For Immediate Release
Chicago, IL – November 27, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: J. Crew Group Inc. (JCG), JPMorgan Chase (JPM), Fifth Third Bancorp (FITB), U.S. Bancorp (USB) and Zions Bancorp (ZION).
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Here are highlights from Wednesday’s Analyst Blog:
J. Crew Beats Zacks Estimates
J. Crew Group Inc. (JCG), a multi-channel retailer of women's, men's and children's apparel, shoes and accessories across the U.S., has reported better-than-expected fiscal 2009 third quarter results with a net income of $43.9 million or 67 cents per share, compared to a net income of $19.0 million or 30 cents per share in the year-earlier quarter. The earnings also exceeded the Zacks Consensus Estimate by 9 cents.
The strong third quarter performance was primarily driven by a healthy sales growth across its segments. J. Crew Group is one of the few U.S. apparel retailers that witnessed robust sales growth during the quarter despite an overall weak economy. Total revenues increased 14.0% to $414.1 million from $363.1 million in the year-ago quarter, while same-store sales increased 8% year-over-year.
J. Crew Group attributes its strong sales to unique and differentiated merchandise, coupled with its tailor-made customer service. The merchandise margins of the company hit a historical high during the quarter, buoyed by stringent inventory management policies and a relatively positive outlook ahead of the upcoming holiday season. At quarter-end, inventories were $223.9 million compared to $250.1 million in the previous year. Inventory per square foot decreased 17% year-over-year.
FDIC Fund in the Negative
In its quarterly report on the banks, issued on Tuesday, the Federal Deposit Insurance Corporation (FDIC) said that the deposit insurance fund used to protect customer accounts dropped by $18.6 billion during the third quarter of 2009 to a deficit of $8.2 billion, while banks earned only $2.8 billion as loan defaults continued to hurt bank balance sheets. The agency said that the decline in the insurance fund was due primarily to an additional $21.7 billion set aside by the FDIC during the quarter for additional bank failures.
While the state of the economy is showing signs of recovery, there are lingering concerns related to the banking industry. As the industry has to tolerate bad loans that were made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more bank failures.
In the third quarter of 2009, the number of banks on the FDIC's list of problem institutions grew to 552 from 416 in the second quarter. This is the highest since 1993. Increasing loan losses on commercial real estate are expected to cause hundreds more bank failures in the next few years. The FDIC anticipates bank failures to cost about $100 billion over the next four years.
In order to replenish the depleting fund, the FDIC board recently mandated the U.S. banks to pay fees for three years in advance. Also, the regulators are considering requesting the healthy banks to bail out the government as soon as it is necessary to replenish the deposit insurance fund. The FDIC also has access to the Treasury Department credit line of up to $500 billion.
The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets. When a bank fails, it reimburses customers for deposits of up to $250,000 per account. The outbreak of bank failures has significantly stretched the regulator’s deposit insurance fund.
Most of the taxpayer-provided money was provided to financial institutions through the Troubled Asset Relief Program (TARP) as these are the backbone of the economy, and they were the primary victims of the recession. However, we continue to see more bank failures, with the tally reaching 124 so far this year. During the third quarter alone, 50 institutions failed, bringing the total number of failures in the first nine months of 2009 to 95.
The failure of Washington Mutual last year was the largest in U.S. banking history. It was acquired by JPMorgan Chase (JPM). The other major acquirers of failed institutions since 2008 include Fifth Third Bancorp (FITB), U.S. Bancorp (USB), Zions Bancorp (ZION), among others.
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