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Nike shares plunge after retailer says quarterly sales will…

28 June 2024
by admin

Nike shoes and logo are seen at a store in Nice, France on May 28, 2024.

Jakub Porzycki | Nurphoto | Getty Images

Shares of Nike plunged on Thursday after the retailer cut its full-year guidance and said it expects sales to drop 10% during its current quarter as it warned of soft sales in China and “uneven” consumer trends across the globe.

The expected 10% first-quarter slump is far below the 3.2% drop that analysts had expected, according to LSEG.

The sneaker giant now expects fiscal 2025 sales to be down mid-single digits, compared to analyst estimates of a 0.9% increase. Nike previously expected sales to grow. The company also expects sales in the first half to be down in the high single digits, compared to previous guidance of declines in the low single digits.

“A comeback at this scale takes time,” the retailer’s finance chief Matthew Friend said on a call with analysts. “Although the next few quarters will be challenging, we are confident that we are repositioning Nike to be more competitive with a more balanced portfolio to drive sustainable, profitable, long-term growth.”

The company cut its guidance as it contends with slower online sales, planned declines in classic footwear franchises, “increased macro uncertainty” in the Greater China region and “uneven consumer trends” across Nike’s markets, Friend said. It also expects sales into wholesalers to be slower as it scales new innovations and pulls back on classic franchises.

Shares plunged roughly 11% in extended trading.

For the fiscal fourth quarter, the company handily beat earnings estimates as its cost-cutting efforts continue to bear fruit, but Nike fell short on revenue.

Here’s how Nike did during the period compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: $1.01 adjusted vs. 83 cents expected
Revenue: $12.61 billion vs. $12.84 billion expected

The company’s reported net income for the three-month period that ended May 31 was $1.5 billion, or 99 cents per share, compared with $1.03 billion, or 66 cents per share, a year earlier.

Sales dropped to $12.61 billion, down about 2% from $12.83 billion a year earlier.

In fiscal 2024, Nike posted sales of $51.36 billion, which is flat compared to the prior year. It’s the slowest pace of annual sales growth the company has seen since 2010, excluding the Covid-19 pandemic.

Nike executives attributed the sales miss to a range of factors. They said its lifestyle business declined during the quarter and that momentum in its performance business, such as its basketball and running shoes, wasn’t enough to offset it.

Online performance was soft because Nike had a higher share of lifestyle products, more promotions and fewer sales of classic franchises, such as its Air Force 1. It also saw traffic in China decline across all channels beginning in April due to macro conditions in the region.

Despite the traffic decline in China, sales in the region exceeded Wall Street expectations, according to StreetAccount, coming in at $1.86 billion, compared with estimates of $1.79 billion. It was the only geographical segment to top estimates for the period.

Sales in North America, its largest market, came in at $5.28 billion, below StreetAccount expectations of $5.45 billion.

In Europe, Middle East and Africa, Nike posted revenue of $3.29 billion, compared to estimates of $3.32 billion. In Asia Pacific and Latin America, Nike saw $1.71 billion in sales, compared to estimates of $1.77 billion.

Still, Friend later warned of the “softer outlook” in China and said had it not been for Chinese marketplace Tmall’s early start to the region’s 618 shopping holiday, sales in the country would’ve fallen short of Nike’s internal expectations.

“The China marketplace remains highly promotional, and we continue to manage both Nike and partners’ inventory carefully,” said Friend. “While our outlook for the near term has softened, we remain confident in Nike’s competitive position in China in the long term.”

Nike’s Converse brand was once again a significant underperformer in the overall results. The division saw revenue plunge 18% to $480 million, largely due to declines in North America and Western Europe.

Sneaker leader loses its crown

Over the last few months, the longtime leader of the sneaker and athletic apparel category has found itself in a rough patch, working to stay ahead of a slew of upstart competitors. Its revenue growth has slowed, it’s been criticized for falling behind on innovation and it’s in the process of walking back its direct-sales strategy, which failed to produce the results the company had anticipated.

Under the strategy shift, Nike had been working to drive sales through its own website and stores rather than through wholesalers like Foot Locker, but it recently began walking back that initiative, telling CNBC in April that it went too far when it moved away from wholesalers.

The strategy can be more profitable and gives companies better control over their brands and customer data, but it can also create logistical headaches and come with unexpected — and costly — hiccups.

