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Best Buy’s profits squeezed by discounts

“It is a very delicate balancing act. It is tough to get it right,” said BB&T Capital Markets analyst Anthony Chukumba.

Excluding items, it earned 47 cents a share, missing the analysts’ average estimate of 51 cents a share, according to Thomson Reuters I/B/E/S.

Total sales rose to about $12.10 billion, missing the analysts’ average estimate of $12.14 billion.

On Tuesday, the company also backed its outlook for the financial year. It continues to see revenue of $51.0 billion to $52.5 billion, reflecting comparable store sales in the range of flat to a 3 percent decline.

Best Buy anticipates earnings per share of $3.35 to $3.65, including share repurchases, but excluding items.

Its shares were down 11.4 percent at $24.87 Tuesday morning on the New York Stock Exchange.

(Reporting by Dhanya Skariachan; Editing by Derek Caney, Maureen Bavdek and Gunna Dickson)

The news pushed Best Buy’s shares down 11 percent on Tuesday and raised the question of whether price was the primary weapon to drive sales, a worrisome longer-term scenario for Best Buy and other brick-and-mortar chains with massive investments in infrastructure and major efforts to increase the service side of the business.

Unlike last year, when it held the line on discounts and promoted only pricey items, Best Buy is now offering deep discounts on items such as flat-screen TVs and free shipping. It also promises to match any lower prices advertised by its brick-and-mortar rivals at the peak of the season.

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For a graphic on Best Buy’s third-quarter results, click http://link.reuters.com/qur55s

The strategic shift helped the industry bellwether to report a 0.3 percent rise in sales at its stores open at least 14 months in the latest third quarter, reversing declines in the past five quarters, but hurt the company’s profits.

Total company gross profit dollars fell 2 percent during the quarter from the year-ago period.

NEW YORK (Reuters) Best Buy Co’s (BBY.N) quarterly profit missed Wall Street estimates as bigger discounts during the key holiday selling season ate into profits at the world’s largest electronics chain.

“Increased promotions hurt gross margin, but we also believe the shift online with free shipping was a significant negative to the gross margin,” analyst David Strasser at Janney Capital Markets said.

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The key selling season - which traditionally begins with “Black Friday,” the biggest sales day of the year for retailers - is closely watched by investors as consumer spending accounts for about 70 percent of the U.S. economy.

“Retail has been very promotional and consumers have been very value-conscious,” Best Buy CEO Brian Dunn said on a conference call as it summed up the season so far.

Net earnings fell to $154 million, or 42 cents a share, in its third quarter that ended November 26, from $217 million, or 54 cents a share, a year earlier.

In its third holiday season after the bankruptcy of archrival Circuit City, Best Buy faces cut-throat competition from online retailer Amazon.com Inc (AMZN.O) and discounters such as Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N).

The results also coincided with a report from the Commerce Department showing that U.S. retail sales rose less than expected in November, tempering some of the expectations of a strong holiday shopping season.

“Lowering pricing is but one step to evolving to a winning formula,” Credit Suisse analyst Gary Balter said. “Given that more aggressive pricing is leading to lower profit dollars, Best Buy also has to be attacking expenses, primarily through right sizing stores and closing some in certain cases.”

For a graphic comparing Best Buy with its peers, click http://r.reuters.com/ten55s

`Frenemies’ take a fashion field trip in NYC

NEW YORK It goes with the teenage territory: Girls gush over their friends and each other’s wardrobes.

But maybe that BFF should wear just a few more casual outfits. Right back at her with, “You should wear more skirts.”

Hmmm, sounds like the “Frenemies” are at it.

A new Disney Channel movie called “Frenemies” debuts Friday night, casting real-life fashion fans and best buds Bella Thorne and Zendaya as style watchers who want to turn their blog Geekly Chic into a magazine.

Of course, their friendship is put to the test when they have to compete for the editor job. In the end, though, they go together like a pair of great shoes, doing their best work as a team.

Both girls star in the Disney Channel TV series “Shake It Up,” where they play outfit-obsessed best friends who get a gig as background dancers on a local TV dance show.

Thorne is 14. Zendaya is 15; her last name is Coleman but she prefers a one-word name like Madonna or Beyonce. Zendaya doesn’t really go anywhere without heels on, and one of Thorne’s favorite outfits ever was a Betsey Johnson party dress with combat boots and funky socks.

Zendaya says she’s learned a lot about shoes from her friend. Thorne is much more into music and dance thanks to Zendaya.

