Retail stocks take another hit today on BJ warning
More woe for the retail sector this morning BJ’s Wholesale (BJ) reported first-quarter results before the market open that missed expectations for same-store sales growth (with earnings per share matching estimates.) The big killer, though, was guidance from the company that said second-quarter comparable store sales are tracking below the 5.7% increase in the first quarter. That 5.7% growth in first-quarter comparable store sales was below the 5.9% that Wall Street analysts had expected. The stock closed today down 7.26% on the day.
Special Report: My 5 Favorite Shorts for This Market–Short #4 Retail stocks using a Put Option on the XLY ETF (1 more Short Pick to come)
Investors and the market indexes remain convinced that the economy will dodge a recession, even if only narrowly. Retail companies, however, aren’t nearly so sure. In the last two days, both Home Depot (HD) and Target (TGT) have cut guidance for the quarter(s) ahead. Consumers, they say, are hesitant to take a trip down the aisle devoted t discretionary goods such as furniture and apparel. With the New York Federal Reserve reporting that consumers look increasingly stretched on their credit card balances, I don’t see that reluctance ending soon. So even if the economy as a whole dodges a recession, I think the shares of companies in the consumer discretionary sector are likely to report their own sector-specific recession or the next quarter or two.
Today Target echoes yesterday’s caution from Home Depot on consumer spending
Target (TGT) easily beat Wall Street earnings projections for the company’s fiscal first quarter with a report yesterday May 16 after the close with a report of $2.05 a share. Analysts were looking for $1.80 a share. Earnings were down, however, 6.2% year-over-year. But like Home Depot yesterday, Target warned that consumers are hesitant to make discretionary purchases.
Special Report: My 5 Favorite Shorts for This Market–Shorts #1, #2 , #3 and #4 (so 1 more to come.)
I’m expecting modestly positive economic news in the next few days. Which will, in my opinion, create a low-risk opportunity to make big gains by going short this market in order to profit as stock prices fall. I’m looking to put the first of those shorts in place right now. With the rest to go into place in the days after the Federal Reserve meets on Wednesday, May 3. In this Special Report, I’ll explain this perhaps initially counter-intuitive call on short-term market direction and give you the details on five of my favorite shorts for profiting in this market. With the first short pick today
Please Watch My New YouTube Video: Trend of the Week Watch Credit Card Debt After Christmas
This week’s Trend of the Week: Watch Credit Card Debt After Christmas. Christmas is a huge anomaly when it comes to the stock market and consumer spending. Jobs numbers and data predictions that come out in December are massively adjusted for the season–and the published numbers are almost always wrong. This December, you can look at consumers, already stretched by inflation, taking on more credit card debt because “It’s Christmas” and they want to make sure there are presents under the tree. The thinking may be, “I’ll blow up my credit cards at Christmas, and then start to cut back in January.” The time to look at the default and bad debt rating numbers from banks is in January and February. This will give us a better picture of where the economy and consumers are for 2023 than the skewed December numbers might. Another good indicator of the consumer market is Wal-Mart (NYSE- WMT). As we come out of the holiday spending season, keep an eye on Wal-Mart to get a better idea of how the economy is doing. If Wal-Mart can stay steady, I think other consumer stocks will follow. (Alth9ugh today’s (January 9) rocky numbers from Macy’s, Chico’s, and Lululemon aren’t good signs.)
3 Retail Stocks Say Bah, Humbug to Christmas Sales
Disappointing holiday sales and margin pressures. Not a good combination for any stock. And today shares of Macy’s (M), down 6.39% as of 2 p.m. New York time; Lululemon (LULU, down 9.01%, and Chico’s FAS (CHS) down 9.41% are paying the price for disappointing Wall Street.
Costco demonstrates strength in a very tough environment; keeping it as a portfolio pick
Shares of Costco Wholesale closed up 2.98% on September 26. The advance against the grain of a generally down market comes after the company announced a beat on both revenue and earnings for its fiscal fourth quarter on Thursday, September 22.
Macy’s lowers guidance for the year on higher inventories and slower sales
It’s not a surprise. But it is a reminder of a continued negative trend for retailers in a slowing economy. Today, August 23, in its second-quarter earnings report Macy’s (M) lowered guidance for the remainder of 2022 on higher inventories of unsold goods and slower sales.
Walmart beats lowered revenue and earnings forecasts and reaffirms guidance for the second half of 2022
Walmart shares were up 5.11% today, August 16, at the close. I think it’s fair to call that a relief rally as the company beat lowered earnings and sales forecasts for fiscal second-quarter earnings today. And then confirmed its guidance for the second half of 2022. Remember that the company had slashed guidance twice in the last three months on May 17 and then again on July 26.
Target outlook cut says some retailers have an inventory problem
Target (TGT) cut its profit outlook for the second time in three weeks. The company will attack oaring inventories in discretionary categories such as home furnishings with price mark downs, cancelling orders from vendors, and “off-loading excess inventory. (To deep discount sellers, I’d assume.) Three weeks ago, on May 18, the retailer’s shares slumped more than 25% after reporting that net profit shrank 52% in the first quarter. In those quarterly results, Target said its inventory rose 43%, compared with a year earlier.
In its guidance for the second quarter on May 18 Target said operating margins for the second quarter would be in a range centered around 5.3%. In today’s inventory warning the company said that orating margin would fall to 2%. Target’s stock, which fell as much as 7% today on the news, closed down 2.22% today. Shares of competitors Walmart (WMT) and Costco (COST) were down only 1.24% and 0.15%, respectively.
CVS Health raises dividend and 2022 revenue guidance
CVS Health (CVS) will raise its annual dividend by 10% to $2.20 from $2.00 effective with the dividend payout scheduled for February 1. The company has also authorized a $10 billion share buyback program. The company also raised guidance for the full 2021 year to revenue of at least $290.3 billion and earnings of at least $8.00 a share.
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