After attempting to extend its recent rally with an early surge, the stock market gave back some of yesterday's gains amid concerns that the U.S. Federal Reserve could raise interest rates more quickly than expected given the current strength of the economy. The Dow Jones Industrial Average (DJINDICES:^DJI) and S&P 500 (SNPINDEX:^GSPC) declined just over 1%.
Today's stock market
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Retail stocks were among today's biggest losers, with the SPDR S&P Retail ETF (NYSEMKT:XRT) down 2%. Meanwhile, financials stocks helped stem declines elsewhere, with the Financial Select Sector SPDR Fund (NYSEMKT:XLF) falling just under 1% -- but only after spending the bulk of today's trading session in positive territory.
Dillard's sustains its momentum
Shares of Dillard's skyrocketed 16.9% today after the department store chain delivered impressive quarterly results. Net sales climbed 6.5% year over year to $2.061 billion, including 3% comparable-store sales growth. Gross margin also improved 48 basis points year over year to 30.5%, and adjusted earnings per share soared 64% to $2.82. Both the top and bottom lines trounced Wall Street's consensus expectations, which called for earnings of only $1.77 per share on revenue of $2.03 billion.
Keeping in mind Dillard's stock also popped more than 18% in November following an equally strong quarter and favorable holiday sales results, CEO William Dillard II stated:
The positive sales trends we noted at the end of the third quarter continued through the fourth. Our 3% comparable store sales increase combined with gross margin improvement and relative expense control led to a notable increase in pre-tax income for the quarter. We are working to keep this momentum into 2018.
That said, Dillard's declined to offer specific financial guidance for the coming year. But given its sustained momentum and relative outperformance so far, it's no surprise to see shares traded at a fresh 52-week high today.
Fitbit's holiday-quarter sales fall yet again
Meanwhile, shares of Fitbit dropped 12.3% today after the wearable technology specialist announced underwhelming fourth-quarter 2017 results and weak forward guidance. Revenue fell 0.5% to $570.8 million, as a nearly 17% decline in the number of devices sold (to 5.4 million) was offset by the higher price of Fitbit's new Ionic smartwatches. On the bottom line, that translated to an adjusted net loss of $4.7 million, or $0.02 per share.
But Fitbit management wasn't pleased.
"Ionic sales outpaced the trajectory of our prior highest-priced device, our legacy GPS watch Fitbit Search," stated Fitbit CEO James Park during the subsequent call. "However, we had more aggressive goals for Ionic."
In particular, Fitbit believes Ionic sales were hurt by a combination of aggressive promotions during the holidays, delays in the availability of its software development kit (SDK), and a limited number of apps available at launch.
Worse yet, with the crucial holiday season now finished, Fitbit expects revenue in the first quarter will decline in the range of 20% to 15% year over year, which should result in an adjusted loss per share of $0.21 to $0.18. By comparison, Wall Street was modeling a loss of $0.09 per share on a more modest 13.8% decline in sales. Finally, for full-year 2018, Fitbit expects revenue of $1.5 billion, down from $1.62 billion in 2017 and far below expectations for 8% growth.
In the end, Fitbit's Ionic couldn't deliver when it mattered the most. And given an absence of sales growth and sustained profitability, it's hard to blame investors for taking a big step back today.