The major stock indexes were in record territory early on Thursday, but fell in the afternoon. Still, the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) both closed with gains.
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Energy stocks continued Wednesday's rally as the price of crude inched up toward $60, with the Energy Select Sector SPDR ETF (NYSEMKT: XLE) rising 2.1%. The real estate sector continued its recent declines, and the Vanguard REIT ETF (NYSEMKT: VNQ) lost 0.4%.
As for individual stocks, strong results from The Finish Line (NASDAQ: FINL) offered hope for sales of athletic shoes and mall traffic in the U.S., but shares of Bed Bath & Beyond (NASDAQ: BBBY) retreated as profit growth remained elusive.
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Finish Line returns to growth
Mall-based shoe vendor Finish Line reported third-quarter results that trounced its previous guidance for sales and profit, and the market rewarded it by bidding up the share price by 13%. Revenue increased 1.8% to $378 million on a comparable-store sales gain of 0.8%. The company's guidance three months ago was for comps to decline by 3% to 5%. Non-GAAP loss per share was $0.26, compared with guidance for a loss of between $0.32 and $0.40 per share.
The company also called out a sales gain of 2.3% for its store-in-store locations within Macy's (NYSE: M). In the conference call, CEO Sam Sato said that the Macy's sales are on track to reach management's long term goal of $350 million in annual sales ahead of schedule.
Looking ahead, Finish Line boosted its full-year guidance to a comparable sales decline of 2% to 3% and EPS of $0.59 to $0.67. Previously, the company had been guiding for EPS of $0.50 to $0.60 on a comps decline of 3% to 5%.
The transition to sales gains was obviously good news for investors in the retailer, which is struggling against multiple headwinds. But the news may also be a harbinger of similarly upbeat results from other sellers of athletic shoes, and perhaps a sign of rising traffic for mall-based businesses generally, and Macy's in particular. Footlocker (NYSE: FL) and Dick's Sporting Goods (NYSE: DKS) both moved up on the news. The company also singled out strong sales of the Nike (NYSE: NKE) VaporMax line, whichbodes well for that company's report, due later tonight.
Bed Bath and Beyond projects continued profit decline
Shares of Bed Bath & Beyond got marked down by more than 12% after the company reported quarterly earnings that beat expectations, but gave an outlook that failed to inspire investors. Sales were flat at $2.95 billion and earnings were $0.44 per share compared with $0.85 per share a year ago. Analysts were expecting EPS of $0.37 on sales of $2.90 billion. Comparable-store sales were down 0.3%, and were helped by strong digital sales. Comparable sales specific to physical stores declined by a low-single-digit percentage.
For the year, the company expects revenue to be flat or slightly positive relative to last year, on a low-single-digit-percentage drop in same-store sales. EPS guidance for the full year was maintained at $3.00, compared to the $4.51 per share it took in last fiscal year.
The guidance numbers themselves were not particularly shocking to watchers of the company, as they were in line with analysts' estimates. But investors had bid the stock up 20% over the last month in anticipation of seeing some sign of renewed profit growth. Apparently, that's not on the horizon. The company had maintained guidance for full-year EPS of $4.12 as recently as June, and hopes for a return to that level any time soon were dashed for the second quarter in a row. Nevertheless, with the stock selling at only 7.2 times the 2017 EPS guidance, it might not take much good news to send Bed Bath & Beyond shares back up again.
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