Stocks gyrated on trade and political news Tuesday, opening higher, falling most of the session, then largely bouncing back in the last two hours. The Dow Jones Industrial Average (DJINDICES:^DJI) finished with a small loss and the S&P 500 (SNPINDEX:^GSPC) ended the day basically flat. Declining stocks outnumbered advancing ones by more than 20%.
Today's stock market
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Consumer staples stocks were the strongest, with the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) rising 0.8%. Bank shares continued their recent underperformance; the SPDR S&P Regional Banking ETF (NYSEMKT:KRE) slipped 1%.
User growth concerns leave Stitch Fix stock in tatters
Shares of Stitch Fix plummeted 20.9% after the company reported fiscal first-quarter results that beat expectations but left investors concerned about user growth. Revenue increased 23.9% to $366 million, exceeding the $362 million analyst consensus. Earnings per share came in at $0.10, double what Wall Street was expecting.
Stitch Fix added 188,000 new active clients in the quarter, for a year-over-year increase of 22.3% to 2.9 million. Revenue per active client, which the company has said to expect to decline over time, was $443, up 2.3% from the period last year, but down from $447 last quarter.
Client growth was slightly less than observers were hoping for, but what probably discouraged investors the most was a statement that next quarter's client count is expected to be "relatively flat" sequentially as their customers focus on buying clothes for others rather than for themselves during the holidays. Last year, Stitch Fix added 112,000 clients in the holiday quarter, and that contrast seemed to reinforce the bear case that the company will eventually saturate its niche.
DSW steps out on strong sales
Footwear retailer DSW blew away expectations for third-quarter results and raised guidance, propelling shares higher by 8.1%. Revenue increased 17.2% to $833 million on the strength of 7.3% growth in comparable-store sales, while adjusted earnings per share rose 56% to $0.70. Analysts were expecting 12.1% revenue growth and EPS of $0.51.
DSW's acquisition of its Canadian business added $80.1 million or 11% to its sales growth, but its U.S. retail segment grew sales a strong 10% as well. Gross profit as a percentage of sales improved 3.2 percentage points due to a favorable swing in merchandise margin.
Looking forward, DSW raised its outlook for the full year for the second quarter in a row. Revenue growth is expected to be 12%-14%, up from 6%-9%, and EPS guidance increased 10% at the midpoint to $1.80 to $1.90.