Messi rises and the dollar falls on results and expectations; The target receives a downgrade

Some retail weakness continued late this week as earnings season kicks off as retailers grapple with rising inventories and cutting consumer spending. Dollar General fell after its results and forecasts on Thursday while Macy’s Index reversed higher after its release. Target took a downgrade from JPMorgan on Thursday. Meanwhile, JWN stock rebounded after Nordstrom beat quarterly estimates late Wednesday.

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Messi cut expectations

Messi (MAdjusted earnings fell 48% to 56 cents per share while sales were down 7% to $4.98 billion from first-quarter results early Thursday. FactSet analysts expected earnings of 45 cents per share on sales of $5.013 billion.

Comparable sales fell 7.2% for the period, worse than analyst expectations for a 5.5% decline.

Despite beating Wall Street estimates, Macy’s cut its full-year outlook as it expects consumer macroeconomic conditions to worsen. Macy’s expects net sales this year to be between $22.8 billion and $23.2 billion, down from its previous forecast of $23.7 billion to $24.2 billion.

The company also lowered its adjusted earnings forecast to $2.70 to $3.20 per share from its previous range of $3.67 to $4.11 per share.

FactSet expects full-year earnings of $3.69 per share on $23.73 billion in sales.

M stock rose 12.2% on Friday. Shares rose 1.2% on Thursday after initially falling as much as 3% in early trade. Shares fell as much as 10% before the market. Macy’s shares are down 25% year-to-date.

General earnings in dollars

dollar general (DJ) Profits fell for the first time in three quarters. Earnings fell 2.9% to $2.34 a share. Net sales growth slowed after accelerating for four consecutive quarters, rising 6.8% to $9.34 billion. The results were just shy of FactSet’s earnings estimate of $2.38 per share on $9.47 billion in sales.

Dollar General noted that the macroeconomic environment is more challenging than previously anticipated, which the company believes has a significant impact on consumer spending levels and behavior.

The discount retailer lowered its net sales forecast to 3.5% to 5% growth from a previous forecast of 5.5% to 6%. Dollar General cut its forecast, expecting earnings to be flat to fall 8%. It previously guided earnings growth of 4% to 6% from $10.68 per share last year.

For the year, FactSet expects earnings of $11.20 per share on $39.99 billion in sales.

DG stock rose 2.6% on Friday after diving 19.5% on Thursday following the results. Shares are down 33.6% so far this year.

Return target

JPMorgan (JPM) cut Target’s stock rating to neutral from overweight early Thursday and lowered its price target for TGT stock to 144 from 182. The company believes that consumer is “broadly underweight.” Portfolio stocks, or allocated consumer expenditures, are shifting away from commodities, which account for 51% of target sales, JPMorgan analyst Christopher Hovers wrote in a note to clients.

Target’s market share is positive on a three-year basis, but it loses ground when looking at a one-year offering. The loss of market share could accelerate in the back-to-school season and continue into the holiday season due to consumer pressure and the company’s recent controversies, Horvers wrote, which could turn the company’s traffic to negative after 12 consecutive positive quarters.

The target stock rose 1.6% on Friday, recovering losses incurred on Thursday following the downgrade. TGT shares are down 18.2% since its May 17 earnings report. Target topped first-quarter views but warned that shrinking inventory would hit profitability and dampen its second-quarter outlook.

Nordstrom profits soar

Luxury department store chain Nordstrom reported adjusted earnings rose to 7 cents per share for its first-quarter results late Wednesday, compared with a loss of 6 cents a year ago. Sales decreased 10.9% to $3.18 billion. Analysts polled by FactSet expected a loss of 10 cents per share on $3.12 billion in sales.

The company reported a diluted loss per share of $1.27 for the period, which included the $1.92 per share impact from the termination of operations in Canada.

Nordstrom maintained its full-year outlook and expects revenue to decline 4% to 6% as consumer spending declines and sales slow. It directed adjusted earnings between $1.80 and $2.20 per share, excluding costs related to closing its Canadian business. FactSet expects earnings to jump 18.3% to $2 per share with sales falling 4.9% to $14.77 billion.

JWN stock swung 9.1% on Friday after rising 4.8% on Thursday. Shares are up 8.3% this year.

You can follow Harrison Miller for more stock news and updates on Twitter @employee

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