What Happened In The Stock Market This Week?
This was a busy week in the stock market as the Dow Jones crossed 4,000 for the first time ever. Retail giant, Walmart showed investors they can compete in the e-commerce space, and On Holding showed they are up-and-coming players in sports apparel and footwear after posting record-setting earnings.
Meanwhile, Alibaba shares dipped this week, and so did shares of Deere & Company, also known as John Deere, after less-than-stellar earnings were released. Under Armour, though, may have had the toughest week of all the companies we'll mention below as their second CEO in two years will step down, the company posted terrible earnings and announced a restructuring including mass layoffs.
We'll also discuss the earnings results of some other companies including Home Depot, Sony, Boot Barn, Cisco, and JD.
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Walmart Inc. ($WMT):
Shares of Walmart jumped nearly 7% during the market session on Thursday after the release of the company's latest earnings report. The company posted EPS of $0.60 per share, topping analyst expectations of $0.52, and jumping nearly 20% from their mark during the same period from the previous year ($0.49). The company said they drove profits with newer businesses like advertising and won over more high-income shoppers. The retailer also made significant gains in its e-commerce segment. Shares of the company hit an all-time high on Thursday after the news related to the company's earnings. Company CFO, John David Rainey said that a major factor in the growing trajectory of Walmart's grocery business is the widening gap between the price of cooking at home versus eating out in the United States. He also said that its customers value convenience, as its delivery business has surpassed its store pickup in terms of volume. Walmart is the United States' largest retailer and private employer and has typically fared well during inflationary times in the United States due to its product offering of selling staples such as groceries as well as its value-oriented reputation. Same-store sales for the company also climbed nearly 4% for the quarter excluding fuel sales. E-commerce is where the attention should go though, as sales in this segment of the business skyrocketed to 22% year-over-year, fueled mainly by store pickup and delivery of online orders, as well as the company's growing third-party marketplace. The company is trying to appeal to younger and more affluent households, typically a demographic that Walmart tends to attract. They're doing this by launching a new private-label grocery brand, including bolder flavors and plant-based items. It's also upgrading and modernizing more than 1,400 stores across the country to showcase some of Walmart's newer and more fashion-current brands like Love & Sports and Beautiful. Walmart is looking to compete with rivals such as Amazon in the e-commerce space. The company's new subscription-based membership Walmart+ grew its profit during the quarter and contributed to its operating income growth outpacing its sales growth. The company also announced in February that it would acquire TV maker, Vizio, for $2.3B. Company CEO and President, Doug McMillon said in the latest earnings report, "Our team delivered a great quarter. Around the world our goal is simple - we're focused on saving our customers both money and time...We're people-led and tech-powered, and that combination is propelling our business."
On Holding AG ($ONON):
Shares of On Holding jumped more than 17% during the market session on Tuesday after the release of the company's latest earnings report. The company reported EPS of $0.36 per share, more than doubling from its $0.17 per share reported during the same period a year ago. Revenue also sky-rocketed nearly 20% to a record $561 Million. Sales growth, however, did lag for the fifth quarter in a row. The company's direct-to-consumer sales increased 48.7% year-over-year. Company leadership reaffirmed its outlook of at minimum 30% net sales growth for the year and hopes to achieve a gross profit margin of roughly 60% for the year. Analyst, Dylan Carden suggested that On has been able to show momentum in a difficult environment due to in large part a "cleaner" inventory position, which declined 21% year-over-year. Company Co-CEO and CFO, Martin Hoffman, said in the most recent earnings report, "The first quarter was a very strong start to the year and a further step in the execution of our long-term strategy to be the most premium global sportswear brand. We are thrilled to have exceeded our expectations and surpassed the half-billion net sales mark in a single quarter. This serves as validation of the strong demand we have experienced across all channels, regions, and product categories. Notably, we see the strength in our DTC channel as a clear marker of the ongoing strong brand momentum. The significantly increased DTC share has also allowed us to reach a very strong gross profit margin in the first quarter, close to the mid-term target we laid out a couple of months ago. Looking ahead, we're extremely excited for the months to come, filled with groundbreaking innovations, big partnerships, and the opportunity to have a notable impact in Paris this summer."