During the quarter, Nike direct revenues came in at $5.1 billion, down 8% compared to the prior year period. Meanwhile, wholesale revenue was up 5% to $7.1 billion, reflecting Nike’s change of heart on direct selling.

According to some analysts, the company’s focus on building out its direct sales strategy led Nike to take its eyes off of innovation — the main attribute that had long made the company stand out.

As the retailer churned out more and more old favorites, such as the Air Force 1, upstarts like On Running and Hoka wowed runners with brand new designs — and snatched them up as customers.

Nike has said that it would reduce the amount of products it had on the market in favor of new innovations and is betting that a suite of new styles, along with the 2024 Paris Olympics, can get the company back on solid footing.

During the company’s conference call, CEO John Donahoe said Nike was accelerating its plans to reduce supply of classic franchises because the brands had performed poorly online, which is expected to affect fiscal 2025 revenue.

“We are taking our near-term challenges head-on, while making continued progress in the areas that matter most to NIKE’s future — serving the athlete through performance innovation, moving at the pace of the consumer and growing the complete marketplace,” Donahoe said in a release. “I’m confident that our teams are lining up our competitive advantages to create greater impact for our business.”

Some of Nike’s challenges are also outside of its control. It has contended with a rough macroeconomic environment that’s seen consumers pull back on sneakers purchases, and it also may be finding itself on the wrong side of trends. Some analysts expect the overall athletic category to face a slowdown this year as denim makes a comeback with consumers and shoppers look to dress up after years of dressing down.

In the meantime, Nike has focused on cutting costs so it can at least deliver strong profits against unsteady sales.

In December, it announced a broad restructuring plan to reduce costs by about $2 billion over the next three years. Two months later, Nike said it was shedding 2% of its workforce, or more than 1,500 jobs, so it could invest in its growth areas, such as running, the women’s category and the Jordan brand.

— Additional reporting by CNBC’s Sara Eisen and Jessica Golden

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Levi’s shares drop 12% as jeans maker’s sales disappoint…

26 June 2024
by admin

Denim is having a moment with consumers, but it hasn’t led to a major sales boost at Levi Strauss.

The jeans creator on Wednesday posted fiscal second-quarter revenue that fell just short of Wall Street’s expectations at a time when shoppers are stocking their wardrobes with denim dresses, skirts and ultra low-rise baggy pants.

Levi’s posted better-than-expected earnings as its direct sales to consumers and cost cutting continue to bear fruit. The company raised its dividend by 8% to 13 cents per share, its first increase in six quarters.

Still, shares fell about 12% in extended trading.

Here’s how Levi’s performed during the quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: 16 cents adjusted vs. 11 cents expected
Revenue: $1.44 billion vs. $1.45 billion expected

The company’s reported net income for the three-month period that ended May 26 was $18 million, or 4 cents per share, compared with a loss of $1.6 million, or zero cents a share, a year earlier. Excluding one-time items, Levi’s posted earnings of $66 million, or 16 cents per share.

Sales rose to $1.44 billion, up about 8% from $1.34 billion a year earlier. However, the sales jump was coming off of an easier comparison.

In the year-ago period, sales were down 9% after Levi’s shifted its wholesale shipments from its fiscal second quarter into its fiscal first quarter. The shift reduced sales last year by about $100 million, the company said previously. Excluding the shift, as well as the exit of Levi’s Denizen business, sales would have been up by only about 1% in its most recent quarter compared to the year-ago period.

Finance chief Harmit Singh attributed the sales miss to unfavorable foreign exchange conditions and weak sales at Docker’s. During the quarter, the khaki and chinos brand saw $82.4 million in sales, up 8.6% from $75.8 million in the year ago period. It’s not clear how sales at Docker’s were affected by the timing of Levi’s wholesale orders.

“People are generally cautious,” Singh told CNBC in an interview. “It’s not necessarily an environment where people are buying a lot, people are cautious.”

While Levi’s posted a strong earnings beat, it only reaffirmed its full-year guidance, which was in line with estimates. The company continues to expect full-year earnings per share to be between $1.17 and $1.27, which now includes a 5-cent hit coming from the company’s new distribution and logistics strategy.

Levi’s said it is transitioning from a primarily owned-and-operated distribution and logistics network in the U.S. and Europe to one that relies more on third parties.

“In the near term, these changes require the parallel operation of new and old facilities for the rest of 2024, resulting in a transitory increase in distribution costs,” the company said.

