Discover Shares Fall After CEO Comments on Sandy: Chicago Mover
Discover Financial Services (DFS), the second-best performer among 81 U.S. financial firms this year, fell the most since June after Chief Executive Officer David Nelms said sales tumbled in the wake of superstorm Sandy.
Discover slid 3.4 percent to $38.63 at 2:13 p.m. in New York, the worst performer in the Standard & Poor’s 500 Financials Index. Nelms, 51, said yesterday that customer card spending declined 15 percent from the same period last year “right after the storm.”
Financial firms including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) are assessing the damage from Sandy, which battered the Eastern U.S. with flooding and power failures after making landfall Oct. 29. Capital One Financial Corp. (COF), a competitor of Riverwoods, Illinois-based Discover, also said today that credit card write-offs rose in October from the previous month.
“There are three things we are seeing,” James Friedman, an analyst with Susquehanna Financial Group in New York, said in an e-mail, citing Nelms’s “cautious comments” about the storm and the increase in write-offs and delinquencies at McLean, Virgina-based Capital One. In addition, investors are taking “profits in their best performing names this year.”
Discover gained 67 percent this year through yesterday, the best performer on the S&P 500 Financials Index. Bank of America Corp. took the top spot today after gaining 1.8 percent.
Nelms discussed fallout from Sandy at an investor conference yesterday in New York sponsored by Bank of America’s Merrill Lynch unit. He said less than 10 percent of the credit- card issuer’s portfolio is based in the states hit by the storm and that he’s expecting a “pretty good” fourth quarter. The sales decline may be mitigated as customers spend money recovering from the storm, Nelms said.
To contact the reporter on this story: Donal Griffin in New York at firstname.lastname@example.org
To contact the editor responsible for this story: David Scheer at email@example.com