Both chains warned of weaker-than-expected earnings in the holiday quarter, sending shares of Abercrombie down nearly 12 percent and Ann down almost 8 percent on Thursday. Abercrombie also gave a forecast for this year’s earnings that was well below analysts’ estimates.

The lackluster forecasts coincided with a mixed bag of sales results from retailers in January, which showed a widening gap between those that are doing well and those that did not have the merchandise or deals that customers wanted during the holidays.

At Abercrombie, “the weather mismatch is problematic, but to us it looked like there was a lot of inventory that just did not move over the holiday season,” Morningstar analyst Jaime Katz said.

The third-warmest January in 50 years was particularly cruel to department stores and apparel retailers, especially the ones that did not roll out spring items early to catch customers looking for warmer-weather fashions.

“Need-based purchases of cold weather apparel or snow removal items were difficult to find in January,” said Scott Bernhardt, chief operating officer of Planalytics, which provides weather data for businesses.

Nonseasonal products accounted for most January purchases and gift card redemptions, he added.

Discounts at many apparel chains climbed to as much as 70 percent in January from the 40 percent level in late December as the retailers tried to clear their shelves off winter goods, Nomura analyst Paul Lejuez said earlier this week.

In particular, Abercrombie and Gap Inc’s (GPS.N) Old Navy chain struggled to clear their shelves of outerwear, Lejuez noted.

Discounters such as Target Corp (TGT.N) and Costco Wholesale Corp (COST.O) as well as high-end stores Saks Inc (SKS.N) and Nordstrom Inc (JWN.N) beat expectations for January sales at stores open at least a year, while chains which cater more to middle-income shoppers and which sell more clothing were hurt the most.

Teen clothier Wet Seal Inc (WTSLA.O) and department store chain Bon-Ton Stores Inc (BONT.O) both came in below analysts’ targets. Gap also reported a 4 percent fall in same-store sales, but the decline was not as steep as analysts had feared.

Overall, U.S. retailers reported a 4.2 percent rise in January same-store sales. Analysts had been a 2 percent rise, according to Thomson Reuters data, but they had been lowering their estimates coming into the month.

The Standard & Poor’s Retail Index .RLX was up less than 0.1 percent at midday, in sync with the broader Standard & Poor’s 500 Index .SPX.

NOT A GAME CHANGER

As to the January winners, Costco’s better-than-expected 8 percent rise in same-store sales was helped by strong sales of food, small appliances and men’s apparel. The warehouse club’s comparable gasoline sales rose 15 percent, as members came to its pumps more often as prices rose.

Limited Brands Inc’s (LTD.N) same-store sales rose 9 percent in January, while analysts expected a 2.7 percent rise. Driving the company’s performance was Victoria’s Secret, a brand that has resonated well with shoppers regardless of the vagaries of the economy or weather.

“Those are each sort of unique scenarios,” said Ken Perkins, president of research firm Retail Metrics.

The smallest sales month of the year, January is mostly dedicated to clearance of carryover holiday goods, prompting many analysts to downplay the effect it will have on the consumer-driven U.S. economy.

Also, same-store sales reports capture only part of the retail economy. Wal-Mart Stores Inc (WMT.N) and other major retailers such as Best Buy Co Inc (BBY.N) and Amazon.com (AMZN.O) do not report monthly results.

“You don’t want to change your perspective” based on January, said Michael Niemira, chief economist of the International Council of Shopping Centers, which expects February same-store sales to rise 3 percent to 3.5 percent.

(Reporting By Dhanya Skariachan in New York, Jessica Wohl and Nivedita Bhattacharjee in Chicago; Editing by Lisa Von Ahn)

http://online.wsj.com/article/SB10001424052970204573704577187062821038498.html

Facebook Inc. could file papers for an initial public offering as early as next week and is currently looking at a deal that would value the social network between $75 billion to $100 billion, said people familiar with the matter.

The Internet giant is close to pickingMorgan Stanley as the lead underwriter for its IPO, these people said, giving the investment bank one of Wall Street’s most coveted assignments. It would mark a setback for rival Goldman Sachs GroupInc.

Facebook could file documents with the Securities and Exchange Commission as early as this coming Wednesday, said one person familiar with the matter. But that is just one scenario Facebook executives are considering, the person said. Executives are also considering filing a few weeks later, the person said.

At a valuation between $75 billion and $100 billion, Facebook is looking to raise as much as $10 billion, said people familiar with the matter. The final valuation will be determined by a variety of factors, people familiar with the matter cautioned, such as investor demand for social media, the IPO market and the health of the European economy.

