Stocks rose Wednesday after comments by Federal Reserve Chairman Jerome Powell supported the view that an interest rate cut is coming. The Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) closed just short of new highs, and the tech-heavy Nasdaq Composite finished at a record.
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As for individual stocks, newly public Levi Strauss (NYSE: LEVI) reported disappointing profits, but WD-40 (NASDAQ: WDFC) notched another quarter of strong growth.
Levi Strauss stumbles
Second-quarter profits at jeans maker Levi Strauss were skinnier than what investors were expecting, and shares fell 12%. Revenue grew 5.4% to $1.31 billion, slightly above the analyst consensus. Net income plunged 63% to $29 million, resulting in earnings per share of $0.07 when analysts were expecting $0.13.
Revenue growth would have been 9% if it weren't for the effect of the strong dollar, and the profit comparison was hurt by $29 million in costs related to the initial public offering and $10 million in lower gains on foreign exchange derivatives, but the company also increased its advertising spending in the quarter.
Revenue in Europe jumped a healthy 18% in constant currency and growth in Asia, where Levi Strauss has yet to fully exploit a large opportunity in China, was 12%. Sales in the company's largest market, the U.S., were disappointing. Wholesale revenue fell 2%, leading to anemic 1% growth in domestic sales.
Levi Strauss sees more headwinds for its U.S. wholesale business in the second half, and given that Black Friday will come after its fourth quarter ends, the company told investors to expect slimmer sales growth in the back end of the year.
WD-40 surprises again
WD-40 continues to find ways to grow sales of its iconic spray lubricant and reported fiscal third-quarter results that blew away expectations, causing shares to gain 8.6%. Net sales jumped 6.5% to $114 million and earnings per share increased 13% to $1.30. Analysts were expecting the company to earn $1.22 per share on revenue of $109 million.
Worldwide sales of the classic blue-and-yellow can were up 7% to $88.4 million. International revenue provided the growth for the company in the quarter, with sales in Asia-Pacific up 14% and those in the company's Europe, Middle East, and Africa segment rising 13%. Sales in the Americas were flat, largely because customers in Q3 last year were buying high volumes in advance of a price increase.
Looking forward, WD-40 expects full-year 2019 revenue between $425 million and $437 million, above the $423 million analyst consensus, and earnings per share between $4.58 and $4.65, an increase of $0.07 over guidance given last quarter.
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