Sony Group Corporation ($SONY):
Shares of Sony jumped by more than 6% Tuesday morning after the release of the company's latest earnings report. This came even after posting a drop in operating profit by a whopping 7% year-over-year. Sony also missed its forecast for unit sales of it PS5 gaming console for the full year. The company posted revenue of $3.5 Trillion Yen ($22.4B), topping expectations of 2.89 Trillion Yen, marking an increase of 14% year-over-year. Operating profit, however, came in at 229.4B Yen, vs. expectations of 236.81B Yen. However, this figure still marks a 57% jump year-over-year. The company also reported total revenue for 2023 of 13 Trillion Yen, a nearly 20% increase from the previous year. Sony expects the negative trend in PS5 sales to continue throughout this year and heading into next. Sony has announced in response to this trend, a shakeup of its management team in its Interactive Entertainment gaming unit, naming Hiroki Totoki, its interim CEO, and new Chairman of the business.
Boot Barn Holdings, Inc. ($BOOT):
Shares of Boot Barn, a western-style clothing and footwear retailer jumped roughly 3% Wednesday morning, after the release of the company's latest earnings report during the post-market session from the previous day. The company posted better-than-expected figures in both revenue and EPS (earnings per share). Boot Barn posted quarterly revenue of $388.5 Million vs. expectations of $385 Million, and posted an EPS figure for Q1 of $0.96, beating expectations of $0.89. This is a roughly 8% beat on EPS. The company continues to build out its brick-and-mortar locations across the country, now operating in 45 states with over 400 stores. However, same-store sales, a critical figure that shows demand for a company, have been steadily decreasing for eight consecutive quarters now. Company leadership also said that revenue for the upcoming fiscal year 2025 is projected at $1.78B, which misses analyst expectations by 2.5%, but does imply business-wide growth by 7%. Boot Barn does expect revenue to top expectations again in fiscal Q2. Company President and CEO, Jim Conroy, said in the latest earnings report, "I am pleased with our fourth quarter performance and proud of the efforts of the entire Boot Barn team. We crossed the 400-store milestone prior to year-end and extended the Boot Barn brand to 45 states across the country...While we expect the consumer to continue to be cautious for the foreseeable future, we feel well positioned to further execute our long-term strategic initiatives."
JD Inc. ($JD):
Shares of JD traded higher by roughly 2% during the market session on Thursday after the release of the company's latest earnings report. JD, for those who are unaware, is a "supply chain-based technology and service provider" in China. The company offers computers, communication, consumer electronics, home appliances, food, beverage, produce, baby and maternity products, furniture and household goods, cosmetics and personal care items, healthcare items, books, automobile accessories, apparel, footwear, and jewelry. The company reported earnings for Q1 of fiscal 2024, and posted revenue growth of 7% year-over-year, coming in at $36.02B, and topping expectations of $35.62B. The company also posted a net income of $0.78 per ADS (American Depository Share), beating expectations of $0.64 per ADS. The company's net product revenue increased by 6.6% year-over-year, to $28.88B, and net service revenues rose 8.8% year-over-year, to $7.14B. Retail revenue also climbed for the company by 6.8% year-over-year, to $31.42B. Logistics revenue gained as well to $5.84B. Adjusted EBITDA increased 13.6% year-over-year to $1.5B, with a 4.1% margin. The company used $2.14B in free cash flow during the most recent quarter and held $24.8B in cash and equivalents as of the end of March of this year. Company CEO, Sandy Xu, said in the latest earnings report, "The year 2024 is marked with execution, and we are already seeing measurable results across the business. In particular, in the first quarter, our focus on user experience helped to drive strong growth in the number of active users as well as user engagement. We are confident that we will further build on our momentum in the months ahead as JD's commitment to providing the best combination of selection, speed, quality, and price continues to attract Chinese consumers nationwide."
