Europe Sends Shivers (LULU, KR, ULTA, TXN, CBPO, JKS)
The volatility in the market continued, with a big swing to the downside today. News out of Europe remains the biggest driver of equities, and the resignation of European Central Bank (ECB) official Jeurgen Stark, of Germany, sent shivers down investors’ spines. While the departure was for “personal reasons,” the widely held belief is that it was in protest of the ECB expanding its bond purchase program. Meanwhile, investors are speculating that Greece will default on its debt. That seems pretty inevitable, and under the EU with the euro currency, we see little hope for the country getting back on its feet anytime soon. Europe needs to take some lessons from the first European nation that was hit by the financial crisis, Iceland, which took painful, but real, steps to fix its economy, instead of the band-aid bailouts its EU counterparts continue to prefer, throwing good money after bad at the problem, inevitably making it worse.
The Chinese Healthcare Stocks Index was the top performing tickerspy Index on the day, led by China Biologic (CBPO) with a 17% gain. The Chinese Solar Stocks Index was the day’s worst performing tickerspy Index, with JinkoSolar Holding (JKS) down -10%.
Stocks ended the week on a sour note, with the Dow plunging -304 points to 10,992. The S&P tumbled -32 points to close at 1,154, while the Nasdaq nosedived -61 points to 2,468. Oil dropped -$1.81 to $87.24 a barrel, while gold edged up $2.00 to $1,859.50 an ounce.
In economic news, U.S. wholesale inventories rose 0.8% in July compared with a 0.6% increase in June, according to the Commerce Department. Economists were forecasting a July gain of 0.7%.
In earnings news, shares of athletic apparel maker Lululemon Athletica (LULU) fell -4.6% after the Canadian company’s full-year revenue guidance fell short of expectations. The company said its fiscal second-quarter profit jumped 76% to $38.4 million, or 26 cents per share, from $21.8 million, or 15 cents per share, a year earlier. Sales rose 40% to $212.3 million. Analysts were expecting a profit of 22 cents a share on sales of $205.4 million. Same-store sales climbed 20%. For the fiscal third quarter, Lululemon forecast a profit of 22-24 cents a share on sales of $225-$230 million. Analysts were expecting EPS of 24 cents on revenue of $228.9 million. For the full year, Lululemon forecast a profit of $1.10-$1.14 a share on revenue of $925-$930 million. Analysts were expecting EPS of $1.10 a share on revenue of $941 million.
Shares of grocery store operator Kroger (KR) slid -5.7% after the company said shoppers are buying fewer items when they come into Kroger stores. For the fiscal second quarter, Kroger earned $280.8 million, or 46 cents per share, compared with $261.6 million, or 41 cents a share, a year earlier. Revenue rose 11.5% to $20.9 billion. On an adjusted basis, Kroger earned 41 cents compared with 38 cents a year earlier. Analysts were expecting a profit of 43 cents a share on revenue of $20.5 billion. Sales at stores open at least 15 months jumped 5.3%. Kroger raised its guidance for that metric to growth of 4%-5% from growth of 3.5%-4.5%. The company expects its full-year profit to be at the high end of the $1.85-$1.95 range previously stated. Analysts were expecting a profit of $1.96 a share on sales of $89.47 billion. Fifteen pros counted Kroger among their top holdings at the end of Q2 and nearly 200 tickerspy members own the stock in their portfolios.
Shares of Ulta Salon, Cosmetics & Fragrance (ULTA) surged 14.5% after the company said its fiscal second-quarter profit rose 82% to $23.9 million, or 38 cents a share, as revenue jumped 22.6% to $394.6 million. Analysts were expecting a profit of 32 cents on revenue of $384.1 million. The company forecast a third-quarter profit of 36-38 cents a share on sales of $400-$407 million. Analysts were expecting a profit of 34 cents on revenue of $395.5 million.
Semiconductor giant Texas Instruments (TXN) lowered its third-quarter revenue and profit guidance due to weakness in the global economy. The company forecast a third-quarter profit of 56-60 cents a share on revenue of $3.23-$3.37 billion, down from a previous forecast of 55-65 cents a share on sales of $3.4-$3.7 billion. Analysts were expecting a profit of 59 cents a share on revenue of $3.5 billion for the quarter. Shares of Texas Instruments rose 1.1%. Nearly 40 pros held Texas Instruments in their portfolios at the end of Q2 and nearly 550 tickerspy members own the stock in their portfolios.
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