Many large retailers reported yesterday, and another manufacturer of office equipment. Here's how investors reacted to it.
Dollar Tree (DLTR) — 144,7 $ (+9,2%)
Revenue — $6.4 billion (+3,9%), earnings per share - 0,96 $ (−30,9%).
Like many, chain of cheap stores faces high transportation costs due to supply disruptions. The company reported, that transport costs were higher, than expected. All this affected net income..
Dollar Tree also promised to expand the range with more expensive products.. Already in the first quarter of 2022, most of the goods in the store will cost 1,25 $. So the company plans to compensate for transportation and other expenses., and increase profitability. In 2015, following the purchase of the ineffective Family Dollar chain, the retailer's gross margin decreased from 35 to 30%. Now Dollar Tree intends to return its previous margins.. This is one of the requirements of Mantle Ridge - an activist company, which bought about 6% retailer shares.
For the first time, the discounter chain started talking about price increases at the end of September., Two months ago. During this time, the company's shares have already grown by 70%.
Best Buy (BBY) — 121 $ (−12,3%)
Revenue — $11.9 billion (+0,5%), earnings per share - 0,96 $ (+35,1%).
The electronics seller reported better than expected and even slightly raised its sales forecast for the year. But it didn't help stocks..
Demand for computers and other equipment has grown significantly during the quarantine. So, in 2020 Best Buy sales grew by 8% - a lot more, than in 2018 and 2019. Then the revenue added only 2%.
Investors are now worried about the company's sales, because consumers are shifting their attention from technology to travel and other entertainment. All of this could force Best Buy to sell off its stock at a discount.. Lower prices coupled with rising logistics costs will hurt the retailer's bottom line and profitability.
Best Buy shares are up by 20%.
Dick’s Sporting Goods (DKS) — 134,6 $ (−4,1%)
Revenue — $2.8 billion (+14,1%), earnings per share - 2,78 $ (+51,1%).
Sporting goods seller's results far exceed analysts' expectations. The company also raised its fiscal 2021 sales forecast from $11.7 billion to $12.2 billion..
Retailer successfully survives the pandemic. During quarantine, the company began to develop its online store. As a result, digital sales doubled compared to 2019. They account for about 19% of total revenue.
In 2021, Dick's Sporting Goods continued to invest in its business. In the spring, the company launched a new clothing brand, and also opened House of Sport, its largest store. It has a climbing wall, golf lawn, departments with goods for health and much more. And in August, Dick's announced a partnership with Nike..
Probably, after a strong report, investors decided to fix some of the profits. Since the beginning of the year, the company's shares have grown by 140%. This is 5-6 times more, than the main indices added S&P 500 and Nasdaq. Since March 2020, shares have risen in price by 700%.
GAP (GPS) — 19,7 $ (−16,2%)
Revenue — $3.9 billion (−1,3%), loss per share - 0,4 $.
One of the largest clothing retailers reported much worse than analysts' expectations. The company was unable to meet consumer demand. And the reasons are the same: supply disruptions and factory closures in Asia due to COVID-19. To bypass busy ports, retailer started using air transport, which increased losses.
As a result, due to a shortage of goods, GAP lost about $600 million in revenue., and air transport increased spending by about $450 million. The company downgraded its sales growth forecast for the year from 30 to 20%.
With the latest drop in postmarket, GAP shares are trading at the same level, as at the beginning of the year.
Nordstrom (JWN) — 24,5 $ (−23,2%)
Revenue — $3.6 billion (+17,8%), earnings per share - 0,39 $ (+14,7%).
Department store chain sales are up, but only up to the level of 2019. Earnings per share due to rising costs, including labor force, missed the forecast. Probably, investors didn't like it, that Nordstrom failed to pass on its costs to customers as effectively, how Macy's and Kohl's did it. Unlike Nordstrom, both of these companies raised their profit forecast for the year..
Given the strong drop in postmarket, shares of Nordstrom since the beginning of the year have fallen in price by 19%.
HP (HPQ) — 34,6 $ (+7,5%)
Revenue — $16.7 billion (+9,3%), earnings per share - 2,71 $ (+453,1%).
Computer hardware maker reports better than expected. Revenue from sales of desktops and laptops increased by 13%, although sales fell by 9%. Revenue in the print segment increased by 1%. In each segment, revenue increased due to enterprises, as employees return to offices as restrictions ease.
Among other things, the size of net profit was affected by a victory in court with Oracle. HP made about $1.8 billion from this. Adjusted earnings per share increased less - by 52%, to 0,94 $.
Taking into account the growth on the postmarket, HP shares rose by 44% year to date.
