Wednesday saw an exceptionally strong session on Wall Street, as most major benchmarks posted gains of over 2%. Investors got new enthusiasm about the prospects for the U.S. economy after Fed Chairman Jerome Powell said that he thinks that the current level of short-term interest rates are just below a neutral range, leading many to believe that future interest rate hikes won't come as quickly as anticipated. That was good news for most stocks, but a few unlucky companies got left out of the rally. Tiffany (TIF), Chico's FAS (CHS -2.49%), and J.M. Smucker (SJM 1.11%) were among the worst performers on the day. Here's why they did so poorly.
Tiffany gets tarnished
Tiffany shares fell 12% after the company experienced weaker growth than most had expected. The luxury jeweler reported a 4% rise in worldwide net sales during the third quarter, with comparable sales increasing just 2%. Net earnings were down from year-ago levels, and Tiffany pointed to lower spending by foreign tourists, especially those from China, in key regional markets. Although CEO Alessandro Bogliolo said that Tiffany remains "encouraged with our strategic progress on a global basis and with customers' reactions to our evolved brand message, product innovation and in-store initiatives," shareholders seem unhappy that the luxury jeweler isn't taking maximum advantage of favorable economic conditions while they last.
Chico's plunges on poor results, executive departure
Chico's FAS stock plummeted nearly 35% in the wake of the release of third-quarter financial results and news of a key executive leaving the company. The women's apparel retailer reported a 6% drop in net sales, with comparable sales falling 6.8% due to weakness at the company's namesake stores and its White House Black Market chain. In addition, Chico's brand president Diane Ellis will leave the company as of Friday, leaving company CEO Shelley Broader to manage the unit's brand-refresh initiatives. Investors are nervous that bad results going into the holiday season will only get worse as time goes on, and Chico's poor guidance for the full year only confirms those fears.
Smucker gets into a jam
Finally, J.M. Smucker shares closed down 7%. The maker of jelly and other food items reported its fiscal second-quarter results, and sales growth of 5% combined with earnings gains of 7% from year-earlier levels weren't sufficient to satisfy investors. Smucker recently sold its U.S. baking business to concentrate more on core products, but reduced expectations for full-year revenue and earnings showed the struggles that the company faces. It's now up to Smucker to show that its efforts to make the most of its well-known brands can produce stronger results, but shareholders are getting impatient with the slow pace of its progress to date.