It was another mixed day for retailers, with several stocks moving sharply. Let’s see what happened.
First up is Foot Locker, which has been unable to find its footing lately. 😬
The shoe retailer reported earnings per share of $0.04, which met expectations. However, revenues of $1.86 billion were light of the $1.88 billion consensus estimate, and same-store sales fell 9.4% YoY.🔻
In addition to declining sales by 9.9% YoY, margins continue to shrink due to higher promotional activity and shrinkage (theft & operational issues). The company continues to diversify away from Nike but pointed to “ongoing consumer softness” and changes to its vendor mix as contributors to its current weakness.
And the company doesn’t see things improving anytime soon. Instead, executives reduced the guidance introduced just five months ago. They now see full-year sales declines of 8%-9% (up from 6.5%-8.5%) and same-store sales declines of 9%-10% (up from 7.5%-9%). To add insult to injury, the company also suspended its quarterly dividend to preserve cash. ✂️
$FL shares fell 28% to thirteen-year lows on the news. It also pushed $NKE shares down to their tenth consecutive daily decline (a new record). ✂️
However, on the positive side, Abercrombie & Fitch continues its turnaround.
The retailer surprised Wall Street with $1.10 in earnings per share on revenues of $935.3 million. That topped estimates of $0.17 and $842.4 million. As for what’s driving the strength? Executives point to their years-long effort to diversify away from being a “jeans and T-shirt brand” and more into a “lifestyle brand.” 🛍️
And those efforts appear to be hitting with consumers. Comparable sales rose 13% YoY, with Abercrombie leading the charge up 23% and Hollister lagging at +5% YoY. Inventory was down 30% YoY as the company worked through existing stock. That’s also helped margins improve, especially as the costs of shipping and raw materials pull back. 🔺
Executives expect the company to continue bucking industry weakness. They now see net sales rising 10% for the full fiscal year, up from previous guidance of 2%-4%. And operating margins should be in the 8%-9% range vs. the 5%-6% previously anticipated. 🔮
$ANF shares surged 24% today to ten-year highs, pushing back to the upper end of its longer-term trading range as a public company. ☝️
And lastly, Williams Sonoma continues to rebound despite a slowdown in the housing market. 🏡
Second-quarter earnings per share of $3.12 on revenues of $1.86 billion were mixed compared to estimates of $2.71 and $1.96 billion. Sales remain lackluster, falling 13% YoY, but margins improved and should buoy earnings. Executives now expect a full-year operating margin of 15% to 16%, up one percentage point from previous guidance.
$WSM shares rose more than 13% on the news. 🍳