The change allows Levi’s to shift the responsibility of final mile delivery to third parties. The denim maker noted that it has new terms with its supplier that result in Levi’s taking ownership of inventory closer to the point of shipment rather than its eventual destination. Levi’s distribution network was built for a business that primarily sold to wholesalers, and now it needs to change into one that’s more focused on selling directly to consumers.

The changes are necessary because nearly half of Levi’s sales these days are coming from its own website and stores.

Direct-to-consumer sales jumped 8% during the quarter, representing 47% of overall sales. Online sales increased 19%.

“Our transformational pivot to operating as a DTC-first company is yielding positive results around the world, giving me great confidence that we will achieve accelerated, profitable growth for the rest of the year and beyond,” CEO Michelle Gass said in a statement.

During the quarter, wholesale revenue grew 7%, but excluding the shift in timing of wholesale orders, sales in the channel decreased 4%. Singh noted that wholesale revenue improved on a sequential basis, but the company has a “conservative” view of the channel’s growth moving forward.

By building out its own direct channels, Levi’s enjoys higher profits, better data on its consumers and less reliance on shaky wholesalers like Macy’s and Kohl’s, which are continuing to shrink and fall out of favor with consumers.

However, selling directly can also be more expensive, and can come with unexpected hiccups that can impact sales and drain profits. For example, when someone buys a pair of Levi’s from Macy’s and wants to return them, Macy’s typically bears that cost. Under a direct model, that responsibility, including the cost and logistics, would fall on Levi’s.

Nike has come to be known as a cautionary tale for retailers long reliant on wholesalers that try to expand direct sales.

For a while, Nike’s focus on direct sales boosted revenue and profits, but some critics said the strategy shift led to a slowdown in innovation, and ultimately, market share losses.

Recently, the company acknowledged that it erred when it cut off so many of its wholesale partners and said it has since “corrected” that.

Read the full earnings release here.

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Southwest Airlines cuts revenue forecast

26 June 2024
by admin

A Southwest Airlines jet is parked Ellison Onizuka Kona International Airport at Kehole awaiting passengers on January 20, 2024 in Kailua-Kona, Hawaii.

Kevin Carter | Getty Images

Southwest Airlines shares fell roughly 4% in premarket trading Wednesday after the carrier cut its second-quarter revenue forecast, citing changing booking patterns.

Southwest expects revenue per available seat mile, the amount the airline brings in for every seat it flies one mile, will fall between 4% and 4.5% in the second quarter over last year, after previously estimating a 1.5% to 3.5% decline.

It also said its unit expenses, excluding fuel, would be up as much as 7.5% over the year-earlier period, after previously expecting no change.

It said its capacity would rise as much as 9% instead of the flat growth it had previously expected in how much it flies.

Southwest still expects record quarterly operating revenue in the second quarter.

Airlines are raking in record numbers of passengers but higher costs and growth in capacity have weighed on fares and profits.

“The reduction in the Company’s RASM [revenue per available seat mile] expectations was driven primarily by complexities in adapting its revenue management to current booking patterns in this dynamic environment,” Southwest said in a filing.

Other carriers like Delta and United, meanwhile, have been enjoying passengers’ return to international travel and have invested heavily in travelers’ willingness to pay more for roomier seats.

Southwest is under activist investor pressure from hedge fund Elliott Management, which has called for CEO Bob Jordan and Chairman Gary Kelly to be replaced, saying the company is underperforming and needs a change at the top.

The Dallas airline has expressed confidence in its leadership and reiterated that it is considering revenue initiatives like seating assignments or premium seating, which would be massive changes to the company’s simple business model that has been profitable for most of the last five decades.

“We will adapt as our customers’ needs adapt,” Jordan said at an industry event hosted by Politico earlier this month.

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Fast-food customers are shifting to casual-dining chains, Darden Restaurants…

20 June 2024
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Customers arrive at an Olive Garden location in San Antonio, Texas.

Callaghan O’Hare | Bloomberg | Getty Images

Casual-dining chains are gaining customers who have grown frustrated with higher fast-food prices, Darden Restaurants CEO Rick Cardenas said on Thursday.

While Darden itself hasn’t benefited from the shift, its competitors, like Chili’s owner Brinker International and Applebee’s parent Dine Brands, have been reigniting a rivalry with their fast-food counterparts — and it seems to be working. Chili’s introduced an ad campaign that calls out the Big Mac and other fast-food burgers for their prices. Dine Brands CEO John Peyton told CNBC in May that Applebee’s has been leaning into deals to win over fast-food diners.