Under Armour, Inc. ($UA):
Shares of Under Armour traded relatively flat during the market session on Thursday after the release of the company's latest earnings report. The company announced a broad restructuring plan as it said sales in its largest market, North America, plunged 10% and predicted the trend will get worse continuing throughout this fiscal year. The athletic apparel retailer also saw profits sink more than 96% during its fiscal Q4. It is still not known how many employees will be laid off as part of the restructuring plan, but it is expected to cost the company between $70 million and $90 million, a large portion being used for employee severance and benefits costs. The company posted EPS of $0.11, topping expectations of $0.08, and matched revenue expectations of $1.33B. The company reported net income for the latest quarter at $6.6 Million, down substantially from $170.6 Million from the same period during the prior year. Sales dropped 5% to $1.33B, down from $1.4B during the same period from the year prior. North American sales declined 10% to $772 Million, even worse than the $780 Million that analysts had expected. Company leadership anticipates that sales will plummet between 15%-17% for the current fiscal year. Company CEO, Kevin Plank, said in the latest earnings report, "Due to a confluence of factors, including lower wholesale channel demand and inconsistent execution across our business, we are seizing this critical moment to make proactive decisions to build a premium positioning for our brand, which will pressure our top and bottom line in the near term...Over the next 18 months, there is a significant opportunity to reconstitute Under Armour's brand strength through achieving more, by doing less and focusing on our core fundamentals." The rough quarter for Under Armour comes roughly two months after former Marriott executive, Stephanie Linnartz, would be stepping down as CEO, after barely a year in the role, and PLank would take back control of the company he founded in 1996. Linnartz was the second CEO the company has let go in just two years. Plank said in the latest earnings call, "With several CEOs and heads of products, marketing, and North America over the past half-decade, ongoing turnover of critical leadership has been central to our inability to stay agile and decisive." Plank went on to mention that the company has gravitated too far away from its men's apparel business which has significantly impacted the brand's perception. He stated, "This focus does not mean that we are deprioritizing our footwear or women's business per se, but from a sequencing perspective, men's apparel will be our highest priority."
Deere & Company ($DE):
Shares of Deere & Company, otherwise known as John Deere, fell nearly 5% during the market session on Thursday after the release of the company's latest earnings report. The company reported EPS of $8.53, easily topping expectations of $7.86, but bottom-line figures decreased by 12% compared to the same period from the prior year on lower shipment volumes. The company also cut down its guidance for 2024.Net sales of construction equipment were down 15.4% year-over-year, coming in at $13.61B. Net sales for the company did top expectations. The company posted net sales of $15.24B, but that figure, even though it topped expectations, was still down 12.4% year-over-year. Total gross profit for the company was also down 16.8% year-over-year, coming in at $4.45B. Total operating profit was also down 20.5% year-over-year, coming in at $3.1B. One highlight of the company was that revenues in their Financial Services Division were up 26% year-over-year, coming in at $1.4B, easily topping expectations of $1.06B.The growth was driven by income earned on higher average portfolio balances. The company expects net income for fiscal 2024 to come in at $7B, down from the prior stated $7.5B-$7.75B. Company CEO, John C. May, said in the latest earnings report, "We are proactively managing our production and inventory levels to adapt to demand changes and position the business for the future...Despite market conditions, we are committed to our strategy and are actively investing in and deploying innovative technologies, products, and solutions to ensure our customers' success."
Alibaba Group Holding Limited ($BABA):
Shares of Alibaba fell roughly 7% Tuesday morning after the release of the company's latest earnings report. The Chinese e-commerce company posted revenue of $30.73B, beating analyst expectations of $30.59B and rising 7% from the same quarter during the previous year. Top-line increases in revenue were attributed to solid growth across the international commerce retail and wholesale business lines. The main concern, however, was the performance of the Digital Media and Entertainment Group. Shares of $BABA have returned 2.6% YTD, underperforming Zacks Retail-Wholesale sector's growth of 10%. 42% of the company's total revenue came from its Taobao and Tmall segments. $12.9B worth of revenue was generated from this segment alone, which grew 4% from the same quarter during the previous year. As mentioned earlier, one major area of concern for Alibaba was its Digital Media and Entertainment Group which posted revenue of just $685 Million and decreased by 1% compared to the same quarter during the previous year. Alibaba reported a free cash flow of $2.1B. Company CEO, Eddie Wu, said in the most recent earnings report, "This quarter's results demonstrate that our strategies are working and we are returning to growth...We are also excited by the accelerated growth of customers and cloud computing revenues related to our AI products." Company CFO, Toby Xu, stated, "We've seen early results from increased investment in our strategic business priorities and are confident in our business outlook...During fiscal year 2024, we repurchased $12.5B worth of stock and our board of directors has approved a dividend of $4B for fiscal year 2024."
