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TSX to head lower amid major acquisition activity, Lululemon earnings warning

A taxi across Bay Street in Toronto's financial district in Toronto in a 2012 file photo. THE CANADIAN PRESS/Nathan Denette
January 13, 2014 - 5:18 AM

TORONTO - The Toronto stock market headed for a lower open Monday amid major acquisition activity and a revenue and profit warning from athletic wear retailer Lululemon Athletica.

The Canadian dollar declined further in the wake of Friday's disappointing employment data, down 0.13 of a cent to 91.6 cents US after the economy shed 46,000 jobs last month.

U.S. futures were lower as investors continued to digest Friday's American government employment showing that only 74,000 jobs were created during December. That missed estimates for at least 200,000 jobs and raised speculation about how quickly the Federal Reserve may move to end its key stimulus program, its massive monthly bond purchases.

The Dow Jones industrial futures slipped 11 points to 16,370 the Nasdaq futures were down 12.5 points to 3,549 and the S&P 500 futures were off four points to 1,833.7.

Shares of Lululemon Athletica (Nasdaq:LULU) plunged 15 per cent in pre-market trading after the Vancouver-based company said fourth-quarter revenue and profit will be significantly lower than its previous estimate.

Lululemon’s new revenue range is between US$513 million and US$518 million, about $22 million lower than the previous guidance, saying sales were on track through December but have have been significantly below target this month.

The company’s new estimate for diluted earnings per share is between 71 and 73 cents per share, a reduction of seven cents.

Goldcorp Inc. (TSX:G) is making a $2.6-billion takeover play for Montreal-based Osisko Mining Corp. (TSX:OSK). Goldcorp is offering a combination of stock and cash that values Osisko at C$5.95 per share, about 15 per cent above the stock’s value at the end of last week.<

Osisko hasn’t commented publicly on whether its board supports the takeover offer, which is being made directly to Osisko shareholders.

Goldcorp. is one of the Canada’s largest gold producers and says the acquisition of Osisko would provide it with a major mine in Quebec and other assets with growth potential.

And in the U.S., Beam, the maker of Jim Beam and Marker’s Mark alcohol brands, has agreed to be acquired by Japan’s Suntory Holdings Ltd. for approximately $13.62 billion. Suntory will pay $83.50 per share, a 25 per cent premium to Beam’s Friday closing price of $66.97. The companies put the deal’s value at about $16 billion, including debt.

Suntory has a portfolio of spirits, with whiskies including Yamazaki and Hakushu as well as Midori liqueur and other beverages.

Meanwhile, the fourth quarter earnings reporting season starts to heat up this week with reports from major financial institutions including JPMorgan Chase, Wells Fargo and Bank of America along with market bellwethers including General Electric and chip giant Intel.

This earnings season follows a strong 2013 where the S&P 500 rocketed about 30 per cent, helped in large measure by Fed stimulus. Now investors want to see if strong earnings and revenue can cement that gain.

Commodity prices were lower across the board Monday morning with February crude on the New York Mercantile Exchange down 52 cents to US$92.20 a barrel.

March copper dipped two cents to US$3.32 a pound while February bullion edged 20 cents lower to US$1,246.70 an ounce.

European bourses were positive as London's FTSE 100 index gained 0.1 per cent, while Frankfurt's DAX and the Paris CAC 40 added 0.13 per cent.

Earlier in Asia, Hong Kong’s Hang Seng index added 0.2 per cent, Seoul’s Kospi rose 0.5 per cent, China’s benchmark Shanghai Composite Index shed 0.2 per cent while Tokyo was closed for a holiday.

Thailand’s SET index gained 1.1 per cent despite street protests by anti-government activists aimed at shutting down swathes of Bangkok and forcing the Thai prime minister from office.

News from © The Canadian Press, 2014
The Canadian Press

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