On Darden’s quarterly earnings call Thursday, Cardenas told analysts that industry data is showing “a little bit of a shift from [quick-service restaurants] to some of those competitors” in casual dining.

As of May, full-service menu prices had risen 3.5% over the last 12 months, compared with a 4.5% increase for those of limited-service eateries, according to Department of Labor data. The overall consumer price index rose 3.3% in that period.

Consumers have been feeling the pinch of the more than two years of price hikes, even with fast-food chains, which typically benefit from tougher economic environments because consumers trade down to their cheaper meals. But both full-service restaurants and grocers alike have been highlighting their own value compared to fast-food meals, whether it’s the actual price or the overall experience and quality.

In particular, McDonald’s has faced backlash from customers, social media users and even House Republicans for its higher prices. In an open letter in late May, the company’s U.S. president, Joe Erlinger, hit back at critics claiming its menu prices have doubled, saying its prices are up 40% since 2019.

Even so, the company has taken steps to try to appeal to price-conscious diners. On Thursday, McDonald’s announced a new $5 value meal, plus free French fries on Fridays with any purchase of at least $1 for its mobile app customers.

Darden has been using a different strategy to win over diners. It has leaned on television advertising and kept its overall pricing lower than inflation to attract customers. In its fiscal fourth quarter, the company reported flat same-store sales growth and weaker-than-expected revenue, although its earnings beat Wall Street’s estimates.

Cardenas said the company has dealt with a “consistently weaker consumer environment,” as well as increased discounting and marketing pressure from its rivals. Still, executives touted that its restaurants are outperforming the broader casual-dining segment.

Shares of Darden rose more than 1% in morning trading on Thursday. The company’s stock has fallen 6% this year, dragged down by concerns about the consumer environment.

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Darden beats on earnings, even as Olive Garden, fine-dining…

20 June 2024
by admin

Olive Garden Italian restaurant sign showing company logo, Spokane Valley, Washington, owned by Darden Restaurants Incorporated headquartered in Florida.

Universal Images Group | Getty Images

Darden Restaurants on Thursday reported mixed quarterly results as Olive Garden’s same-store sales fell for the second consecutive quarter.

For fiscal 2025, Darden is forecasting that its same-store sales will grow just 1% to 2%.

Shares of the company rose more than 2% in premarket trading.

Here’s what the company reported compared with what Wall Street was expecting for the quarter ended May 26, based on a survey of analysts by LSEG:

Earnings per share: $2.65 adjusted vs. $2.61 expected
Revenue: $2.96 billion vs. $2.97 billion expected

Darden reported fiscal fourth-quarter net income of $308.1 million, or $2.57 per share, down from $315.1 million, or $2.58 per share, a year earlier.

Excluding costs related to the Ruth’s Chris acquisition and other items, the company earned $2.65 per share.

Net sales rose 6.8% to $2.96 billion, fueled by its acquisition of Ruth’s Chris Steak House and 37 other net new locations.

Darden’s overall same-store sales were flat for the quarter, dragged down by weaker-than-expected sales at Olive Garden and its fine-dining restaurants.

Olive Garden’s same-store sales fell 1.5%. Analysts were expecting the Italian-inspired chain to report flat same-store sales growth, according to StreetAccount estimates. Last quarter, Olive Garden’s same-store sales fell 1.8%, driven by a pullback from low-income consumers.

Darden’s fine-dining restaurants, which include The Capital Grille and Eddie V’s, saw their same-store sales shrink 2.6% in the quarter. That division now includes Ruth’s Chris, but those same-store results won’t be included in the category total for several more quarters.

LongHorn Steakhouse, which is overtaking Olive Garden as the gem of Darden’s portfolio, was the only segment to report same-store sales growth. The chain’s same-store sales rose 4% in the quarter.

Looking to fiscal 2025, Darden is forecasting earnings per share from continuing operations of $9.40 to $9.60, in line with Wall Street’s expectations of $9.55 per share. The company is also anticipating net sales of $11.8 billion to $11.9 billion, on the low end of analysts’ expectations of $11.94 billion.

Darden is projecting total inflation of 3% and same-store sales growth of 1% to 2% in fiscal 2025. Ruth’s Chris won’t be included in Darden’s same-store sales until the second quarter of fiscal 2025. The company plans to spend $550 million to $600 million on capital expenditures.

