Consumer Sector Update for 08/25/2017: ULTA, SIG, GME

Top Consumer Stocks

WMT +0.58%

MCD +0.39%

DIS +0.45%

CVS +0.48%

KO +0.69%

Consumer stocks were recovering Friday following yesterday’s steep fall, with shares of consumer staples companies in the S&P 500 posting a nearly 0.6% gain while shares of consumer discretionary firms in the S&P 500 were advancing nearly 0.3% this afternoon.

In company news, Friday trading was ugly for specialty retailer Ulta Beauty ( ULTA ) after last night reporting Q2 financial results exceeding Wall Street expectations although slowing same-store sales and a less-than-gorgeous forecast for the current reporting period weighed on shares.

The company earned $1.83 per share during the three months ended July 29, which includes $0.02 per share linked to new accounting standards and improving on $1.43 per share during the same quarter last year and beating the Capital IQ consensus by $0.05 per share. Net sales rose 20.7% over year-ago levels to $1.29 billion, matching the analyst mean.

Sales at stores open more than 14 months and also including ecommerce sales grew 11.7% during the May-to-July fiscal period compared with a 14.4% increase during the same quarter last year. It also is projecting a rise of 9% to 11% in Q3 same-store sales, slipping from a 16.7% pace during the year-ago period.

Ulta last night guided Q3 net income in a range of $1.63 to $1.68 per share on between $1.33 billion to $1.35 billion in sales. Analysts, on average, are expecting the company to earn $1.68 per share during the three months ending Oct. 31 on $1.33 billion in sales.

Following the disappointing outlook, analysts at BMO Capital Markets today cut their investment recommendation for the company’s stock to market perform from outperform, also reducing their price target by $110 to $235 a share.

In other sector news,

(+) SIG, (+6.2%) Analysts at RBC Capital today raise price target for the company’s stock by $3 to $66 a share, also reiterating an outperform investment recommendation.

(-) GME, (-12.8%) Q2 net income falls to $0.15 per share from EPS of $0.27 during year-ago period and missing the Capital IQ consensus by $0.01 per share. Net sales rise to $1.69 bln, topping the $1.64 bln Street view.

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