Toll Brothers posts loss, frets about recession talk
By Steve Goldstein, MarketWatch
Last update: 5:31 a.m. EST Feb. 27, 2008
LONDON (MarketWatch) -- Luxury home builder Toll Brothers on Wednesday swung to a fiscal first-quarter loss and said "ceaseless talk" about a recession is dampening the mood of consumers.
Toll Brothers (TOL) said it posted a loss in the fiscal first-quarter to Jan. 31 of $96 million, or 61 cents a share, after $153.3 million in write-downs. It earned $54.3 million, or 33 cents a share, in the year-ago quarter.
Revenue dropped 23% to $842.9 million, and its backlog fell 42% to $2.4 billion. Excluding write-offs, it would've earned 35 cents a share during the quarter.
Analysts polled by Thomson Financial expected a loss of 44 cents a share on revenue of $818 million.
Toll said "ceaseless talk" of a recession is dampening the consumer mood, though it noted "glimmers of hope" in a few markets, including Naples, Fla. and suburban Washington D.C. "Ceaseless talk of a recession continues to dampen the mood of consumers in general, whether or not a recession actually occurs. For home buyers, we believe this drumbeat, coupled with concerns over mortgages, the direction of home prices, and foreclosures, has kept pent-up demand on the sidelines," said Robert I. Toll, chairman and chief executive, in a statement.
Home-builder stocks including Toll Brothers rallied sharply Tuesday after a report indicated U.S. home values fell 9% last year, raising hopes that improving affordability could lure reluctant buyers and help the housing market form a bottom. See related story.
Housing stocks, surprisingly, have been one of the top-performing sectors of the market in recent months. Despite the housing bust, the shares have benefited from interest-rate cuts and efforts to stimulate the residential market.
The iShares Dow Jones U.S. Home Construction ETF (ITB
is up 32% over the past three months, while the overall market has been slightly negative.
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