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Lululemon shares pop 12% despite lackluster earnings report and…

5 June 2024
by admin

Lululemon‘s growth in the Americas, its largest market, appears to be stalling after the retailer on Wednesday reported flat comparable sales in the region and weak guidance for the current quarter.

The athletic apparel retailer handily beat Wall Street’s earnings estimates, but only narrowly topped revenue expectations. Lululemon’s full fiscal year guidance suggests the company is betting conditions will improve in the back half of the year.

Here’s how Lululemon did in its first fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: $2.54 vs. $2.38 expected
Revenue: $2.21 billion vs. $2.19 billion expected

Despite the tepid growth, Lululemon’s stock jumped 10% in extended trading Wednesday. The company also announced it would add $1 billion to its stock buyback program.

The company’s reported net income for the three-month period that ended April 28 was $321 million, or $2.54 per share, compared with $290 million, or $2.28 per share, a year earlier.

Sales rose to $2.21 billion, up about 10% from $2 billion a year earlier.

In a news release, CEO Calvin McDonald touted the “strong momentum” the company is seeing in its international markets and hinted that it needs to do more work in the Americas to grow in the region again.

“We are pleased by the progress we are making to optimize our U.S. product assortment,” said McDonald. “Looking ahead, we continue to have a significant runway for growth and are confident in our team’s ability to powerfully deliver.”

Last quarter, McDonald said the company was seeing consumer dynamics change in the Americas, but also noted Lululemon fumbled by not having the right sizes and colors in its stores, which hit sales. During a call with analysts on Wednesday, McDonald said those issues continued during the fiscal first quarter.

He said Lululemon’s color assortment was too narrow in leggings, and the company was once again out of stock of the sizes its customers wanted. McDonald added the company didn’t buy enough of the items that were landing with consumers, leading to products being out of stock. He said he expects the company to be in a better inventory position in the second half of the year.

Lululemon is still growing in the Americas, but at a much slower pace than last year. During the first quarter of this year, sales in the Americas increased 3%, versus a 17% jump in the year-ago period. Comparable sales were flat from last year.

Across the business, Lululemon’s comparable sales grew 6%, below the 7% uptick that analysts had expected, according to StreetAccount.

As growth in the Americas slows, Lululemon issued weak guidance for the current quarter. It expects revenue to be between $2.40 billion and $2.42 billion, just below estimates of $2.45 billion, according to LSEG. It guided earnings per share to be between $2.92 and $2.97, compared to estimates of $3.02, according to LSEG.

The company appears to be expecting conditions to improve in the second half of the year. For the full year, Lululemon expects earnings per share to be between $14.27 and $14.47, ahead of the $14.11 that analysts had expected. It’s expecting revenue to be between $10.7 billion and $10.8 billion, which is in line with expectations, according to LSEG.

Lululemon, still widely considered to be a best in class retailer and a market leader, has hit a bit of a rough patch as of late. Its stock is down 40% year to date as of Wednesday’s close, as investors become concerned about its growth prospects.

It recently announced that its longtime chief product officer Sun Choe would be resigning, which caused shares to fall. Lululemon could also soon find itself on the other side of trends. Denim is having a major moment with consumers, and investors have been concerned that shoppers could be swapping athleisure for jeans, which could hit Lululemon’s topline.

Read the full earnings release here.

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Kohl’s stock plummets 25% after massive earnings miss

30 May 2024
by admin

Shoppers walk in front of a Kohl’s store in Mount Kisco, New York.

Scott Mlyn | CNBC

Kohl’s shares plummeted 25% Thursday after the company posted a surprise loss per share, coming in well below Wall Street’s expectations for a slight profit.

That share slide puts the stock on pace for its biggest single-day percentage decline ever.

In an interview with CNBC, CEO Tom Kingsbury chalked up slower sales to tough comparisons. He said the department store had higher-than-usual clearance levels in the year-ago period, as it tried to clean up inventory and jumpstart its turnaround plan.

He added sales trends started the quarter strong in January and February, but weakened in the last five weeks of the period as customers held back on buying seasonal merchandise, such as clothing for spring, because of poor weather. He said “fortunately, we see it coming back as the weather improves.”

For investors, Kohl’s weak results have raised questions about the company’s turnaround strategy. Led by Kingsbury, the previous leader of off-price chain Burlington Stores, Kohl’s has tried to attract shoppers by adding fresh merchandise like home decor, gifting items and pet goods. It’s also opened more Sephora shops inside of its stores.

