TJX cites cost cuts, marketing for gains

President and chief executive Carol Meyrowitz said TJX Cos. profit margin was the strongest in six years. (Winslow Townson/Associated Press)

Off-price retailer TJX Cos. said improvements in inventory, cost controls, and marketing boosted its fourth-quarter profit by almost 47 percent.

The operator of 2,563 stores including T.J. Maxx and Marshalls also reduced cash set aside in a legal reserve because of lower-than-expected costs so far from a massive data breach disclosed a year ago.

But TJX also forecast a first-quarter profit just below Wall Street expectations.

Framingham-based TJX said net income in the three months ended Jan. 26 rose to $301.1 million, or 66 cents per share, compared with profit of $205.4 million, or 43 cents per share, in the same quarter a year ago, when earnings were reduced $38 million, or 8 cents per share, from closing 34 A.J. Wright Stores.

Not counting the latest quarter's gain of $11 million, or 2 cents per share, from reducing its breach-related legal reserve, TJX's profit was 64 cents per share. That beat Thomson Financial analysts' estimates by a penny.

Sales rose 8 percent to $5.49 billion, narrowly beating analysts' $5.48 billion forecast.

TJX president and chief executive Carol Meyrowitz told analysts on a conference call the company's 2007 profit margin was the strongest in six years, excluding costs from the data breach.

TJX recorded the 2 cents-per-share gain after reducing its legal reserve for the computer hack by $19 million. The company cited insurance payments it has received to help cover costs, and a reduction in estimated fees after TJX recently resolved some disputes and litigation.

After the reserve reduction, TJX's total pretax charges related to the breach were $197 million for the year. (AP)

Inverness Medical Innovations Inc. fell the most on record on the American Stock Exchange after the maker of rapid medical tests unexpectedly reported a loss arising from acquisitions.

The Waltham maker of products for the women's health market, reported a net loss of $12.5 million, or 19 cents a share in the fourth quarter versus a $6 million profit, or 15 centas a share, in the year-ago period. A Bloomberg survey of four analysts had an average net income estimate of 32 cents a share for the latest period.

Revenue rose to $288 million from $157 million a year ago.

Administrative costs doubled to $323.8 million as the company made 14 acquisitions during the year. (Wire services)

Chip maker Analog Devices Inc. said fiscal first-quarter profit more than doubled, helped by gains on the sale of two businesses, though revenue declined slightly and missed Wall Street's expectations.

For the quarter ended Feb. 2, the Norwood company earned $370.7 million, or $1.22 per share, up from a profit of $153.2 million, or 44 cents per share, in the same period a year ago. The latest results were boosted by a gain of 81 cents per share from the sale of two units. Without the gain, earnings were 40 cents per share.

Revenue slipped 2 percent to $613.9 million from $626.3 million. Last year's sales were boosted by a one-time payment of $35 million for a license of intellectual property rights.

Analysts, on average, were expecting a profit of 39 cents per share, excluding items, on sales of $623.5 million, according to a poll by Thomson Financial.

ADI derived nearly half of its revenue from the industrial market, including factory automation, medical, and scientific instruments. (AP)

Watson Pharmaceuticals Inc., the second-biggest US maker of generic drugs, reported a fourth-quarter profit that beat analysts' estimates, compared with a year-earlier loss tied to research costs.

Net income was $38.4 million, or 34 cents a share, the Corona, Calif., company said. A year ago, the loss was $489 million, or $4.80. Earnings excluding one-time items beat by 4 cents the 31-cent-a-share estimate of 17 analysts surveyed by Bloomberg.

Investors have waited for Watson to introduce products as sales of older drugs decline, and analysts say the company's plans to recertify a Florida manufacturing plant this year and submit three new brand-name drugs to regulators are steps in the right direction. Watson has also hired executives from rivals Barr Pharmaceuticals Inc., Teva Pharmaceutical Industries Ltd. and Novartis AG's Sandoz unit to help ignite growth.

Revenue in the quarter increased about 1 percent to $627.3 million, as a new distribution business made up for a drop in both generic and brand-name sales. The average estimate of 14 analysts surveyed by Bloomberg was $612.9 million. (Bloomberg)

Host Hotels & Resorts Inc., the owner of 119 properties including Marriotts, Hiltons, and Westins, said fourth-quarter profit rose 50 percent as room rates increased. The hotel owner reduced its 2008 forecast for revenue growth on slowing demand in the United States, sending the shares slightly lower.