In an hour-long fashion field trip to an H&M store in Manhattan, the girls dreamed up new fashion-forward combos, described their signature looks, and listed must-have items for their purses (phones and headphones for both, but Zendaya also needs her lip gloss).

The girls say they wish they could swap clothes more often, but, alas, while they are cut from the same cloth, they are not the same size. Here are some other tidbits from their visit to H&M.

AP: What’s your style?

Zendaya: I like to be dressed up. I’m pretty neutral, not very funky. I like neutral colors, and black and white. I need to wear more color. .., I could sit in the closet a long time and be very happy and think about what to wear. I have a definite interest. I study ads in fashion magazines, and I’ll cover up the labels and guess if I know the designer. I quiz myself.

Thorne: I don’t do a stylist because I like the unexpected. I will make up a whole outfit, picking the shoes first. … I also really like leather.

AP: How would you describe each other’s style?

Thorne: If I were going to buy something for myself, I’d get the hot pink, and I’d get the black for Zendaya. She’s sophisticated.

Zendaya: Bella likes to mix it up. She’ll wear frilly with studs.

AP: What would you like to see each other wear more of?

Zendaya: I would like to see her more casual, in jeans and some kick-back Converse.

Thorne: She never wears skirts. (To Zendaya:) You should wear more skirts. I’d love to see her in a bubble skirt and a comic T-shirt.

AP: Your biggest obsession?

Thorne: I love to shop shoes. I turned a room into my house into a closet I made it my shoe closet.

Zendaya: I have a closet full of blazers, and I love shoes. I wear the blazers with shorts, and then I’ll try on all of my shoes.

Jabil sees Q2 largely below estimates, shares fall

(Reuters) Contract manufacturer Jabil Circuit Inc (JBL.N) posted quarterly revenue below analysts’ estimates as its large customers battled inventory pile-ups, and sees lower revenue in the second quarter from its high-velocity segment which services digital products.

Shares of the company were down 4 percent at $19.17 in extended trade on Tuesday.

Jabil, which supplies to Cisco Systems (CSCO.O),wholesale Burberry Cheap, Hewlett-Packard (HPQ.N), IBM Corp (IBM.N) and Nokia Corp (NOK1V.HE), sees a 14 percent decline in its high velocity segment (HVS), which brings in more than one-thirds of its revenue.

The company, which competes with Flextronics International Ltd (FLEX.O) and Sanmina-SCI Corp (SANM.O), forecast second-quarter core earnings of 52-62 cents per share on revenue of $4-$4.2 billion.

Analysts on average were expecting earnings of 59 cents per share on revenue of $4.23 billion, according to Thomson Reuters I/B/E/S.

The company, which reduced exposure to its mobility handset and TV set displays businesses in the HVS in the first quarter, said the segment will see some impact from the Thailand floods.

“The Chinese new year, fewer working days in the (second)quarter, and there will be some impact in our high velocity business area related to set top boxes due to the Thailand flooding.” Chief Executive Timothy Main said on a call with analysts.

The HVS provides module design, manufacturing, and repair services for digital home and office products like set-top boxes, printers and keyboards.

Jabil’s first-quarter revenue fell as inventory adjustments by some large customers hurt its enterprise and infrastructure business.

First-quarter net income rose to $112.9 million, or 54 cents per share, from $106.7 million, or 49 cents per share, a year ago.

The company’s core earnings were 65 cents per share.

Revenue for the quarter rose to $4.3 billion from $4.1 billion a year ago.

Analysts, on average, expected first-quarter earnings of 65 cents per share on revenue of $4.41 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Viraj Nair)

JPMorgan sued for $95 million over mortgage securities

(Reuters) JPMorgan Chase & Co has been sued for $95 million by the trustee for securities marketed in 2005 by the former Bear Stearns Cos over alleged misrepresentations regarding the underlying mortgage loans.

US Bank NA wants to force JPMorgan to buy back the mortgage loans because of alleged breaches of representations and warranties regarding the Bear Stearns Asset Backed Securities Trust 2005-4, for which it serves as trustee.

It also accused the largest U.S. bank by assets of refusing to provide the underlying loan files, as the trust documents require, so it can investigate the extent of the alleged breaches.

The unit of US Bancorp said it made its request at the direction of a majority certificate holder in the trust. US Bank also sued Bear Stearns and its former EMC Mortgage Corp unit. JPMorgan bought Bear Stearns in 2008.

JPMorgan spokeswoman Jennifer Zuccarelli declined to comment.

The lawsuit was filed on Friday in the New York State Supreme Court in Manhattan, and publicly docketed on Tuesday.

