Bears Steal Retailer Gains

It was a rough day for shares of several popular retailers, including Dick’s Sporting Goods and Macy’s. Let’s take a look at why. 👇

Starting with Dick’s Sporting Goods, the company reported adjusted earnings per share of $2.82 on revenues of $3.22 billion. Both figures were below the $3.81 and $3.24 billion expected. Gross margins of 34% were also below the 36% consensus estimate.

The company blamed its first earnings miss in three years on an uptick in retail theft (shrinkage) and significant discounts in its outdoor category as it looks to reduce inventory. And unfortunately, executives believe their shrink problem will worsen before it gets better. ⚠️

CEO Lauren Hobart told analysts, “Organized retail crime and theft in general is an increasingly serious issue impacting many retailers. Based on the results from our most recent physical inventory cycle, the impact of theft on our shrink was meaningful to both our Q2 results and our go forward expectations for the balance of the year…”

As a result, they now expect earnings per share of $11.33 to $12.13, down from previous guidance of $12.90 to $13.80. $DKS shares fell nearly 25% to fresh year-to-date lows on the news. 📉

Traditional department-store chain Macy’s also came under pressure today after its second-quarter results disappointed. 👎

Sales of $5.13 billion were down 8% YoY but topped estimates. Its same-store sales fell 8.2%, although a 10% decline in digital sales surprised investors. And adjusted earnings per share of $0.26 topped estimates of $0.14 as the company rationalizes costs. 🔺

Overall, executives remain cautious about the consumer due to an uncertain economic environment and discretionary spending on services over goods. Also, the higher-end consumer continues to hold up better than the low-to-middle-income one. That’s evidenced by a smaller revenue decline at Bloomingdale’s compared to its flagship Macy’s brand. 🛒

It remains an expectations game for the company, which is why it reaffirmed the same guidance it reduced earlier this summer.

For now, investors are still cautious about the stock, with $M shares falling 14% to 2.5-year lows. 🔻

Meanwhile, shares of Nike posted their ninth straight day of losses, marking their longest losing streak ever. It remains a rough environment for many retailers and related industries despite overall U.S. consumer spending holding up better than many expected. Time will tell if these stocks can stage a turnaround. 🤷

Financial services company Charles Schwab is back under pressure today after announcing a significant restructuring. Like other stocks caught up in the “regional banking crisis” earlier this year, it has not fully recovered its decline and is now resuming lower. 📉

Yesterday it announced plans to shutter or downsize some real estate holdings and cut employee headcount to save at least $500 million annually. It’s also issuing 11-year debt at roughly 2% above Treasuries for “general corporate purposes,” as it’s estimating $400 to $500 million in restructuring costs in the year ahead. 

Investors remain concerned that competition from higher-yielding products is stealing deposits from Schwab and its competitors. Additionally, the firm reported lower net flows of client money as it integrated TD Ameritrade into its business. 💸

It’s not the only financial services giant to issue debt recently, as Bank of America, Goldman Sachs, Huntington Bancshares, and others have tapped the bond market recently. The entire sector remains under pressure for a variety of reasons. For example, today, S&P Global joined Moody’s in cutting several regional lenders’ credit ratings due to high commercial real estate (CRE) exposure. 🔻

$SCHW shares fell another 5% and are down about 20% over the past month as investors reassess the company’s overall financial health. 🕵️‍♂️

It was a mixed day for several of retail investors’ favorite stocks. Let’s see what’s moving. 👀

First up is Canadian Solar, which reported mixed second-quarter results and reaffirmed its full-year 2023 outlook. However, its third-quarter revenue forecast of $1.9 to $2.1 billion lagged the $2.5 billion consensus estimate. $CSIQ shares fell 13% as the solar industry remains under pressure. 🌩️

$AMC and $APE shares continued to fall ahead of this week’s corporate events.

On Thursday, AMC common shares will undergo a 10-for-1 reverse stock split, and on Friday, the company’s APE units will be converted to common shares. Many investors had anticipated the gap in share price would’ve closed by APE units rising, but instead, AMC shares are falling to reflect the impact of their coming dilution. 📊

And lastly, Vietnamese electric vehicle maker VinFast’s wild ride continues, with the stock rising more than 100% today. The surge in price brings its market cap back above $84 billion, making it larger than General Motors, Ford, and China’s BYD.

Time will tell if the company’s underlying fundamentals can grow into that valuation, but for now, the stock remains volatile as the “price discovery” process continues. 🤷