A Reversal Of The Reversal

Rite Aid, yes, it’s still a publicly traded company (for now), tumbled nearly 30% today after a big earnings miss. 😮

The drugstore chain reported adjusted earnings per share loss of $0.63, below the $0.50 expected. Meanwhile, revenue fell about $200 million YoY to $5.901 billion.

Where the company faced trouble was its outlook. It stuck with its fiscal 2023 revenue guidance but forecasted a larger-than-expected loss of $477.30-$520.30 million. Additionally, its same-store sales disappointed, growing just 0.3% on an inflation-adjusted basis. 👎

As is usually the case, a business struggling during the good times is likely to perform poorly in the bad times. And that’s what we’re seeing here as it faces continued pressure on consumer spending and supply chain challenges. 

Who knows what can save the company, but it’s certainly in need of some aid as its stock approaches a new all-time low. 📉

With bellwether companies like FedEx and Target missing earnings, investors can add Nike to their list of disappointments.

On its surface, the athletic apparel company’s report didn’t seem that bad. EPS of $0.93 beat the $0.92 expected, and revenues of $12.69 billion were above estimates of $12.27 billion. 📈

With that said, its forward guidance is what’s getting it put in the dog house. The company says supply chain headwinds like rising shipping costs and times have caused its inventory levels to swell significantly during the quarter. While this was partially offset by strong demand, concerns over its sales channels remain.

The largest part of Nike’s business is wholesale, which only saw a 1% increase. Meanwhile, its direct sales grew by 8%, and its digital-brand sales rose by 16%.

As expected, shutdowns in the Greater China region caused a sales decline of 16%. So although conditions in China are improving, there’s still a lot of uncertainty around its business there. And with the U.S. economy looking like it’s going to get worse before it gets better, some analysts have concerns over demand in North America. 😬

In the short-term, bearish investors are shipping the stock back, sending shares down another 10% after hours. Meanwhile, the bulls argue that the stock is already down more than 50% and that much of the bad news is already baked in.

Given the current market and economic environment, bears feel like they still have the upper hand. However, we’ll have to see what the rest of the week and next quarter bring for $NKE. 🤷

The used car market has been bonkers over the last few years, but as of now, it remains on the downswing. For example, shares of CarMax fell 25% today to a 2-year low after reporting a second-quarter profit well below expectations.

Its earnings per share was $0.79 vs. the $1.39 expected. Additionally, revenues of $8.14 billion fell short of the $8.54 billion expected. 🔻

Like in housing, the used car market faces an affordability crunch. Record-high prices, rising interest rates, and an uncertain economy have led to a steep decline in demand.

CarMax saw vehicle unit sales fall 10.30%. Meanwhile, the average price of a used vehicle sold was up 9.60%, and average wholesale vehicle prices were up 17%. Comparable-store used vehicle unit sales fell 8.30%, way higher than the consensus estimate for a 3.60% decline. 😱

With the Federal Reserve waging war on demand and prices, things don’t look great for CarMax and the used car industry. As a result, competitors like Carvana (-19.73%) and Penske (-9.16%) fell in sympathy throughout the day. 📉