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Stocks to Watch: Ann Taylor Climbs, Electronics Sellers Drop

The Day's Winners

  • Abercrombie & Fitch (ANF) added about 3% to $21.24 after the company said it would beat second-quarter estimates on better-than-expected sales. The retailer said its total net sales in July were up 18% to $126.2 million, while same-store sales fell about 3%. Abercrombie said results were boosted by inventory and cost control measures.

  • Women's apparel retailer Ann Taylor (ANN) added 4.4% to $25.20 after raising its second- and third-quarter guidance on higher July sales. The company now expects to earn 38 cents in the second quarter and 50 cents to 51 cents in the third quarter, compared with consensus estimates of 29 cents and 46 cents, respectively. Ann Taylor reported an 18.5% increase in July sales, with comparable-store sales up 7.4% for the month.

  • ESS Technology (ESST) added 3.3% to $11.04 after increasing its stock buyback program and saying it was comfortable with analysts' estimates for the third quarter. The company's board of directors has authorized the repurchase of up to 5 million shares, and it has already procured about 2.4 million shares. In addition, ESS said it expects to earn about 35 cents to 38 cents a share in the third quarter on revenue of $86 million to $90 million, in line with estimates of 37 cents.

  • Shares of Monsanto (MON) were climbing 3.5% to $16.50 on news that the technology-based agricultural company will be added to the S&P 500 Index after the close of trading on Aug. 13. Monsanto, which was recently spun off by Pharmacia (PHA), will replace Palm (PALM) in the index.

  • Biopharmaceutical company Scios (SCIO) tacked on 3.8% to $27.28 on an upgrade to strong buy from Needham. The firm said the stock's valuation should increase if sales of the drug Natrecor continue to rise and the company sees positive results in the clinical trials for its rheumatoid arthritis treatment. Needham raised its price target on the stock to $45 to $47 from $35 to $37.

    The Day's Losers

  • Shares of Best Buy (BBY) plunged 38% to $18.98 after the electronics retailer said it was lowering its second quarter outlook, citing flat same-store sales caused by "declining consumer confidence." The company forecast second-quarter earnings of 17 cents to 21 cents a share, sharply down from its earlier guidance of 30 cents to 32 cents. Analysts had been looking for 32 cents. "Our June results were in line with our expectations, but comparable store sales softened significantly in July, finishing the month essentially flat," the company said in a statement. Best Buy now expects to see "modestly positive" comparable-store sales for the quarter, down from an earlier outlook calling for 4% to 5% growth.

  • Discount warehouse clubs were trading down after BJ's Wholesale Club (BJ) cut its second-quarter forecast on slower sales trends and an "unfavorable mix of sales." The company expects earnings of about 50 cents a share in the quarter, below the consensus estimate of 54 cents. For the third quarter, BJ's also cut its forecast to 42 cents to 44 cents, missing the consensus of 48 cents. Costco (COST) was also trading down about 6.4% to $32.33, despite posting a 5% increase in same store sales for July. Total sales for the month were up 10% to $2.96 billion.

  • Factory 2-U (FTUS) fell 27% to $6.37 on lower sales and a downgrade. The company said sales were down 3.9% for July. The discount retailer also warned that it expects to lose 33 cents to 36 cents a share in the quarter, well below the consensus estimate calling for a loss of 19 cents a share. The stock was downgraded to hold from buy by Wedbush Morgan on the news.

  • Orthodontic Centers of America (OCA) was losing 8.5% to $11.90 on a downgrade from Banc of America. The firm cut its rating on Orthodontic to market perform from buy, saying the company's announcement of a delay in its second-quarter earnings release and an accompanying charge came as a surprise. Banc of America added that the delay just adds to the list of accounting problems the company faces.

  • Ultimate Electronics (ULTE) was falling 38% to $8.17 after slashing its second-quarter outlook on weak sales. The company now expects 5 cents to 7 cents a share for the second quarter, missing the consensus estimate of 13 cents. The stock was downgraded by Piper Jaffray to outperform on the news, and the firm cut its price target on the stock to $15 from $39.

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