Advancing issues outnumbered declining stocks on Wall Street Friday, but the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) both fell.
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Data source: Yahoo! Finance.
Retail stocks were in the spotlight today, and some positive earnings reports fueled a 2.8% gain in the SPDR S&P Retail ETF (NYSEMKT: XRT). Gold made a strong move upward today as the dollar weakened. The SPDR Gold Shares ETF (NYSEMKT: GLD) closed up 1.2%.
As for individual stocks, Foot Locker (NYSE: FL) beat third-quarter expectations and gave investors hope for a good Q4, and Williams-Sonoma (NYSE: WSM) gave a disappointing outlook.
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Foot Locker steps over a low bar
Sneaker retailer Foot Locker reported third-quarter results that beat investor expectations, and the stock shot up 28.3%. Sales fell 0.8% to $1.87 billion and non-GAAP earnings per share fell 23% to $0.87. The declining numbers still beat Wall Street's low expectations for the quarter, which were for EPS of $0.80 on revenue of $1.83 billion. Comparable-store sales declined 3.7%, in line with guidance the company gave three months ago.
The comparison with last year may look grim, but what perked up the ears of analysts was an improved outlook for sales of high-end athletic shoes. Average selling prices in the quarter were up in the high single digits, and in the conference call, the company commented that availability of premium sneakers, a big issue in Foot Locker's disappointing second quarter, has been improving and should be good for the holidays.
"Despite the highly promotional environment we still see in the marketplace, the availability of premium product is gradually improving compared to the first half of the year, and we believe we can achieve, and perhaps modestly exceed, the top- and bottom-line guidance we gave for the fourth quarter back in August," said CEO Richard Johnson in the press release.
Expectations were so low for Foot Locker that an earnings beat and some encouraging words about the holiday season were all it took to put the squeeze on short-sellers and kick the shares into high gear.
Williams-Sonoma falls on weak holiday guidance
Shares of Williams-Sonoma lost 13.4% after the home-furnishings retailer reported earnings that were above analyst expectations, but gave guidance for the fourth quarter that was below what Wall Street was looking for. The retailer also announced a cash acquisition of a company that makes a platform for 3D augmented reality.
Sales grew 4.3% to $1.299 billion, thanks to comparable brand revenue growth of 3.3%. EPS came in at $0.84, or $0.86 excluding the effect of hurricanes. E-commerce net revenue increased 6.4% and accounted for 53.1% of the total. Retail store net revenue grew 2.1%.
Looking forward, Williams-Sonoma expects the holiday quarter to generate revenue of $1.61 billion to $1.675 billion on comps growth between 2% and 6%, and EPS between $1.49 and $1.64. Analyst were expecting $1.65 in earnings per share.
The company also announced that it is acquiring Outward, Inc., a 3D imaging and augmented reality platform for the home furnishings industry for $112 million in cash. "We are excited to own and collaborate in the further development of Outward's technology that enables applications in product visualization, digital room design, and augmented and virtual reality," said CEO Laura Alber in the press release.
The acquisition of the software company is an innovative step that Williams-Sonoma hopes will change the way people shop for home furnishings. That may happen, but Wall Street's show-me-now preoccupation with the current quarter drowned out any consideration of the long term for the company today.
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