Cisco Systems, Inc. ($CSCO):
Shares of Cisco fell more than 2% during the market session on Thursday after the release of the company's latest earnings report during the post-market session from the previous day. The company reported EPS and revenue that declined from the same period from the previous year but still managed to top analyst expectations. EPS for Cisco fell 12% from the year prior, down to $0.88 per share, and revenue fell 13%, down to $12.7B. Analysts had Cisco posted EPS of $0.83 per share and revenue of $12.53B. Orders for fiscal Q3 for Cisco did rise 4% vs. a 12% decline during the same quarter from the previous year. Company leadership attributed the downtrend in revenue to their "customers' continued implementation of products on-hand". Cisco reported strong profitability with a GAAP gross margin of 65.1%. Splunk, the company's newly acquired business accounted for a whopping 54% of the company's total revenue and accrued $6.9B in subscription revenue. Company CEO, Chuck Robbins, said in the latest earnings release, "We delivered a solid Q3 performance in what remains a dynamic environment...Our unique ability to bring together networking, security, observability, and data enables Cisco to offer our customers unrivaled digital resilience for the AI era...Customers are consuming the equipment shipped over the last few quarters in line with our expectations and we are seeing stabilization of demand as a result. The addition of Splunk to our product line will be a catalyst for further growth."
Home Depot, Inc. ($HD):
Shares of Home Depot fell roughly 1% Tuesday morning after the release of the company's latest earnings report. The company posted EPS (earnings per share) that slightly topped analyst expectations, posting a figure of $3.63 vs. analyst expectations of $3.60 per share. However, the company did miss revenue. Home Depot posted revenue figures of $36.42B, falling just short of analyst expectations of $36.66B. The company believes that discretionary projects such as home renovations are being put on old by consumers due to higher interest rates. Even after noting this, Home Depot leadership still reaffirmed its full-year guidance. Net income for the fiscal Q1 decreased to $3.6B, and net sales fell 2.3%. Comparable sales for the company also dropped by 3.2% in the United States. The company's DIY (do-it-yourself) segment is hurting the most as noted earlier, and Home Depot estimates that this segment accumulates to roughly half of its customers. The high-interest rate environment is hurting their home improvement business due to more consumers being unwilling to enter into financing on home improvement projects, which tend to be relatively pricey. To combat slow sales from retail consumers, Home Depot is aggressively ramping up its wholesale or professional segment of its business, which they believe is more consistent in terms of quantity of items purchased and consistency of purchases. In March of this year, Home Depot announced it would be acquiring SRS Distribution, a Texas-based distributor of roofing, landscaping, and pool supplies. The acquisition costed Home Depot $18.25B, the largest in the history of the company. Company CEO, Ted Decker, said in the latest earnings report, "The team executed at a high level in the quarter, and we continued to grow market share...While the quarter was impacted by a delayed start to Spring and continued softness in certain larger discretionary projects, we feel great about our store readiness, our product assortment in stores and online, and our associate engagement. Our associates are energized and ready to serve our customers as Spring breaks across the country."
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Resources:
$WMT:
https://stock.walmart.com/home/default.aspx
https://finance.yahoo.com/news/walmart-wmt-q1-earnings-revenues-151511682.html
https://www.cnbc.com/2024/05/16/walmart-wmt-q1-2025-earnings-.html
$ONON:
https://www.investors.com/news/on-running-stock-q1-earnings-record-revenue/
$SONY:
https://www.cnbc.com/2024/05/14/sony-q4-and-full-year-2023-earnings.html
$BOOT:
https://finance.yahoo.com/news/boot-barn-nyse-boot-posts-201841497.html
$JD:
https://finance.yahoo.com/quote/JD/profile
https://finance.yahoo.com/news/jd-coms-q1-earnings-revenue-132808779.html
https://ir.jd.com/news-releases/news-release-details/jdcom-announces-first-quarter-2024-results
$UA:
https://www.cnbc.com/2024/05/16/under-armour-uaa-earnings-q4-2024.html
$DE:
https://finance.yahoo.com/news/deere-q2-earnings-sales-top-161300015.html
https://investor.deere.com/home/#earnings-events
$BABA:
https://finance.yahoo.com/news/alibaba-baba-q4-earnings-beat-162500537.html
https://www.alibabagroup.com/en-US/document-1726694664490188800
$CSCO:
https://www.investors.com/news/technology/cisco-stock-news-cisco-earningsq12024/
$HD:
https://www.cnbc.com/2024/05/14/home-depot-hd-q1-2024-earnings-.html
https://ir.homedepot.com/news-releases/2024/05-14-2024-110058012
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