Toll Brothers Posts 47 Percent Decline in Orders
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Toll Brothers is looking for a life raft today as the ship is taking on serious water after announcing the decline in orders by 47 percent. The company has held firm on pricing in markets that have been the most effected by the housing bubble.
The Horsham, Pa., company said orders in the quarter ended July 31 totaled 1,443 units, compared with 2,746 units a year earlier. The decline was bigger than the 33% to 40% decrease Wall Street had expected and worse than its 32% order decline in the previous quarter.
Chief Executive Robert Toll blamed an inventory glut and waning home-buyer confidence. “It is the first downturn in the 40 years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors,” he said.
Toll Brothers shares were down $1.70, or 6.4%, to $24.88 in 4 p.m. composite trading on the New York Stock Exchange. Shares of other home builders also fell as the news appeared to spook investors across the sector.
Toll Brothers said cancellations increased in a number of markets, like Orlando, Fla.; Northern California; Palm Springs, Calif.; Las Vegas and Phoenix. The home builder said it has opted not to slash home prices in order to move sales.
Preliminary figures indicate that revenue slipped to $1.53 billion from $1.54 billion a year earlier. The company also indicated it would be taking write-downs in the quarter in connection with land options it is walking away from.
Toll Brothers said it now expects to deliver 8,600 to 8,900 homes this year. A previous outlook pegged deliveries at 9,000 to 9,700 homes for the year.
The company will report its third-quarter earnings later this month. via RealEstateJournal
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