So far, those efforts haven’t shown up much in the numbers. Kohl’s reported a net loss of $27 million, or a loss of 24 cents per share, for the first quarter compared with a year-ago profit of $14 million, or 13 cents per share.

Net sales decreased 5.3% to $3.18 billion compared with the year prior.

Here’s how Kohl’s did in its fiscal first quarter compared with what Wall Street was expecting, according to a survey of analysts by LSEG:

Loss per share: 24 cents vs. a profit of 4 cents expected
Revenue: $3.18 billion vs. $3.34 billion expected

The company on Thursday lowered its 2024 guidance. It now expects full-year net sales to decline between 2% and 4%. Wall Street analysts polled by LSEG had been expecting its 2024 sales guidance to reflect a 0.2% gain.

Kohl’s expects full-year diluted earnings per share in the range of $1.25 to $1.85 — far lower than the $2.34 per share expected, according to LSEG.

Kohl’s stock plummets on first-quarter results.

On top of company-specific challenges, Kingsbury said the company took a more conservative stance with its full-year outlook because of higher interest rates and inflation.

“While spending among our high-income customers has remained steady, our middle-income customer continues to be impacted,” he said in the release.

Despite the first-quarter results, he told CNBC that Kohl’s has made progress with newer initiatives. For example, he said, the women’s category showed positive trends and Sephora in-store shops have continued to be a bright spot.

For Sephora at Kohl’s, comparable sales, a metric that takes out the impact of store openings and closings, rose 20% year over year during the quarter.

That’s far higher than Kohl’s comparable sales, which sank by 4.4% during the same period.

Kohl’s plans to open another 140 Sephora shops in the second quarter. It announced in March that it would add similar in-store outposts of Babies R Us to about 200 locations.

Other new categories are doing well, too, Kingsbury said, with comparable sales for seasonal and everyday decor up more than 30%. Some of those gains are because Kohl’s didn’t carry many items in those categories before. It has bulked up its selection, such as offering more picture frames, wall art and decorative glassware, like vases.

“We are going to continue to work hard on these underpenetrated categories,” Kingsbury said.

Inventory was down 13% year over year, as Kohl’s tightened up on expenses and tried to give itself more flexibility to respond quickly and buy merchandise that’s on trend. It has focused on that especially in the juniors department, which caters to teen girls. Kohl’s is moving that department next to Sephora, to encourage shoppers to browse for outfits, too.

“You have to be in the trend at the right time,” Kingsbury said. “You can’t be post trend, for sure.”

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Dick’s Sporting Goods stock surges 15%, as retailer says…

29 May 2024
by admin

A shopping cart sits in front of a Dick’s Sporting Goods store on August 26, 2020 in Daly City, California.

Justin Sullivan | Getty Images News | Getty Images

Dick’s Sporting Goods on Wednesday said customers are spending more on new sneakers and athletic gear, leading the retailer to raise its full-year earnings guidance.

The big-box sports store’s comparable sales grew 5.3% during its fiscal first quarter, well ahead of the 2.4% growth that analysts had expected, according to StreetAccount.

The company said that growth was driven by a 2.7% increase in transactions, meaning more customers are shopping at Dick’s, and a 2.6% jump in average ticket values, showing that shoppers are spending more, too.

Dick’s said shrink, a retail industry term that refers to lost or stolen merchandise, increased less than the company expected, after it saw higher than anticipated shrink last year.

The company’s shares surged more than 15% in intra-day trading.

Here’s how Dick’s did in the period compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: $3.30 vs. $2.95 expected
Revenue: $3.02 billion vs. $2.94 billion expected

The company’s reported net income for the three-month period that ended May 4 was $275 million, or $3.30 per share, compared with $305 million, or $3.40 per share, a year earlier.

Sales rose to $3.02 billion, up about 6% from $2.84 billion a year earlier.

“We saw growth across all of the different areas of our business. Footwear, apparel, total hard lines, all grew,” CEO Lauren Hobart told analysts on an earnings call. “The consumer is absolutely putting a priority on a healthy and active lifestyle. You see people running and walking, being outdoors. But I think the most important thing is that we are providing them with an experience that they’re clearly choosing and that’s both through the products that we have in our stores, as well as the experience that we provide in-store and online.”

Hobart said the strong quarter led Dick’s to raise its full-year guidance, but the company is remaining cautious for the back half of the year.

