Stocks fell Wednesday as investors pondered the latest economic data. The U.S. trade deficit for goods hit a record and job creation slowed in February. The Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) posted moderate losses.
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Drug stocks fell the day after FDA Commissioner Scott Gottlieb announced his retirement; the SPDR S&P Biotech ETF (NYSEMKT: XBI) dropped 4.1%. Materials was the strongest sector, with the Materials Select Sector SPDR ETF (NYSEMKT: XLB) managing a 0.2% gain.
As for individual stocks, retailers Dollar Tree (NASDAQ: DLTR) and Urban Outfitters (NASDAQ: URBN) reported fourth-quarter results.
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Dollar Tree gets serious about dealing with Family Dollar problems
Discount retailer Dollar Tree reported fourth-quarter results that were in line with expectations and announced it is stepping up efforts to turn around its struggling Family Dollar chain. Dollar Tree is taking a $2.73 billion writedown on goodwill associated with Family Dollar, and it will close as many as 390 out of 8,264 stores this year. About 200 Family Dollar stores will be rebranded Dollar Tree. Shares gained 5.1%.
For Q4, net sales fell 2.5% to $6.21 billion, and excluding one-time charges, earnings per share rose 2.1% to $1.93, near the high end of its guidance. Same-store sales increased 2.4%, with Dollar Tree stores growing 3.2% and Family Dollar up 1.4%.
Dollar Tree has been pressured by activist investor Starboard Value to sell Family Dollar and begin selling goods in Dollar Tree stores for more than a dollar. Today's news indicates that the company is still focused on trying to fix Family Dollar rather than sell it. Dollar Tree did say it will try multiprice merchandise in some Dollar Tree test stores.
Urban Outfitter's tailwind becomes a gentle breeze
Clothing retailer Urban Outfitters reported mixed fourth-quarter results, as growth in online sales offset a decline in traffic in its physical stores, and shares slipped 0.1%. Net sales increased 3.7% to $1.13 billion and earnings per share of $0.80 beat analysts' expectations by $0.01.
Comparable sales in Q4, which were announced last month, were up 3.7% companywide, 4% at the Urban Outfitters brand, 4% at Free People, and 2% at Anthropologie. Online sales were up double digits, but the physical store channel posted a decline in comparable sales for the first time in the year. Traffic fell in both North America and Europe.
Urban Outfitters saw slowing sales trends in January and believes retail comparable sales and gross margin in Q1 could decline. "Over the past year, I've talked about strong tailwinds and a changing fashion silhouette as forces favorably impacting our business," said CEO Richard Hayne in the conference call. "Today, I believe those wins would be more accurately characterized as gentle breezes, still positive, but certainly less impacted."
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