It is one of many lawsuits seeking to hold banks responsible for investor losses over mortgages that may have been toxic, defective or improperly underwritten.

JPMorgan Chief Executive Jamie Dimon last month told investors that the bank has been sued over $54.9 billion of private-label securitizations, excluding the former Washington Mutual Inc, and expects that number to rise.

“We think the disclosures are clear, risks were plain and set forth,” he said. “Investors, mostly sophisticated,wholesale Ed hardy jeans, they understood and accepted it.”

The case is Bear Stearns Asset Backed Securities Trust 2005-4 v. EMC Mortgage Corp et al, New York State Supreme Court, New York County, No. 650003/2012.

(Reporting by Jonathan Stempel in New York; Additional reporting by David Henry; editing by Gerald E. McCormick)

Box Office Preview ‘M I 4′ continues global climb

LOS ANGELES Paramount’s “Mission: Impossible Ghost Protocol” will maintain its firm grip on the domestic box office with a leading 17 million-plus in Tom Cruise-powered dollars expected for its fourth weekend. By Sunday night, the film should be well on its way toward $400 million worldwide.

The R-rated “The Devil Inside” from Paramount Insurge will be the only wide-release newcomer this weekend and should scare its way to near the top of the chart with a debut in the $12 million to $15 million range. Capitalizing on the success of its “Paranormal Activity” franchise,Cheap Ed hardy belts, Paramount hopes for another hit with this mock-reality horror entry.

Warner Bros.’ “Sherlock Holmes: A Game of Shadows” will also enter its fourth weekend with solid momentum as it closes in on the $250 million mark at the global box office.  A consistent hold on the No. 2 spot in the midweek race should place it in the third position for the weekend with a domestic gross in the low teens.

Fox’s PG-rated “Alvin and the Chipmunks: Chipwrecked” continues to be the “go to” movie for the family audience, crossing the $100 million mark domestically on Wednesday. An expected weekend gross in the $10 million range will put the little critters in the top five once again.

“The Girl With the Dragon Tattoo” from Sony has shown itself to be a steady performer after a modest start over Christmas weekend as it continues to build an audience.  Having earned over $60 million thus far in North America, the R-rated thriller heads into its third weekend with solid word-of-mouth and a likely take of just under $10 million.

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Paul Dergarabedian is president of the Box Office Division of Hollywood.com and provides box office analysis for The Associated Press.

Congress presses rating agencies on MF Global

(Reuters) Congressional investigators have launched an inquiry into the work of credit rating firms that examined MF Global Holdings Ltd’s risky bets on European government bonds and whether they overlooked crucial information in their evaluations.

Congressman Randy Neugebauer, who chairs an investigative panel of the House Financial Services Committee, sent letters to Moody’s Corp Chief Executive Raymond McDaniel and Standard & Poor’s Ratings Services President Douglas Peterson asking for detailed information about their procedures for determining MF Global’s credit-worthiness.

In letters dated December 27, Neugebauer asked each of the rating agencies to respond to his inquiries into the matter by January 15 and to turn over a lengthy list of documents concerning bankrupt futures brokerage MF Global.

The subcommittee is also seeking to hold a hearing in the coming weeks on the role of the ratings firms in the MF Global mess, a source familiar with the matter said on Thursday.

The Wall Street Journal first reported about the congressional inquiry.

MF Global filed for bankruptcy on October 31 after it was forced to reveal that it had made a $6.3 billion bet on European sovereign debt, spooking investors and customers.

Downgrades of MF Global’s debt rating by Moody’s to near-junk status on October 24 helped trigger the panic among investors. Moody’s and Fimalac SA’s Fitch Ratings later both downgraded MF Global to junk on October 27.

McGraw-Hill Cos Inc’s S&P, meanwhile, warned of a possible downgrade on October 26,wholesale Ed hardy jeans, but did not take any rating action until after MF Global filed for bankruptcy.

A few months prior to Moody’s first downgrade of MF Global, the company revealed it had made repurchase-to-maturity trades collateralized with European sovereign debt in the footnote of a filing with the U.S. Securities and Exchange Commission. Those transactions allowed MF Global to move its exposure off its balance sheet, even though it faced enormous risk in the event of a default.

That disclosure caught the eye of the Financial Industry Regulatory Authority, which began looking into the matter and along with the SEC ultimately forced MF Global to put up more capital. MF Global disclosed the capital charge on September 1.

In his letters to S&P and Moody’s, Neugebauer asked the rating agencies when they became aware of the repo-to-maturity transactions and whether or not they had any reason to question whether such trades put MF Global at risk.

