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Why Embraer, Dillard's, and Farfetch Slumped Today

Dan Caplinger, The Motley Fool

Wall Street was in a good mood on Thursday, as major indexes generally finished up as much as 1%. After more than a week of anxiety, investors appear to be coming to grips with the new state of affairs on the trade front between the U.S. and China, and the market seems to be giving the Trump administration more latitude to take aggressive action in efforts to negotiate favorable deals. Yet not all stocks moved higher; some companies had to deal with challenges that sent their share prices lower. Embraer (NYSE: ERJ), Dillard's (NYSE: DDS), and Farfetch (NYSE: FTCH) were among the worst performers. Here's why they did so poorly.

Embraer loses altitude

Shares of Embraer fell 5%, adding to losses on Wednesday as investors continued to digest the aircraft manufacturer's latest quarterly report. On the day of the release, Embraer stock lost between 5% and 6%, thanks to results that included weak deliveries of just 11 commercial jets and 11 executive aircraft. The plane maker also lost money again, and despite a backlog of about $16 billion, shareholders seem worried about its future prospects. Embraer expects to move forward with its partnership with Boeing and affirmed its prior full-year projections, but investors are nervous about the uncertain environment in aerospace given Boeing's woes elsewhere.

Silhouette of airplane in the sky with setting sun and clouds behind it

Image source: Getty Images.

Dillard's deals with dying malls

Dillard's saw its stock drop 10.5% after the department store retailer reported its first-quarter financial results. Total revenue was higher by 1% on flat comparable-store sales, and although net income eased lower, a decline in shares outstanding helped boost earnings on a per-share basis by between 3% and 4% compared to year-ago levels. Yet gross margin fell well over a full percentage point, as weakness in shoes and cosmetics was only partially offset by strength in juniors' and children's apparel, as well as the home and furniture category and the men's apparel and accessories groups. Between high levels of inventory and costs of competing against e-commerce competition, Dillard's faces a tough situation and will have to work hard to move beyond it.

Farfetch can't grow fast enough

Finally, shares of Farfetch plunged almost 11%. The online luxury fashion platform reported first-quarter results for 2019 that included a 39% jump in overall sales on 44% gains in gross merchandise value sold over the platform. Yet after-tax losses more than doubled from year-ago levels, and even on an adjusted basis, Farfetch posted more red ink than it did in the first quarter of 2018. Founder and CEO Jose Neves believes that the company is in good position "to continue capturing share of the significant opportunity in the online personal luxury goods market," but shareholders seem to want even faster growth and more progress toward breaking even before they'll be completely confident in Farfetch's prospects.

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Dan Caplinger owns shares of BA. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.