There Goes The Win Streak…

It’s been a rough year for retailers, but sentiment has gotten bad enough for some of them to beat expectations. That seems to be the case for Foot Locker, which rallied heavily after reporting better-than-expected earnings.

Though the $1.10 per share it earned was down 50% YoY, it was still ahead of the $0.81 Wall Street expected. On the other hand, revenues were just shy of expectations, down 9%, while same-store sales fell 10.3%. 🔻

Despite beating expectations this quarter, the company updated its 2022 profit forecast to $4.25-$4.45 per share, down $0.15 from the higher end of its guidance. 📉

Most notable was the company’s announcement that CEO Richard Johnson will retire on September 1st. Mary Dillon, a former Ulta Beauty executive and e-commerce expert, will take over.

Investors appear optimistic about the move and the company’s turnaround story, since the stock rallied 20% today. 👍

Here’s to hoping Richard enjoys his retirement as much as investors are… 😂

While the market’s four-week win streak ended, the good news is we’ve gotten some interesting data to consider. 🕵️

Let’s make lemons out of lemonade — or whatever the saying is… 🍋

First, let’s start by looking at the eleven U.S. sector SPDR ETFs’ performance from July 15th through today, which includes four up weeks and one down. In terms of major winners, we had energy (XLE), consumer discretionary (XLY), industrials ($XLI), and technology (XLK). And the losers were health care (XLV), communication services (XLC), and consumer staples (XLP).

The risk-on sectors rallied significantly during this period, while defensive sectors lagged. 🤔

Meanwhile, if we look at the year-to-date performance of these sectors, we see a very different picture. Some of the top winners (excluding energy) were the defensive sectors like utilities, consumer staples, and health care. And some of the biggest losers were the risk-on sectors of the market like communication services, consumer discretionary, and technology. 👀

Some technical analysts point to this data as evidence that the recent rally was nothing more than a bear-market rally. 💭

They argue that the risk-on areas only rallied the most over the last five weeks because they were hit hardest year-to-date. They also suggest that the defensive sectors holding up best throughout the year is continued evidence that institutions are positioned for more downside.

Because if you’re bearish on the market and the economy, you’d probably be investing in toothpaste and utility companies, not high-flying growth names, right? 

Whether or not they’re reading too much into this data remains to be seen, but we wanted to pass it along so you could draw your own conclusions. 🤷‍♂️

While a good portion of the world deals with a major heatwave, Deere’s earnings report shows it’s facing a drought of its own. 🥵

The world’s largest farm equipment manufacturer lowered its full-year profit outlook and said it has sold out of its large tractors. The overarching sentiment is similar to what it expressed last quarter, that it’s unable to fulfill strong demand because of supply chain issues. 🏭

While it struggles to keep up with demand, those supply chain issues are eating into its profits. Total costs and expenses rose 24.4% YoY, resulting in an earnings miss but a revenue beat. 🔻

Despite another mixed quarter, the stock was more or less flat on the day. Investors appear to be focusing on its backlog of orders through early 2023 and hoping the company’s supply chain issues will ease in the year’s second half. 📆

Although commodity prices have come down as of late, but are still above pre-pandemic levels in many cases. Investors and analysts alike believe that will continue to buoy demand for Deere’s products in the coming quarters. 💪