Net income advanced to $294 million, or 54 cents a share, from $196 million, or 36 cents, a year earlier, the Bethesda, Md.-based company said.

Funds from operations increased to 75 cents a share from 58 cents a year earlier. Fifteen analysts surveyed by Bloomberg estimated funds from operations of 68 cents. Revenue rose 5.8 percent to $1.81 billion, meeting analysts' estimates.

Room rates climbed 6.4 percent as business travelers and tourists stayed in cities such as New York, where few new hotels have been built. The company also benefited as Europeans taking advantage of the weak dollar booked trips to the United States.

Host forecast first-quarter earnings of 8 to 9 cents per share and full-year profit of $1.05 to $1.14. (Bloomberg)

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Garmin 4Q profit beats forecast on strong holiday demand

Eds: UPDATES with details, closing stock price; ADDS byline; CHANGES dateline.

By DAVID TWIDDY

AP Business Writer

KANSAS CITY, Mo. (AP) - Shares in navigational device maker Garmin Ltd. dropped more than 7 percent Wednesday as investors worried about price cuts made to deal with competition in the automotive market - the vast majority of the company's business.

That overshadowed better-than-expected fourth-quarter profits, which jumped 70 percent as holiday shoppers helped sales double.

Garmin shares fell $5.03, or 7.2 percent, to close at $64.47 on Wednesday after hitting an intraday low of $61.88.

Company officials said on a conference call that prices for automotive units - 82 percent of Garmin's business - would fall 20 percent this year as the No. 1 navigational device seller in North America faces tougher competition. Besides rival device makers, wireless companies are also adding navigational content to their products.

"We do anticipate that 2008 will present increased challenges from competitors as well as declining (average selling prices) and margins, but we also believe we are prepared to take advantage of the growth opportunities in all market segments," Chief Operating Office Clifton Pemble said.

While Garmin's average prices sank 29 percent in 2007, the lingering questions about the sector's future have spooked investors, said Jeff Evanson, an analyst for Dougherty & Co.

"It is an extremely strong and capable company," Evanson said. "The only question in investors' minds is what should they be willing to pay for a company that is facing a product transition in the next two years to a phone-based business when that is a business with lower margins."

Garmin announced last month that it would introduce a wireless phone that will incorporate many of the features of its popular Nuvi line of devices. It hasn't said which carriers it will work with, but announced Wednesday that it would likely roll out the Nuviphone toward the end of the year.

The company, based in the Cayman Islands but with operational headquarters in Olathe, Kan., specializes in devices that use global positioning system technology to help users find where they are, get directions and, in more advanced models, retrieve information on nearby restaurants, shops, traffic and weather. It also sells equipment for pilots and mariners.

Earlier, Garmin said it earned $307.3 million, or $1.39 per share, in the three months ending Dec. 29. That compared with $180.3 million, or 82 cents per share, in the same period a year ago. Analysts surveyed by Thomson Financial had expected earnings of $1.11 per share.

Revenue doubled to $1.22 billion from $611.2 million and beat analyst predictions for $1.05 billion.

Sales in North America, by far Garmin's largest market, more than doubled to $836 million, with the largest gains coming in its automotive and outdoor/fitness segments. The company said it sold 5.5 million units in the fourth quarter, or slightly fewer than the total sold in all of 2006.

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McCormick & Schmick's takes 'conservative' stance on fiscal year, offers guidance below Street

PORTLAND, Ore. (AP) - Restaurant operator McCormick & Schmick's Seafood Restaurants Inc. on Wednesday said it is taking a "conservative" approach to guidance and offered a fiscal 2008 profit outlook that missed analyst expectations.

The company also said Wednesday it swung to a 4th-quarter loss, hurt by one-time charges and a same-store sales decline.

McCormick & Schmick's expects earnings between 64 cents to 74 cents per share for the year, while analysts predict a profit of $1.01 per share for the year.

The company expects revenue between $410 million and $420 million, while analysts had forecast sales of $412.2 million.

"Because of the current business environment we have decided to take a conservative approach to our 2008 guidance, but we will revisit these expectations as the environment changes," Douglas Schmick, chairman and chief executive, said in a statement.

The Portland company predicts same-store sales will fall 2 percent to 4 percent during the year.

Same-store sales, or sales in restaurants open at least one year, is a key indicator of performance, because it measures growth at existing restaurants rather than newly opened ones.

McCormick & Schmick shares fell $1.50, or 11.8 percent, to $11.25 in aftermarket electronic trading, from their regular session close at $12.75.