What Happened In The Stock Market This Week?
This week saw many companies in the consumer discretionary sector release earnings. Dick's Sporting Goods ($DKS), Chewy, Inc. ($CHWY), and Abercrombie & Fitch ($ANF) all reported stellar earnings and saw their share prices soar because of it. Meanwhile, well-known tech company, Dell Technologies ($DELL) fell nearly 20% after reporting earnings, and Advance Auto Parts ($AAP) also struggled mightily in the stock market this week after less-than-stellar earnings. We'll dive into all of it in the week's edition of The Traders' Recap presented by Lightspeed Financial Services Group.
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Dick's Sporting Goods Inc. ($DKS):
Shares of Dick's Sporting Goods rose nearly 16% during the market session on Wednesday after the release of the company's latest earnings report that morning. The sporting goods and apparel retailer raised its full-year guidance after reporting solid earnings, causing its share prices to soar. The company said that customers are spending more on new sneakers and athletic gear. Comparable sales for Dick's Sporting Goods grew 5.3% during its first fiscal quarter, more than doubling analyst projections which were set at 2.4%. The company reported a 2.7% increase in transactions, meaning more volume for the stores, and saw a 2.6% increase in average ticket values, meaning customers are spending more per trip. The company reported earnings of $3.30 per share, topping analyst expectations of $2.95 per share. They also reported revenue of $3.02B, topping expectations of $2.94B. By raising its full-year guidance, Dick's Sporting Goods is expecting its full-year EPS to fall between $13.35 per share to $13.75 per share. This is up from the previous range of $12.85 per share to $13.25 per share. The company is also expecting full-year revenue to fall between $ 13.1B-$13.2B, which is currently in line with estimates. Executive Chairman, Ed Stack, said in the latest earnings report, "Our strong first quarter results continue to prove that Dick's is the go-to destination for sport and sports culture in the US. The product pipeline from our key brand partners and our vertical brand portfolio has never been better...We have significant momentum and are excited about the differentiated product and compelling experience we are providing." Company CEO, Lauren Hobart, stated, "The consumer is absolutely putting a priority on a healthy, active lifestyle. You see people running and walking, being outdoors."
Chewy, Inc. ($CHWY):
Shares of Chewy rose more than 27% during the market session on Wednesday after the release of the company's latest earnings report. This marked its largest one-day gain in its five-year history on the stock market. The company reported earnings of $0.31 per share, easily topping expectations of $0.20 per share. Adjusted earnings before taxes, depreciation, and amortization (EBITDA) jumped 47% to a record for the company $162.9 million, topping expectations of $113.9 million. Net sales grew 3.1% to $2.88B, topping expectations of $2.85B. Net sales per active customer grew 9.6% to $652, even with the number of active customers as a whole falling. Even with the stellar earnings, company leadership did not raise full-year guidance but did reaffirm current expectations. The company is attributing this growth to a turnaround in the pet adoption industry. For context, pet adoptions were down 30% in Q4 of 2023. Chewy also announced a $500 million stock repurchase program, representing 5.3% of the company's current market capitalization ($9.43B). Company CEO, Sumit Singh, said in the latest earnings report, "Fiscal year 2024 is off to a solid start. We delivered strong net sales as well as record-breaking adjusted EBITDA in the first quarter...Chewy's value proposition continues to resonate with our customers, and I am proud of the teams at Chewy who are executing flawlessly on our strategic roadmap and the controllable elements of our business."