A $10 billion Facebook offering would rank fourth among U.S. companies, behind VisaInc., General Motors Co. and AT&T Wireless. At a $100 billion valuation, Facebook would be worth about the same as McDonald’s Corp. and nearly half of Google Inc.

Facebook’s IPO has been hotly anticipated as a defining moment for the latest Web investing boom. The site, which was started by Chief Executive Mark Zuckerberg in 2004 out of his Harvard University dorm room, has reshaped how people share information and interact with others on the Web.

In the process, Facebook has spawned new verbs such as “to friend” and a popular Hollywood movie “The Social Network” that detailed the company’s origins. Overall, Facebook now counts 800 million users, with 500 million users logging into the site daily.

The IPO will test Mr. Zuckerberg’s ability to manage a global company whose financial performance will be scrutinized every three months by investors. Facebook also still faces questions about its commitment to its users’ privacy, an issue that had dogged it since its earliest days.

A Facebook spokesman declined to comment. A Morgan Stanley spokesman also declined to comment.

The race to lead the management of the company’s IPO has been one of the most competitive contests on Wall Street in the past year. For investment banks, leading the offering will likely mean tens of millions of dollars in fees as well as bragging rights.

The IPO is likely to have two or more active managers, people familiar with the matter said. Morgan Stanley is the strong frontrunner for the much-coveted “lead left” position on Facebook’s IPO documents, the people said, but Goldman Sachs is expected to play a significant role in the deal. As a result, Goldman also would likely also snag significant fees.

Still, losing out on the lead position would be seen as a blow to Goldman Sachs, which fought hard for a piece of the deal. Goldman Chief Executive Lloyd Blankfeinactively courted at least one Facebook board member in an attempt to win the deal, said a person familiar with the matter.

The firm was seen as having an edge on the IPO after the investment bank orchestrated a $1.5 billion private offering of Facebook shares in January 2011. However, its odds were seen as declining amid a flub in that process that led the bank to limit the offering to non-U.S. investors.

A spokeswoman for Goldman declined to comment.

Morgan Stanley led more U.S. and world-wide Internet IPOs than any other Wall Street firm in 2011, including the leading the offerings of Groupon Inc., Zynga Inc. and LinkedIn Corp. Goldman Sachs led the league for global IPOs of all kinds last year, according to Dealogic, which tracks securities sales.

Facebook’s IPO would cap a recent wave of Web IPOs, some of which have struggled amid growing investor scrutiny of the new crop of Internet companies. In early 2011, professional social network LinkedIn went public with a bang, more than doubling on its first day of trading. Zillow Inc. and other Web companies followed with strong IPOs.

But in the latter half of 2011, daily deals site Groupon and social games maker Zynga went public at valuations below early expectations and their stock performance has since been choppy.

The largest global technology IPO on record was a $5.9 billion offer in 2000 by Infineon Technologies AG, the former semiconductor unit of Siemens AG, Dealogic said.

The largest global Internet IPO was a $2.8 billion sale by World Online International NV, a European Internet service provider, also in 2000. The largest U.S. Internet IPO, the $1.9 billion sale in 2004 by Google Inc. which valued Google at $23 billion, ranks No. 3 among global Internet IPOs.

The red envelope company said that it is seeking a new marketing chief to replace Leslie Kilgore, who stepped down as chief marketing officer on Friday. Kilgore has been with Netflix for the last 12 years; a period that saw the company transform to a rental giant with nearly 24 million domestic subscribers.

Jessie Becker will serve as interim chief marketing officer while the company conducts an external search for a new CMO.

Kilgore will join the Netflix board as a non-executive director, but the company did not give a reason for her departure and did not say what her future plans would be once she steps down.

“Leslie has been instrumental in our long-term success and our recent return to solid growth,” Reed Hastings, Netflix co-founder and chief executive officer, said in a statement.

Jonathan Friedland, a veteran of Disney’s PR team, has been promoted to chief communications officer. He will report directly to Hastings instead of serving under the marketing chief, according to a Netflix spokesman.

Recent months have not been kind to Netflix, however. The trouble started in July, when Netflix enraged customers by raising the prices on its most popular subscription plan by 60 percent.

The company later apologized, but coupled that mea culpa with an announcement that it would spin-off its DVD-by-mail business into a new company called Qwikster. Facing subscriber revolt, Netflix shelved that plan, but the damage was done. Netflix’s stock fell from a high of $300 in the summer to roughly $100 in after-hours trading on Friday.