The retailer is now expecting earnings per share to be between $13.35 and $13.75, up from its previous range of $12.85 to $13.25. That’s ahead of the $13.25 that analysts had expected, according to LSEG.

The retailer’s caution was reflected in its sales guidance, which fell a bit flat after its first-quarter revenue beat.

Dick’s now expects comparable sales to rise between 2% and 3%, compared with previous guidance of up 1% to 2%. The low end of that range is only in line with the 2% growth that analysts had expected, according to StreetAccount.

Dick’s is expecting full-year revenue to be between $13.1 billion and $13.2 billion, which is also in line with estimates of $13.16 billion, according to LSEG.

“What we have done today in terms of the full-year guidance, is it reflects the results that we posted here in Q1 and we maintained largely our expectations for Q2 through Q4,” finance chief Navdeep Gupta told analysts. “There’s a little bit of a disconnect with the external consensus expectation but I would say, you know, we are appropriately cautious as we think about Q2.”

A jolt for footwear and apparel

Over the last year, consumers beaten down by stubborn inflation and high interest rates have pulled back on discretionary items like new clothes and shoes, but the apparel and footwear markets have shown some signs of life over the last couple of weeks.

Dick’s performance indicates that consumers are willing to shell out for new releases and other staples from big brands like Nike, Hoka, Adidas and On Running, and are spending on things that they may not necessarily need, but are nice to have.

Similar trends were spotted at other retailers. Last week, Ross Stores, Ralph Lauren, Urban Outfitters and TJX Cos. all reported positive comparable sales. Even Target mentioned that apparel was a bright spot in an otherwise dim quarter after the retailer saw sluggish clothes sales in the prior-year period. Demand for new Hoka sneakers and Ugg boots drove a 21% jump in sales at Deckers, and even Shoe Carnival, which caters more to lower-income consumers, saw sales grow about 7%, ahead of Wall Street’s estimates, according to LSEG.

More insights about the state of consumer health, and the impact it’s having on the apparel and footwear markets, are still to come. Abercrombie & Fitch reported its strongest first quarter in history on Wednesday and American Eagle is set to post earnings later in the afternoon. Foot Locker, Birkenstock and Gap will report on Thursday.

Read Dick’s full earnings release here.

— Additional reporting by CNBC’s Robert Hum.

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Oddity Tech says it’s bucking the beauty slowdown Ulta…

7 May 2024
by admin

As Ulta Beauty says it expects a slowdown in retail’s most resilient category, an upstart says it is bucking the trend.

Oddity Tech, the newly public Israeli cosmetics platform that uses artificial intelligence to develop products, posted first-quarter results that blew past expectations and raised its full-year guidance.

Here is how the beauty retailer behind the Il Makiage and Spoiled Child brands performed compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: 61 cents adjusted vs. 49 cents expected
Revenue: $211.63 million vs. $205 million expected

The company reported net income of $32.98 million, or 53 cents per share, for the three-month period that ended March 31, compared with $19.59 million, or 35 cents per share, a year earlier. Excluding one-time items, Oddity reported earnings of 61 cents per share.

Sales rose to $212 million, up about 28% from $166 million a year earlier.

The company is now expecting full-year revenue to be between $626 million and $635 million, compared to a prior outlook of $620 million to $630 million. Analysts had expected $627 million, according to LSEG. It expects adjusted earnings per share to be between $1.57 and $1.62, up from prior guidance of $1.49 to $1.54. Analysts had expected $1.51, according to LSEG.

For the current quarter, Oddity is expecting sales to be between $185 million and $189 million, and adjusted earnings per share to be in the range of 61 cents to 64 cents. Analysts had expected revenue of $186.5 million and earnings per share of 56 cents, according to LSEG.

Shares jumped nearly 10% in extended trading Tuesday.

Oddity, which started trading on the Nasdaq in July, aims to disrupt the legacy beauty and wellness industry by using AI to develop new products and tailor recommendations.

Oddity believes beauty and wellness products are best sold online, and that consumers will not need to visit beauty shops such as Ulta and Sephora if product selection can be improved.

Last month, Ulta Beauty CEO Dave Kimbell warned that demand for beauty products was cooling, sending its stock down 15% that day and hitting shares of e.l.f. Beauty, Estée Lauder and Coty.

“We have seen a slowdown in the total category,” Kimbell said at an investor conference hosted by JPMorgan Chase. “We came into the year — and we talked about this on our [earnings] call a few weeks ago — expecting the category to moderate. It has [had], as I said, several years of strong growth. We did not anticipate it would continue at the rate that it’s been growing.”