Abercrombie & Fitch Compnay ($ANF):
Shares of Abercrombie & Fitch rose nearly 25% during the market session on Wednesday after the release of the company's latest earnings report, which was the strongest in the company's entire Q1 history. Sales for the fashion retailer jumped 22% year-over-year, and profits came in nearly 7X from the same period from the previous year, obliterating expectations set by Wall Street. The company reported earnings of $2.14 per share, topping expectations of $1.74 per share. They also reported revenue of $1.02B, beating expectations of $963.3 million. The company also saw comparable sales grow 21% and increased its full-year guidance on revenue. The outlook was previously set at 4%-6% but has now been increased to 10%. The company recently debuted a new line, titled, "A&F Wedding Shop", which is a collection of apparel for brides and attendees that can be used for the wedding day and for other bachelorette events. The wedding shop line apparently has already exceeded expectations according to company CEO, Fran Horowitz. She went on to say that a major pillar for the company's turnaround outside of its product assortment is its marketing engine, specifically how the company utilizes influencers and affiliates to communicate its brand and voice. Horowitz stated, "That user-generated content that they create is something that really resonates with our customer" and is going to continue to be a "very big part of our business" strategy moving forward. She continued on the topic, stating, "People count on and believe their friends and peers more than they believe what a company is telling you, and we've learning that through the ages."
Dell Technologies Inc. ($DELL):
Shares of Dell plummeted nearly 18% during the market session on Friday after the release of the company's latest earnings report during the post-market the previous day. According to CNBC, investors were discouraged by the company's lower-than-expected artificial intelligence server backlog and an estimated decline in margins. The drop in share price occurred even after the company beat analyst expectations and offered optimistic full-year guidance. The company said revenue for the quarter came in at $22.44B, beating expectations of $21.64B. Analysts at Bernstein said the "principal disappointment" in Dell's results was that operating margins for its Infrastructure Solutions Group compressed year-over-year. This raised concerns that Dell's AI servers at being sold at "near-zero" margins. Simply put, the company's AI efforts are not translating into profits yet. The company returned roughly $1.1B back to shareholders in the most recent quarter through share repurchases as well as dividends and ended the quarter with $7.3B in cash and investments. Company CFO, Yvonne McGill, said in the latest earnings report, "We again demonstrated our ability to execute and deliver strong cash flow, with Ai continuing to drive new growth...Revenue was up 6% at $22.2B, servers and networking revenue was up 42%, and we generated $7.9B of cash flow from operations over the last 12 months." Diluted EPS came in at $1.32, which is up 67% year-over-year.
Advance Auto Parts, Inc. ($AAP):
Shares of Advance Auto Parts fell nearly 11% during the market session on Wednesday after the release of the company's latest earnings report. The auto parts retailer reported earnings of $0.67 per share, falling short of expectations of $0.69 per share. This also marks a year-over-year decline from the same quarter last year when the company reported earnings of $0.72 per share. The company generated net revenues of $3.41B, also missing estimates which were set at $3.43B. Comparable store sales decreased year-over-year by 0.2%, when analysts had expectations set at a growth rate of 0.7%. Operating income for the company also declined year-over-year. The company reported operating income of $86 million, compared to $97.9 million during the same period from the previous year. The company did declare a cash dividend of $0.25 per share for all common stock shareholders. As of April of this year, Advance Auto Parts has 4,777 stores in the United States, Canada, Puerto Rico, and the U.S. Virgin Islands. The company did, however, raise its full-year guidance on sales from $11.30B-$11.40B to $11.40B-$11.50B. Company CEO and President, Shane O'Kelly, said in the latest earnings report, "We continue to work on improving our overall performance by removing complexities and distractions to increase our value proposition and divlier shareholder value. We recognize we still have significant work ahead of us, however, the actions we're taking will put us on the path to delivering improved results." "While the industry experienced a slower start to 2024 compared with our expectations, the actions we began in the back half of last year (2023) will help us streamline our operations for the long term"
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Resources:
$DKS:
https://www.cnbc.com/2024/05/29/dicks-sporting-goods-dks-earnings-q1-2024.html
$CHWY:
$ANF:
https://www.cnbc.com/2024/05/29/abercrombie-fitch-anf-earnings-q1-2024.html
$DELL:
https://www.cnbc.com/2024/05/31/dell-shares-fall-ai-servers-concerns.html
https://investors.delltechnologies.com/
$AAP:
https://finance.yahoo.com/news/advance-auto-aap-q1-earnings-152300918.html
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