Kilgore joined Netflix in 2000 after holding various positions at Amazon.com, Procter & Gamble and Booz Allen and Hamilton.

Becker has most recently been vice president of marketing, in charge of a variety of acquisition channels. She previously held positions at Amazon.com and Oracle Corp. Becker will report to Hastings.

Friedland joined Netflix in February 2011 from The Walt Disney Company, where he was senior vice president of corporate communications. Before that, he spent over 20 years as a foreign correspondent and editor, mainly with The Wall Street Journal, in the U.S., Asia and Latin America and co-founded the Diarios Rumbo chain of Spanish-language newspapers in Texas.

Samsung Group chairman Lee Kun-hee said the country’s largest conglomerate will concentrate on corporate social responsibility in 2012 at its New Year’s greeting at the Shilla Hotel in Seoul on Monday. “We will take full social responsibility as the nation’s representative firm,” he said, adding that the group’s competitiveness not only comes from its people and technologies but also from society’s trust. With this year’s keywords being “social responsibility” for Samsung, the group must gain the public’s trust and be loved to get a talented workforce and differentiated technologies, according to Lee.

“We must make greater investments, hire more people and gear efforts toward expanding exports, joined by supporting our partnering firms to gain their competitiveness that could lead the market,” he said. Lee has been stressing that Samsung will make more active investments and create more new jobs in the midst of an ongoing global economic crisis, which has been exacerbated by the sluggish economies in Europe. He also said that its affiliates must think outside the box and put more emphasis on new projects, new products and new technologies. Emphasizing that the industry will meet changes that were not expected, it is the responsibility and mandated task for Samsung to develop the country’s economy and provide for continuous growth, said Lee.

“We need to make revolutionary changes to the company’s culture to create a more open and flexible working environment,” Lee said. “The group must concentrate only on what is new and continuously challenge itself thinking that failures can be accepted by the company.” On another front, Lee said he will take part in the Consumer Electronics Show in Las Vegas next week, joined by his three children ― Jae-yong, Boo-jin and Seo-hyun. “I plan to listen to participating presidents’ difficulties that Samsung faces in reality,” he said. “Because Samsung’s position has somewhat changed globally, we will try to make decisions on several issues, such as figuring out what future direction to take.”

That’s why budget experts hope the bipartisan congressional debt committee will aim higher. To avoid triggering a series of automatic spending cuts, committee members have less than a month to propose at least $1.2 trillion in deficit reduction over 10 years.

But if that’s all they do, it will barely move the needle on the country’sfiscal predicament.

That’s because under the most likely scenario, reducing deficits by $1.2 trillion won’t stop the accumulated debt from growing faster than the economy.

The going assumption is that Congress will extend a host of expiring policies, such as the Bush tax cuts and the “doc fix” to prevent Medicare doctors’ reimbursements from being slashed next year.

Project Compromise: Time for Congress to do right

Thus, to stabilize the debt, Congress would need to pass a debt-reduction plan worth $4 trillion to $6 trillion, budget experts say.

Cuts on the higher end of that spectrum may be required to compensate for a bad economy, which can increase deficits..

Of course, the odds are long that the super committee will be able to agree on a big package. (Video: Super committee under pressure)

On Wednesday, news leaked that some Democrats on the super committee put forth a $3 trillion package.

Republicans rejected the proposal, however, because it relied heavily on tax increases, congressional sources from both parties told CNN. And liberal advocacy groups issued press releases bashing the plan for its reported cuts to Medicare.

Therein lies the second big problem with a $1.2 trillion package.

Lawmakers will meet resistance no matter how much debt reduction they propose.

Debt committee could raise risk of downgrade

And serious compromise will be required whether the super committee opts for $4 trillion or just $1.2 trillion.

In other words, Republicans will have to yield on their aversion to tax increases and Democrats will have to yield on their opposition to cuts in entitlement spending.

That’s because practically speaking, it’s hard to reach $1.2 trillion in spending cuts without touching Medicare. And politically speaking, it’s hard to touch Medicare without including an increase in tax revenue.

In other words, getting to $1.2 trillion will be just as hard politically as $4 trillion. The only difference is if they only hit $1.2 trillion, they’ll have to do it all over again soon.

“The public would see a package of tough choices and a debt burden that continues to grow,” the nonpartisan Committee for a Responsible Federal Budget noted in a recent report. “In essence it would deliver political pain for not so much gain.”

