Dollar Tree, Best Buy, HP and others: main reports from 23 November

Dollar Tree, Best Buy, HP и другие: главные отчеты от 23 ноября

Many large retailers reported yesterday, and another manufacturer of office equipment. This is 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 the bottom line.

Dollar Tree also promised to expand its assortment with more expensive goods.. Already in the first quarter of 2022, most of the goods in the store will cost 1,25 $. This is how the company plans to compensate transportation and other expenses., and also 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, a chain of discounters 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%).

Electronics seller reported better than expected and even slightly increased its sales forecast for the year. But it didn't help stocks.

The 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, after all, consumers are switching their attention from technology to travel and other entertainment. All of this could force Best Buy to sell off its stock at discounted prices.. Lower prices coupled with rising logistics costs will negatively impact 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%).

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Sporting goods seller's results far exceed analysts' expectations. The company also raised its FY2021 sales forecast from $ 11.7 billion to $ 12.2 billion..

Retailer successfully survives the pandemic. During the quarantine, the company began to develop its online store. As a result, digital sales have doubled compared to 2019. They account for about 19% of total revenue.

Dick's Sporting Goods continues to invest in its business in 2021. 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 health products 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 closed factories 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 costs by about $ 450 million. The company downgraded its sales growth forecast for the year from 30 to 20%.

Taking into account the last drop on the 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, fell short of forecasts. Most likely, investors didn't like, that Nordstrom failed to pass its costs on to buyers as efficiently, how Macy’s and Kohl’s did it. Unlike Nordstrom, both of these companies raised their profit forecasts for the year..

Considering the strong drop on the postmarket, shares of Nordstrom since the beginning of the year have fallen in price by 19%.

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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 are eased.

Among other things, the size of the net profit was influenced by the victory in court with Oracle. HP earned about $ 1.8 billion on 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.

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