Toys R Us Beats Expectations
Despite reports of a dismal holiday season in the retail industry, Toys R Us (TOY) announced yesterday that it beat analysts' earning expectations. While Wall Street analysts had predicted that fourth-quarter earnings for the company would wind up around $1.22 a share, Toys R Us came in with gains of $1.23 a share.
The company posted earnings of $0.98 a share in the fourth quarter last year. This year's performance was attributed to the new alliance between Toys R Us and Amazon.com.
"Given the ongoing highly promotional conditions retailers are facing in the marketplace, we are particularly pleased with our performance in 2000 as it demonstrates our customers' increasing recognition of Toys R Us' ability to meet their needs," Toys R Us CEO John Eyler said.
Toys R Us hopes to maintain its performance by expanding its alliance with Amazon in the near future.
What Recession?
The fear of recession affects us all, particularly those who will soon be in the work force. While the stock market has slowed of late and many predict a recession is eminent, a new analysis by Goldman, Sachs & Co. suggests that the economy may not be in as much trouble as people think.The company has created a new model that can analyze economic data with surprising accuracy. This model suggests that there is a 40 percent chance of recession in the next year, down from the 59 percent predicted for just a few months from now. Economist William C. Dudley believes that the chances are even lower - around 33 percent - due to the response to the current economic situation by the Federal Reserve.
Using this model, the company says it could have predicted every recession since 1960 a year in advance.
Early last year, while the economy was red hot, nearly everyone was willing to jump in on the dot-com craze. From Jan. 31 through March 10, 2000, 77 companies went public, with a combined value of $11.3 billion. When the NASDAQ peaked on March 10 of last year, these companies were valued at $25.9 billion.
However, the dot-coms were not as stable as analysts had hoped, and their worth has since dropped 80 percent, to $5.3 billion. This fall was caused partly by rate hikes implemented by the Fed, which thought that the economy was outrunning itself. The alterations turned out to work too well, slowing the economy to a point where many now fear recession.
In recent months, other statistics have also suggested an economic slowdown. The February index of consumer confidence, compiled by the Fed, fell to 106.8, and its 22-point drop over the past two months is the biggest drop since the 1990-91 recession. The consumer expectations measure has also reached its lowest level since 1993, and is down 42 percent from its peak just a year ago.
However, the Goldman Sachs model shows some promising information. While sales of single-family homes fell 10.9 percent in January, the mark had jumped 14.9 percent in December for a post-Gulf War record of 1.03 million. And even with the January decline, there were still 921,000 home sales - better than the monthly average for all last year.
The Federal Reserve will convene on March 20 to decide the fate of the economy.