Spokesmen for S&P and Moody’s both declined to comment on the letters.

It was not immediately clear on Thursday whether or not congressional investigators would also be asking Fitch questions about MF Global. Spokesmen for Fitch did not respond to requests for comment.

(Reporting by Sarah N. Lynch; additional reporting by Alexandra Alper in Washington and Rachana Khanzode in Bangalore; Editing by Gerald E. McCormick)

Newt Gingrich weeps, Mitt Romney attacks Ron Paul

DES MOINES, Iowa Former House Speaker Newt Gingrich wept Friday as he recalled his late mother’s end-of-life illnesses, a moment of poignancy in a notably negative Republican presidential Iowa caucus campaign with four unpredictable days yet to run.

“I do policy much easier than I do personal,” Gingrich told an audience of women as he tried to regain his composure. The tears flowed as the former speaker was responding to questions about his mother from a pollster and longtime political ally.

Gingrich’s emotional moment came as his rivals engaged in traditional campaign tactics, and as polls suggested large numbers of Iowa Republicans could change their minds before caucuses Tuesday night provide the first test of the 2012 campaign.

Former Massachusetts Gov. Mitt Romney sought to marginalize his closest pursuer in most polls, saying, “I don’t think Ron Paul represents the mainstream of Republican thought with regards to issues, particularly in foreign policy.”

Paul gave no ground. “I really can’t conceive” of intervening militarily to prevent Iran from acquiring nuclear weapons, he said, unequivocally restating his position on an issue on which he differs with Romney and his other rivals.

Former Pennsylvania Sen. Rick Santorum, claiming momentum based on recent polls, told reporters he recently had the best fundraising day of his candidacy. Yet he also drew criticism from Texas Gov. Rick Perry for advocating earmarks during two terms in the Senate.

Minnesota Rep. Michele Bachmann became the latest presidential hopeful to hold a campaign event with Iowa Rep. Steve King and the latest to hear him say he wasn’t ready to give his endorsement.

Whatever the impact of Gingrich’s tears on the race for the White House, the episode seemed destined to be replayed endlessly on televisions,Cheap Ed hardy silk scarves, personal computers and hand-held devices.

That was the case nearly four years ago, when Hillary Rodham Clinton appeared to choke back tears while campaigning in New Hampshire a few days before the state’s Democratic presidential primary. The episode also became the subject of intense political analysis. Clinton won the primary in an upset a few days later.

Gingrich was surging in the polls a little more than a week ago, but was hit by a barrage of negative ads and has been struggling in recent days. Normally a combative politician, he shed tears as he appeared before a group of mothers and responded to a question from Frank Luntz, a Republican pollster and longtime ally of the former speaker.

Asked about his mother and an event in his life that influenced his policies and views, Gingrich recalled her as happy and having friends before she ended up in a long-term care facility suffering from bipolar disease, depression and physical ailments.

“My whole emphasis on brain science comes in directly from dealing with the real problems of real people,” he said, his face distorting as he began to cry. “And so it’s not a theory. It’s, in fact, my mother,” he said. Kathleen “Kit” Gingrich died in 2003. She was 77.

The event drew notice in New Hampshire, where Romney was campaigning a few hours later. As he mentioned his own parents, now deceased, a member of the audience interrupted, “Don’t cry.”

“I won’t cry. But I do, I do. Nothing to be ashamed of in that regard,” Romney said.

Romney, who leads in most polls in Iowa, criticized Paul in an interview with Fox News Channel.

“I don’t think Ron Paul represents the mainstream of Republican thought with regards to issues, particularly in foreign policy,” he said, referring to the Texan’s statement that he would oppose military action to prevent Iran from acquiring nuclear weapons.

At the same time he said Paul was outside the GOP mainstream, Romney pledged to support whoever wins the party’s nomination to oppose President Barack Obama in the fall.

Campaigning later in western Iowa, Paul said he would probably have difficulty voting for any of the other Republicans in the race if they win the party nomination. “They all are part of the status quo,” he said.

After months of campaigning and millions of dollars in television commercials, the polls depicted a race as unsettled and unpredictable as any in the four decades since Iowa’s caucuses became the kickoff event in presidential campaigns.

A pair of surveys in the last five days suggested upwards of a third of all potential caucus-goers had not firmly settled on a candidate of choice.

The same polls made Romney the front-runner, and his decision to leave for a quick trip to New Hampshire and then return to Iowa and stay through caucus night projected optimism.

