Stocks were mixed on Tuesday, with the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^GSPC) waffling between positive and negative territory after two consecutive days of gains to start the month of June. When all was said and done, the S&P eked out a minuscule gain and the Dow fell slightly.
Today's stock market
|Index||Percentage Change||Point Change|
Consumer goods stocks traded modestly lower today, with the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) down 0.5%. But retail stocks soared for the third straight session, with the SPDR S&P Retail ETF (NYSEMKT:XRT) up another 1.8%.
G-III Apparel's surprise profit
Shares of G-III Apparel soared as much as 19.4% early today, then settled to close up 10.8% after the parent company of brands including Tommy Hilfiger, Donna Karan, Levi's, and Calvin Klein announced better-than-expected fiscal first-quarter 2019 results.
G-III's sales grew 16% year over year to $611.7 million, and translated into net income of $9.9 million, or $0.20 per diluted share. On an adjusted (non-GAAP) basis, which notably excludes expenses related to its acquisition of Donna Karan, net income was $0.22 per share, swinging from an adjusted net loss of $0.18 per share in the same year-ago period.
Analysts, on average, were expecting an adjusted loss of $0.06 per share on revenue of $567.4 million.
G-III Chairman and CEO Morris Goldfarb called it a "solid quarter across the board," adding: "Strong brands, quality product, diversified distribution and great execution continue to be our winning formula."
If that wasn't enough, G-III Apparel increased its full-year guidance to call for net sales of $2.97 billion (up $30 million from its old range), and for net income per share between $2.20 and $2.30 (up from $1.90 to $2.00 per share previously).
In the end, this was a straightforward beat-and-raise scenario from G-III, and it's no surprise to see investors' positive response.
Shrugging off Ascena Retail's light guidance
Meanwhile, shares of Ascena Retail Group -- the owner of a handful of retail chains including Justice, dressbarn, Ann Taylor, LOFT, Lane Bryant, Catherines, and maurices -- closed up 7.9%, but only after recovering from a nearly 14% drop in this morning's early trading.
Ascena's fiscal third-quarter 2018 results were decent relative to expectations. Net sales declined 3.9% year over year to $1.503 billion, as 10% comparable-store sales growth at Justice was more than offset by a modest decline in comps at Ascena's other retail concepts. On the bottom line, that translated to an adjusted net loss of $0.08 per share, compared to adjusted income of $0.05 per share in the same year-ago period.
This might not sound encouraging, but consensus predictions on Wall Street called for an even wider net loss of $0.09 per share on lower sales of $1.47 billion.
"Our third quarter results reflected a soft start in February, with sequential improvement over the combined March/April period," explained CEO David Jaffe.
Still, Jaffe admitted that the company's net loss was "certainly not at a level that we consider acceptable, or representative of the company's earnings potential." But he also noted that its late momentum has carried into the current fiscal fourth quarter, with comparable sales up in the mid-single-digit range.
Looking ahead, Ascena expects fiscal Q4 sales of $1.62 billion to $1.66 billion, with the bottom line ranging from a loss of $0.05 per share to net income of $0.05 per share. Wall Street was looking for earnings near the high end of that range, but on significantly lower sales of $1.58 billion.
Given Ascena's history of underpromising and overdelivering, it's apparent that the market was willing to forgive that bottom-line guidance shortfall with the hope that its top-line momentum will continue.