He added that the slowdown has been “a bit earlier and bit bigger than we thought.” Kimbell said the downturn has cut across price points and beauty categories, but has been more significant in prestige makeup and hair care.

Lindsay Drucker Mann, Oddity’s chief financial officer, disagreed that the category is slowing down.

“There’s no slowdown for us, not in our new users, and not in the way our existing users are behaving. If anything, the quarter shows there’s massive demand for online,” Drucker Mann told CNBC in an interview.

“What we do see is an industry that’s transforming,” she said. “So the consumer is moving online and the consumer is moving to high-efficacy products that really solve their problems and these are two really unstoppable trends that we see driving the industry that we are leading.”

Read the full earnings release here.

Science & Environment

Starbucks shares sink 12% as coffee chain slashes 2024…

1 May 2024
by admin

A Starbucks coffee shop in Amsterdam.

Nicolas Economou | Nurphoto | Getty Images

Starbucks on Tuesday reported weaker-than-expected quarterly earnings and revenue, fueled by a surprise decline in same-store sales.

The coffee chain also slashed its forecast for its fiscal 2024 earnings and revenue, predicting that its cafes would keep underperforming for several quarters.

Shares of the company fell 12% in extended trading.

“In a highly challenged environment, this quarter’s results do not reflect the power of our brand, our capabilities or the opportunities ahead,” CEO Laxman Narasimhan said in a statement. “It did not meet our expectations, but we understand the specific challenges and opportunities immediately in front of us.”

The company’s same-store sales fell 4% as traffic to its cafes declined 6% in the quarter. Wall Street was anticipating same-store sales growth of 1%, according to StreetAccount estimates.

Across all regions, Starbucks reported shrinking same-store sales and falling traffic.

In the U.S., same-store sales decreased 3% as traffic sank 7%. This marks the second quarter that the company’s home market has struggled. Last quarter, executives blamed sluggish sales on boycotts targeting the company due to “misperceptions” of its stance on Israel.

Starbucks’ international segment reported same-store sales declines of 6% as both average ticket and transactions dropped. In China, Starbucks’ second-largest market, same-store sales plunged 11%, fueled by an 8% decline in average ticket.

“In this environment, many customers have been more exacting about where and how they choose to spend their money,” Narasimhan told analysts on the company’s conference call.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: 68 cents adjusted vs. 79 cents expected
Revenue: $8.56 billion vs. $9.13 billion expected

The coffee giant reported fiscal second-quarter net income attributable to the company of $772.4 million, or 68 cents per share, down from $908.3 million, or 79 cents per share, a year earlier.

Net sales dropped nearly 2% to $8.56 billion.

For fiscal 2024, Starbucks now expects revenue growth in the low single digits, down from its prior forecast of 7% to 10%. The company also revised its projections for global and U.S. same-store sales growth to a range of low single digits to flat from its previous forecast of 4% to 6%. Same-store sales in China are expected to decline by single digits, down from the prior outlook of a single-digit increase.

Starbucks now also expects earnings per share growth in a range of flat to low single digits. It previously forecast its earnings would climb 15% to 20% in fiscal 2024.

The company forecasts that sales will start improving in the fiscal fourth quarter.

Waning sales

Starbucks’ most dedicated customers have stayed loyal and been using discounts offered via the company’s mobile app, executives said. But coffee drinkers who visit only occasionally have been buying Starbucks’ macchiatos and cold brew less often, executives said; Narasimhan said those customers want more variety from their coffee.

Starbucks is planning to offer a version of its app that allows customers to order without being a loyalty member in order to attract these occasional customers to visit more frequently.

Narasimhan said Starbucks is also exploring how to meet overnight demand, from 5 p.m. to 5 a.m. The company conducted a pilot test, which Narasimhan said doubled business.

He also said the chain’s lavender drinks were one of its most successful launches.

“Building off that success, we are aggressively pursuing options to build a $2 billion business over the next five years,” he said.

McDonald’s, PepsiCo and other companies have said this quarter that low-income consumers have pulled back their spending and are looking for deals.

“While it was a difficult quarter, we learned from our own underperformance and sharpened our focus with a comprehensive roadmap of well thought out actions making the path forward clear,” CFO Rachel Ruggeri said in a statement.

Narasimhan also said that the company now expects supply-chain cost savings of $4 billion over the next four years, revising its prior forecast of $3 billion over three years.