More worries over mounting world trade tensions helped push stocks lower for a third straight week last week as both the S&P 500 (^GSPC 0.21%) and the Dow Jones Industrial Average (^DJI 0.07%) shed 2%. Indexes are now down more than 6% since the highs they set in late April.
Earnings reports continue to drive volatility in individual stocks, and that's why investors can expect to see sharp price moves in Gamestop (GME 1.85%), Stitch Fix (SFIX +5.32%) and Vail Resorts (MTN +1.36%), which each have an announcement scheduled in the week ahead. Below, we'll look at the key metrics that will make the difference between a good week and a bad one for shareholders of these companies.
GameStop's strategic plan
Except for a brief period of optimism surrounding GameStop's unsuccessful attempts to sell itself, investors have stayed pessimistic about the company's stock for over a year. Sure, the video game retailer achieved its 2018 growth targets, but its shrinking software sales and failed diversification strategy point to a prolonged period of declining earnings ahead.
The outlook is especially cloudy as the chain transitions to a new CEO. Management cited this executive shakeup in early April when it declined to issue a profit forecast for fiscal 2019.
Depending on the strategy going forward, GameStop may take more painful charges, like the $400 million writedown from its divestment of its Spring Mobile business. For now, the company can only predict that sales will likely decline for a second consecutive year, with comparable-store sales falling by between 5% and 10%.
Investors will be focused on any update to that prediction in GameStop's earnings report on Tuesday. They'll also be demanding to see signs that its new leadership team is prepared to make aggressive changes that might arrest its earnings slide.
Stitch Fix's customer base
Stitch Fix will announce its first-quarter results after the market closes on Wednesday. The stock's recent volatility implies big price swings this week as investors digest the latest operating trends.
Image source: Getty Images.
The online apparel specialist has found early success with its subscription-based approach that relies heavily on data-crunching algorithms to pack its shipments with the right offerings. Sales rose a surprisingly high 25% last quarter as its active user base jumped 18%, to 3 million.
CEO Katrina Lake and her team are aiming for a much larger global client catalog, and investors this week will hear an update on that international expansion plan. Stitch Fix's more immediate challenges include stocking its inventory appropriately as it scales its service and fending off rival apparel specialists. The best gauge of its success on these points will be the company's engagement metrics such as its user-base growth, average spending per order, and customer satisfaction.
Vail Resorts' winter weather
Investors will be following Vail Resorts' earnings report on Thursday to learn how the vacation specialist fared during the key winter ski season. Vail Resorts painted a mixed picture for shareholders at the start of that critical period, with solid lift ticket sales in most properties being held back by sluggish traffic around the Christmas and New Year's holidays.
Executives are aiming to improve those early season demand trends by installing a network of snow-manufacturing machines that will deliver more consistent mountain conditions throughout the season. Vail's long-term growth plan also involves pouring cash into upgrading all aspects of the vacation experience on its properties, from ski-lift rides to restaurants and lodging.
Over time, these investments should support higher prices and rising guest traffic. However, Vail's results are still sensitive to the day-to-day snow conditions in North America during its second and third quarters, so this week's report will largely determine whether management hits its 2019 goal of adjusted earnings ranging from $690 million to $710 million.