Paul views on Iran have been called into question this week by numerous other contenders, and Gingrich went so far as to say he would not vote for the Texan.

To some extent, Paul stands alone in the field because of his libertarian-leaning views. He does not want the government to have the power to ban abortions, for example, and has called for the legalization of some drugs that are now outlawed.

That has left Santorum, Gingrich, Perry and Bachmann to vie for standing as Romney’s chief opponent in the competition for evangelical voters and other conservatives.

Even before the caucuses, Romney and the rest of the field were looking ahead to New Hampshire’s primary on Jan. 10 and the first two Southern contests later in the month, in South Carolina and Florida.

But there was maneuvering yet to come in the state that precedes them all.

Allies of Gingrich announced they were airing a 30-minute program in Iowa produced by Newsmax, a conservative media outlet. It features Michael Reagan, son of the former president, who calls the former speaker “a person who we believe will help continue my father’s legacy.”

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Associated Press writers Thomas Beaumont and Kasie Hunt in Des Moines, Brian Bakst in Early and Mike Glover in Ames contributed to this report.

A Standout Stine Goya Caps Copenhagen Fashion Week

Photos: Courtesy of Copenhagen Fashion Week

The most committed designers won’t let the prospect of labor delay their shows. And in the case of Danish designer Stine Goya, that was labor literally—the very pregnant designer was due the same day as her collection was to debut. But Goya’s collection marched on as scheduled (her baby, for what it’s worth, didn’t make an appearance) and secured her spot as the standout of the season.

The designer’s relaxed, feminine forms are widely flattering, but like the seventies Danish designer Margit Brandt, Goya is her own best model. Maybe that’s why all the models in her show were styled with her own signature cat-eye makeup and coif—long, strawberry blond locks with blunt-cut bangs. The collection took hot-air ballooning for its theme, emphasizing voluminous, beaded frocks, printed silk dresses, draped trousers in pretty pastels and sherbet shades. And Goya, a former Chanel model herself, took her runway bow in a peach and white form-fitting dress with a balloon-sized belly.

The rest of Copenhagen fashion week was somewhat less buoyant, since many of the city’s most artistically innovative designers were M.I.A. Vilsbøl de Arce and Spon Diogo were noticeably absent from the schedule, which was heavy on commercial labels such as Munthe plus Simonsen, Malene Birger, and Hugo Boss. But the refreshingly clean minimalist Bruuns Bazaar collection, Henrik Vibskov’s Dadaist presentation on a circular stage set rotated by costumed stagehands, and Anne Sofie Madsen’s magnificent collection of dresses with sculptural frills and prints inspired by Piero Fornasetti maintained Copenhagen’s strong creative integrity as the fashion showcase for future generations of stylish Danes.
—Ana Finel Honigman

Kristen Stewart’s Apres-Couture - UsMagazine.com

At the end of day, Kristen Stewart, who always makes sneakers a trend on and off the red carpet, comes down off her 5 and 6 inch Sergio Rossis and Jimmy Choos to be comfortable like the rest of us.

Just be sure that you wear them simply and elegantly. Steer clear of a poufy dress paired with loud colors or prints. Or you’ll end up with a huge fashion crime summons.

To buy: Champion Canvas Originals, $35, keds.com

She switches over into her Keds. You know, those simple, classic sneakers? The ones that have been crawling along since 1916?

Theyre cute, theyre comfortable (sizes 5 to 13!) and cheap ($35!). Also, they’re very cool as Kristen is wearing them. Whats not to like?

She doesnt wear the sequined ones or the bubble gum pink ones; she loves the darkest black ones. As in, black sole, black laces, black everything.

Maxime Simoens Makes A Move To Leonard

“I want a woman from our age,” Maxime Simoens, the newly announced creative director of Leonard, tells Style.com of the look he has in mind for the label. “It was a bit old, in my opinion. I really want to give it sophistication and modernity. “

The young French designer, who has taken the reins from Véronique Leroy after her eight-year term with Leonard, only began work with the brand today. “I really just began this morning—it’s quite new,” he says. Simoens, who has his own signature ready-to-wear line (which he will continue doing), is known for his strong geometric design aesthetic. He admits, however, he wants to keep the look of his line and Leonard very different. So, what does he have in store? “Leonard was originally a house of fabric—they made it for Chanel and Dior—and then they began doing fashion. I would like to use their vintage fabrics and prints and give them vibrancy and youth,” he explains. “But she will not be in print all the time—it’s impossible!” Until March, when he debuts his first outing with the label, stay tuned.

Photo: Courtesy Photo