotive shows automotive map.  "they go to to have a fight on their hands."

The corolla is a good example, depending on the Bragman and other analysts.  It is now one of the oldest products in the segment, and with a view to increasing competition from newer models like the Chevrolet Cruze, Ford focus, Hyundai Elantra - the latter have won the coveted North American car of the year brought in last month.

Toyota has, ever, seen an increase in the demand for the new model of the Camry, which it introduced in autumn last year.

The increase in complications of the questions is the value of the yen.  In the last quarter, it traded 77 to the dollar, compared to 83 Yen in the year before.  Few expect Exchange rates in favour of Japan any time soon relocate.  Forces, which both sharp cost reductions and a reconsideration the Toyota manufacturing strategy - the traditional stressed has production in the domestic market.

The increase in output in the corolla work stressed that Toyota is reluctantly from this strategy shift.  Even before the manufacturer recently announced production relocated sold several export models in the United States, including the version of the Sienna minivan in South Korea.

Toyota has its latest result only a few days after rival Honda announced.  Manufacturers have its consolidated operating income for the fiscal third drop 64% to 44.2 billion yen or $578 million - in the worldwide sales of cars fell in the quarter of 830,000.  Honda offered guidelines for the for the full year of the operational forecast a decline in average price % to 200 billion yen, or $2.6 billion.

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Ford exec Preps Wall Street for lower profits

DETROIT - A top executive Ford Motor Co. said Wednesday that the company's second quarter pre-tax profit in the first quarter due to the increasing raw material and factory production costs could fall down.

Vice President and controller Robert Shanks also said that Ford is expected to be less than pre-tax profit in the second half of the year compared with the same period last year. He said, is the direction in line with what the company said if it published in the first quarter results in April.

"We expected at this time, which would potentially the best of the year be the result in the first quarter," Shanks said an analysts Conference in Chicago. "In the second quarter could be actually very close to the first quarter, perhaps a little lower."

Is in the first quarter fall slightly down and not bad. Ford reported pre-tax income of $2.8 billion, or 62 cents per share. The net profit of us $ 2.6 billion after tax was its best quarterly performance in 13 years.

Shanks statements were clearly preparing Wall Street for the protection of the Ford stock price by earnings. Analysts at FactSet interviewed on Wednesday were forecast, that Ford would make 64 cents per share before taxes in the second quarter.

In the fourth quarter of last year, Ford fell analysts expectations. It reported an 80 percent in profits, missing forecasts and two years of better than expected results. In January announced the result on the day, the Ford, lost more than 13% share and still need to restore. Ford said that it better should have informed $1 billion in North America analysts of potential problems in the quarter, including a loss in Europe and a cost increase.

So on Wednesday, Shanks said structural costs by $2 billion this year due to future investment, increased factory capacity requirements for the sales and the costs for the strengthening of the company brand image would increase. He said also, raw material costs will increase by $2 billion.

He told the analysts that will increase revenue due to higher sales and because Ford expected to keep prices.

The predictions, he said, are also in line with the normal seasonal fluctuations in the car business. The second half of the year is usually a little weaker than the first.

He also said that the company expected to pay dividends to common shares by 2015, as it pays debt is next and their debt ratings, investment-grade.

General Motors co. and Ford tried last week, investors calm, that revenues and profits despite worry about the US economy and slowing auto sales will continue. Automakers with a series of bad news this spring on 11 March earthquake in Japan taken, the traders short on cars to rising gas prices and unemployment. Car sales fell in may US, their first monthly decline this year.

The message failed. GM stocks have sold for $33 per share in a first public stock sale in November last year more than 12 percent of its value lost since. Ford's share price, declined almost 15 percent since the beginning of May.

Shares fell Wednesday to close 28 cents or 2.1 per cent to $13.15 Ford.

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