Stocks closed out the first quarter with a big rally on light volume in the pre-holiday session. The Dow Jones Industrial Average (DJINDICES:^DJI) broke back through the 24,000 level, but still closed at a loss for the quarter. The S&P 500 (SNPINDEX:^GSPC) also closed in the red for 2018 so far, despite having been up 7.5% in late January.
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Technology stocks bounced back after taking a drubbing earlier in the month, with the Technology Select Sector SPDR ETF (NYSEMKT:XLK) gaining 2%. Energy stocks also surged on rising crude futures; the SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) rose 2.8%.
Movado Group keeps on ticking
Luxury watchmaker Movado reported fourth-quarter sales and profits that were above expectations and shares soared 15.7%. Sales increased 14.1% to $149.2 million, beating earlier guidance of $133.8 million and analyst expectations of $132.5 million. Adjusted earnings per share were $0.52, more than double last year's $0.22 and far above expectations for $0.26. The company also announced it is increasing its quarterly dividend 54% to $0.20.
Retail sales in the U.S. still experienced headwinds, but international sales and online sales more than compensated. In constant currency, sales in the U.S. increased 1% and international sales grew 20.1%. Overall, online sales in the quarter grew 53% compared with last year and comparable sales in Movado stores grew 6.4%. Looking forward, Movado expects EPS in the current fiscal year to come in between $2.15 and $2.25, up 38% from fiscal 2018 and above the $1.95 Wall Street has been expecting.
Movado's fourth-quarter results come after big beat-and-raise reports in the third quarter and second quarter. The company is making all the right moves: taking out costs, controlling inventory, and investing in online sales and the newly acquired Olivia Burton brand. Investors celebrated the results today.
Strong holiday sales are not enough for GameStop investors
Game retailer GameStop reported fourth-quarter results that beat expectations, but issued guidance for continued profit declines and a return to declining sales, and the stock tanked 10.8%. Sales increased 15% to $3.5 billion and adjusted earnings per share -- excluding a massive, previously announced asset impairment charge of $358 million -- came in at $2.02, down from $2.38 a year ago. Analysts were expecting adjusted EPS of $1.96 on sales of $3.26 billion.
Same-store sales increased 12.2%, with hardware sales growing 44.8% in the quarter, thanks largely to demand for the Nintendo Switch gaming platform. Software sales increased 12.4% and collectibles sales were up 22.8%. Looking forward, the company doesn't see a repeat of the strong holiday sales in the upcoming season, with full-year revenue falling 2% to 6% and adjusted EPS coming in at $3.00 to $3.35, compared with $3.34 in the year just completed and $3.77 in fiscal 2016.
"While we had a solid performance in 2017, there are still many areas to improve that will drive future profitability," said CEO Mike Mauler in the press release. "We have three core profitable businesses; Video Games, Collectibles, and Technology Brands. Moving forward over the next year, we plan to pause on investing in additional new businesses or acquisitions and focus on the fundamentals of improving the businesses that we already have."
Despite a remarkably low valuation, investors seem to have no taste for shares of the brick-and-mortar game seller, and may not warm up to it until the company can stabilize declines in sales and profit -- if that is even possible.
Jim Crumly has no position in any of the stocks mentioned. The Motley Fool owns shares of GameStop and has the following options: short April 2018 $18 calls on GameStop. The Motley Fool recommends Movado Group. The Motley Fool has a disclosure policy.