- CNN’s Kate Bolduan, Deirdre Walsh and Ted Barrett contributed to this report.

U.S. Defecit in billions vs. U.S. Defecit as a percent of the GDP. See my comment below for an interesting observation on both.

The U.S. government posted its third consecutive annual budget deficit in excess of $1 trillion in the fiscal year ended Sept. 30.

The shortfall registered $1.3 trillion in fiscal 2011, up from $1.29 trillion in 2010 and the second-highest on record, according to Treasury Department data issued today in Washington. It reached $1.42 trillion in 2009, the highest ever. The September gap widened to $64.6 billion from $34.6 billion in the same month last year.

“This report confirms that we cannot waste any time in jump-starting economic growth and job creation to lay the foundation for a stronger economy and lower future deficits,” Jacob Lew, director of the White House Office of Management and Budget, said in a statement.

The budget deficit for fiscal 2011 was 8.7 percent of gross domestic product, down from 9 percent in 2010, according to the Treasury data. The gap reached 10 percent of GDP in 2009, the highest since 1945, according to the Congressional Budget Office.

“There is a lot of red ink on the government’s balance sheet and Congress appears clueless on how to make it disappear,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before today’s report.

Automatic Cuts

A special 12-member congressional committee has been ordered to find $1.5 trillion in savings over the next decade under the terms of the debt-ceiling deal reached in August. If Congress fails to act on the group’s recommendations by Dec. 23, the compromise will trigger automatic cuts.

The panel’s closed-door meetings for the past month have focused on spending cuts in areas accounting for 12 percent of the federal budget — the same areas lawmakers discussed in previous unsuccessful talks led by Vice President Joe Biden, according to one Republican and one Democratic aide who weren’t authorized to speak publicly.

Today is the deadline for congressional committee leaders to submit recommendations to help identify the savings. The bipartisan committee is assigned to propose a plan by Nov. 23, and if Congress doesn’t pass it by the December deadline, spending cuts of $1.2 trillion would begin in fiscal 2013.

Ongoing Negotiations

House Democrats made their recommendations yesterday, focusing more on job creation than debt reduction. After a series of standoffs over spending cuts sought by House Republicans that almost shut down the government, Republican leaders of House committees overseeing taxes and entitlements aren’t offering formal proposals on how they would cut the government.

“It is going to be a long and painful process as the economy has slowed to the stall speed, and while you can’t grow your way out of your debts, it obviously helps speed up the timetable,” Rupkey said.

Spending rose 4.2 percent in fiscal 2011 from a year earlier to $3.6 trillion, according to the Treasury. Revenue climbed 6.5 percent to $2.3 trillion.

Before the release of the annual statistics, the OMB and the non-partisan CBO both estimated a fiscal 2011 budget of $1.3 trillion.

“There is no oversupply in the market right now,” he told reporters in Dhahran today.
The country, OPEC’s biggest producer, will keep pumping at current rates even if Libyan output returns to the market this year, as long as customers are in need of the oil, the minister said. The Organization of Petroleum Exporting Countries meets next on Dec. 14 in Vienna to decide whether it needs to alter production targets.

Saudi Arabia supplied 9.39 million barrels of crude oil a day to the market in September, Al-Naimi said. Corresponding figures for June, July and August were 9.8 million, 9.6 million and 9.8 million, he said. “I’m giving you these numbers to show that demand is fluctuating this year,” he said. “Demand is always fluctuating, but our position is we would supply whatever our customers are asking for.”

OPEC’s main crude oil grades rose above $100 a barrel on Oct. 6, after falling below that level earlier in the week for the first time since February.

Basket Below $100

The price advanced to $101.63, from $99.90 on Oct. 5, according to OPEC’s website. The so-called OPEC basket is calculated on the basis of one key export blend from each of the organization’s 12 members, weighted according to production.

OPEC ministers last met in June, when six members including Iran and Venezuela rejected a Saudi proposal to replace lost Libyan crude. Saudi Arabia and some other members had already boosted production after armed conflict in Libya that began in February curbed almost all of that country’s 1.6 million barrels a day of production.

Bloomberg estimates show Libya producing 100,000 barrels a day on average last month, and Saudi Arabia 9.76 million barrels a day. Libya is the only OPEC member not exceeding its official quota, aside from Iraq which has no target.

Link

NEW YORK (CNNMoney) — The U.S. economy is staring down another recession, according to a forecast from the Economic Cycle Research Institute.