{"id":87314,"date":"2023-11-22T00:32:24","date_gmt":"2023-11-22T05:32:24","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/lowes-and-kohls-fell-but-burlington-stock-soared-it-isnt-just-the-economy\/"},"modified":"2023-11-22T00:32:25","modified_gmt":"2023-11-22T05:32:25","slug":"lowes-and-kohls-fell-but-burlington-stock-soared-it-isnt-just-the-economy","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=87314","title":{"rendered":"Lowe’s and Kohl’s Fell but Burlington Stock Soared. It Isn’t Just the Economy."},"content":{"rendered":"
\n
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Tuesday\u2019s slew of earnings reports rocked the retail industry, sending some stocks tumbling double digits and others soaring by just as much.\u00a0<\/p>\n

What\u2019s behind the divergence?\u00a0<\/p>\n

\n

Certainly, the macroeconomic environment\u2014and how companies are navigating through it\u2014has something to do with it. Many retailers whose stocks were lower Tuesday\u2014including
\n Lowe\u2019s
\n (ticker: LOW),
\n Kohl\u2019s
\n (KSS), and
\n Best Buy
\n (BBY)\u2014saw sales fall over the third quarter as consumers reined in their discretionary spending.\u00a0
\n Kohl\u2019s
\n closed 9% lower, Lowe\u2019s was down 3%, and
\n Best Buy
\n was off 0.7%. <\/p>\n

\u201cOur results were driven by a greater than expected pullback in DIY discretionary spending, especially in bigger ticket categories,\u201d said Lowe\u2019s CEO Marvin Ellison in a call with investors. \u201cWhile we\u2019ve seen a more cautious consumer for some time now, this quarter we saw some of these consumers increasingly prioritizing experiences over goods spending on travel and entertainment.\u201d<\/p>\n

Stock in off-price retailer
\n Burlington Stores
\n (BURL), in turn, closed 21% higher, its largest one-day percent increase on record, after the company said Tuesday that its revenue jumped 12% from the year-ago quarter\u2014another sign that Americans are looking for value amid a slowing economy.\u00a0Markets are also rallying behind the company\u2019s improved margins\u2014suggesting investors are still willing to reward strong execution. <\/p>\n

\u201cOur expectation coming into this year was that the economy would slow down and that that would cause shoppers to become more value conscious; and therefore, we\u2019ve seen more trade down traffic in our stores,\u201d said Michael O\u2019Sullivan, CEO of Burlington on Tuesday.<\/p>\n

The macro factor, however, doesn\u2019t fully explain Burlington\u2019s rally\u2014the earnings beat was narrow, and the company didn\u2019t raise guidance. It also doesn\u2019t explain why shares of
\n American Eagle Outfitters
\n (AEO) tanked 16% Tuesday, even though the company beat expectations\u2014nor why the market reaction to
\n Abercrombie & Fitch\u2019s
\n (ANF) stellar quarter was relatively muted, with the stock closing 2% higher.\u00a0<\/p>\n

Part of it may boil down to expectations\u2014some companies had to clear a higher bar than others heading into the report. Abercrombie has been cranking out beat after beat, which has boosted both the share price and Wall Street\u2019s outlook for the company.<\/p>\n

\u201cStepping back, this was a strong [quarter], and the stock may struggle to move higher given already-high expectations,\u201d wrote Citi analyst Paul Lejuez in a client note, referring to Abercrombie\u2019s report. He said the same about American Eagle\u2019s print.\u00a0Heading into earnings, Abercrombie\u2019s stock had gained a whopping 215%, while American Eagle was up 41%. The
\n S&P 500
\n gained 18% in the same period. <\/p>\n

Burlington has seen a couple of choppy quarters, so any improvement in both the top- and bottom-line was well received. Expectations were also low heading into Dick\u2019s Sporting Goods report, so when the company posted what Wells Fargo analyst Will Gaertner calls a \u201crare beat and raise\u201d for this earnings season, the stock rose. It closed 2% higher Tuesday, but reached intraday highs to gain as much as 12%, according to Dow Jones Market Data. <\/p>\n

It isn\u2019t the first time this earnings season that we see expectations driving share prices. Last week, Target and
\n Walmart\u2019s<\/span>
\n stocks went in opposite directions following earnings, partly because investors were expecting little from the former, and too much from the latter.<\/p>\n

\u201cIt would have taken a real blockbuster announcement to move [Walmart stock] up because that was already priced,\u201d Don Nesbitt, portfolio manager at F\/m Investments, told Barron\u2019s<\/em> last week.\u00a0<\/p>\n

Write to Sabrina Escobar at sabrina.escobar@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Tuesday\u2019s slew of earnings reports rocked the retail industry, sending some stocks tumbling double digits and others soaring by just as much.\u00a0 What\u2019s behind the divergence?\u00a0 Certainly, the macroeconomic environment\u2014and how companies are navigating through it\u2014has something to do with it. Many retailers whose stocks were lower Tuesday\u2014including Lowe\u2019s (ticker: LOW), Kohl\u2019s (KSS), and Best […]<\/p>\n","protected":false},"author":1,"featured_media":87315,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-87314","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nLowe's and Kohl's Fell but Burlington Stock Soared. 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