Stocks offered off as a result of geopolitical considerations and falling oil costs on Friday. The Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) each had small losses.
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Oil shares tumbled on information that Saudi Arabia and Russia are close to an settlement to extend manufacturing, pushing oil costs down over four%. The SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) fell three.2%. Homebuilders had been a vivid spot, with the iShares US Home Construction ETF (NYSEMKT:ITB) rising 1.5%.
As for particular person shares, retail earnings stories proceed to provide winners and losers in the market, with Foot Locker (NYSE:FL) rising greater on its revenue outlook and The Gap, Inc. (NYSE:GPS) stumbling as a result of softening in its core model.
Foot Locker off to the races on sturdy revenue
Shares of specialty athletic retailer Foot Locker jumped 20.2% after the firm reported first-quarter results that exceeded expectations and gave an upbeat outlook for the remainder of the yr. Revenue elevated 1.2% to $2.03 billion, in contrast with analyst expectations for a 2% decline. Earnings per share grew by $zero.02 to $1.38 whereas Wall Street was anticipating $1.25.
Comparable-store gross sales fell 2.eight% from the interval a yr earlier and gross margin decreased from 34% to 32.9%. Selling, common, and administrative spending elevated to 19% from 18.5% a yr in the past, as a result of greater investments in digital operations.
Those might not sound like stellar outcomes, however they had been higher than what the firm was anticipating. “The flow of premium product continues to improve, with increasing breadth and depth in the most sought after styles from our key vendors,” mentioned CEO Richard Johnson in the press launch. “This led to first quarter results which were above our expectations. With the strength of our strategic vendor partnerships and our central position in youth culture, we continue to believe that we are poised to inflect to positive comparable-store sales growth as we progress through the year.”
In the convention name, the firm mentioned it anticipated strengthening gross sales efficiency throughout the yr and double-digit development in adjusted earnings per share over the $three.99 it earned final yr.
Foot Locker had a low bar to step over this quarter, however the upbeat outlook, together with a 7.1% decline in stock as the firm cleared out slow-moving merchandise, had buyers believing in the inventory right now.
Gap model shops drag down revenue
Shares of Gap plummeted 14.6% after the firm reported higher-than-expected gross sales however missed revenue estimates. Sales had been up 10% to $three.78 billion and EPS elevated 16.7% to $zero.42. Analysts had been anticipating the firm to earn $zero.46 per share on income of $three.6 billion.
Gap continues to wrestle with its flagship shops, which had a comparable-sales decline of four%, after flat efficiency in the earlier quarter. Growth in its Old Navy shops slowed to a three% comp acquire, after rising 9% in This autumn. Banana Republic was a vivid spot, rising comparable gross sales three%, up from 1% final quarter and a four% decline in the year-ago interval. Gross margin, excluding the impact of an accounting change, declined 120 foundation factors from final yr, largely as a result of the Gap model.
Looking ahead, Gap reaffirmed earlier steerage for EPS between $2.55 and $2.70, which is 22.7% forward of final yr’s quantity at the midpoint, and comparable gross sales flat to up barely.
In the convention name, Gap administration mentioned “operational missteps” led to excessive stock in the Gap model going into the quarter, which led to a choice to aggressively dump the extra. CFO Teri List-Stoll mentioned that the strain will proceed into Q2, however tried to reassure analysts that the trigger was not a problem with product acceptance by prospects.
Investors weren’t shopping for that right now, although, believing that the Gap brand has longer-term points.