Stocks fell in the morning, but recovered somewhat in the afternoon, with the major benchmarks finishing with mixed results. The Dow Jones Industrial Average (DJINDICES:^DJI) managed a small gain while the S&P 500 (SNPINDEX:^GSPC) closed down for the session.
Today's stock market
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Industrial stocks were a bright spot in the market today, especially defense-related companies. The iShares US Aerospace & Defense ETF (NYSEMKT:ITA) gained 1.1%. Semiconductor stocks were a drag on the technology sector, with the iShares PHLX Semiconductor ETF (NASDAQ:SOXX) falling 2.7%.
As for individual stocks, AeroVironment (NASDAQ:AVAV) soared to an all-time high after beating estimates for its latest quarter, but Lands' End (NASDAQ:LE) fell following the release of its earnings report.
AeroVironment hits new highs on strong sales
Shares of military-drone maker AeroVironment took flight, rising 14.3% after the company reported fiscal first-quarter earnings that beat expectations by a mile. Revenue increased 127% to $78 million and earnings per share from continuing operations came in at $0.85, compared with a loss of $0.19 in the period a year earlier. Analysts were expecting the company to earn only $0.29 per share on revenue of $73.7 million.
Product sales nearly tripled to $55.3 million from $18.8 million in Q1 last year. Contract services were up 46% to $22.7 million. Gross margin as a percentage of revenue jumped from 25% last year to 42% in the latest quarter, thanks to a mix of higher-margin products. EPS benefited from a one-time gain of $0.26 due to a litigation settlement.
Looking forward, a 121% increase in the company's funded backlog to $157 million portends more sales gains in the rest of the year. AeroVironment maintained previous full-year guidance of sales between $290 million and $310 million and earnings per share of $1.10 to $1.40, compared with $0.72 in the last fiscal year.
Lands' End falls after a dreadful quarter
Apparel retailer Lands' End reported disappointing results for its fiscal second quarter, sending shares down 12.2%. Revenue increased 1.9% to $307.9 million, well below the $322.2 million analysts were expecting. The company lost $0.16 per share compared with a per-share loss of $0.12 in Q2 last year and Wall Street's expectation for a loss of only $0.04 per share.
Weakness in Lands' End's results was largely due to a decline in sales by its retail segment as the company tries to distance itself from struggling Sears Holdings. Retail sales fell 25.8%, primarily because it reduced its shops at Sears locations by 57. Same-store sales at those locations fell 6.7%. Same-store sales in company-operated stores also lost ground, down 0.6%. Online sales were up 6.4%, but that was far below last quarter's 19.7% increase.
On the conference call, company officials admitted that some of the damage was due to poor execution. Lands' End misjudged seasonal inventory and sales fell in July when there was not enough inventory to meet demand for end-of-season sales.
All in all, it was a quarter to forget for Lands' End investors, but CEO Jerome S. Griffith was optimistic about the future, saying, "Overall, we continue to see evidence that our strategic initiatives are taking hold with product and marketing efforts both resonating with our customer."