In today's episode of MarketFoolery, host Chris Hill chats with MFAM Funds' Bill Barker about market news. Tiffany's (TIF) stock popped after earnings came out, which is a baffling reaction to a ton of bad numbers. Meanwhile, Lands' End (LE -2.24%) is up around 10% on a decent-ish quarter, coming off of a decent-ish decade. At least it's still around, which is some kind of accomplishment. Cloud storage provider Box (BOX -2.03%) is hitting a 52-week low on some weak trends and ever-tough competition. Plus, some folks in California and Britain have apparently heard the good word about coffee. Scroll on to find out more.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

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This video was recorded on June 4, 2019.

Chris Hill: It's Tuesday, June 4. Welcome to MarketFoolery! I'm Chris Hill. Joining me in studio today, from MFAM Funds, Bill Barker, in the house. Thanks for being here!

Bill Barker: Thanks for having me!

Hill: We've got weird stuff happening in the market today. 

Barker: We sure do! 

Hill: I'm glad you're here to explain what's actually happening with the various earnings that we have. We'll get to some retail. We'll get to some cloud storage. Let's start with Tiffany! 

Shares of Tiffany are up 5% this morning, and I really am not sure why. Their first quarter revenue was low. Their same-store sales were negative 5%. That was basically 3 times as bad as analysts thought it was going to be. Why is this stock up?

Barker: I think they must have said something in the conference call that is not completely contained in the earnings report. That's often the case. Because the numbers are not that good. It's not as if there was some blowout expected. It's a company that's growing at the rate of growth of the global economy, more or less. I think the initial pre-market reaction was quite negative, and was based in part on, part of the quote that is early on in the report, which talks about a dramatically lower worldwide spending attributed to foreign tourists. Dramatically, lower, two bad words to put together in an earnings report.

Hill: If you're in the business of selling anything.

Barker: Yes. But if you're explaining away something, and then in the conference call, you say something like, "Oh, yeah, you know, the quarter ended at the end of April. By the way, May looks really good." That reversed itself. I don't know that's the explanation there. But there was something to that. Whatever the quarterly numbers were, which, if they stood on their own, you would sell, and the market was selling pre-market -- there's another part of the story, and it's better than what is contained at the end of April.

Hill: This is one of those stocks that, at various points in time, Tiffany has been a great stock to own. But you look over the long term... if your mindset when it comes to stocks is the Charlie Munger line, "I'm looking to buy great businesses and sit on my butt," I don't know that Tiffany, certainly in the recent past, has been one of those businesses. It's basically been flat for about five years.

Barker: Yeah, you should have gotten off your butt in about 1999, I would say. That's when the real surge in price -- it went up about 4 times. From '98 to '99, it went up from about a $10 stock to about a $40 stock. And now it's a $90 stock. And you're getting some dividends in there, but, 20 years where it has done a little bit better than double is obviously trailing the market. There are some peaks and valleys where you could have timed something over a short period of time. If you got into this stock, like many others, at the bottom in 2009, you're happy. You're happy if you'd bought the other thing that you would have bought at the very bottom of 2009 as well. And, as you point out, the last five years have been one step forward, one step back, and not really a compounding effect. If you'd gotten out, oh, about a year ago today, you'd be pretty happy.

Hill: Let's move on to Box, the cloud storage company. First quarter loss was smaller than expected. That's always nice to see. But shares of Box are falling because they lowered revenue guidance for the full fiscal year. I hasten to point out that revenue in the first quarter actually came in higher than expected. This makes sense to me, that shares of Box are falling, when they outperformed on their sales in the first quarter and basically said, "Oh, yeah, but the next three quarters, we're going to have to lower that full-year guidance."

Barker: Yeah. Again, this is pointing out that what is being guided to going forward is more important in the earnings release story, just as it was for Tiffany. They're talking about a longer sales cycle, and they're having more trouble with, I think, deals over $100,000. You don't want to see that as the area of weakness, the larger contract deals. And they're shifting the model to strategic solutions selling. All that is amounting to lowered guidance, and that never really raises the price of your stock.

Hill: I know this may sound odd to say about a company that's worth $2.5 billion, but this really seems like a company that could be in trouble. They're in an industry with some enormous players. Their stock is at a 52-week low. And I'm wondering, if you own shares of Box, if at this point, you're just hoping for someone to come along and make an offer to buy the company. I can't imagine, with the... "struggles" almost seems like too strong a word, so I'll just couch it by saying the relative struggles of this company since it's been public, it's hard for me to imagine that people are looking at this drop today, the stock hitting a 52-week low, and saying, "Yeah, now's the time to pick up some more shares."

Barker: Yeah, you could talk about its struggles, at least in terms of the stock. Four years ago, a little over that, it came public. And it's lower today than not only the IPO price, but after it settled a couple of days, it was $18 in February of 2015. It's now at $16 today. Given that it is a cloud-based company, there's a lot of other stuff that is in the Cloud Content Management which is a competitor, and some very big companies, as you noted. But also, if you'd bought a basket of companies that had cloud in their description name, you'd be pretty happy over the last three, four years. Box is one of the ones that would lower your returns, and others would have done better for you. So you were in the right space, generally, but not in this name particularly.

Hill: Good name, though.

Barker: Well, it's Box. One of their competitors, sort of, is Dropbox. And I think right there --

Hill: There you go, that's better.

Barker: -- you've got a little bit of confusion. Some of the other competitors for cloud storage are things like Google. 

Hill: [laughs] AmazonMicrosoft.

Barker: Apple. Those are the places where you store things in the cloud. So, tough competition. They've got their work cut out for themselves in distinguishing themselves. They have some add-ons that they've been marketing in terms of making this more of a solutions company and more of a platform that you can do many things on than just store. But you can see from the results of the stock, it hasn't been working out for investors.

Hill: Like Box, Lands' End's first quarter loss was smaller than expected. Their same-store sales looked pretty good. I'm still scratching my head on why shares of Lands' End are up more than 10% today. Is this just, the expectations were so low for this company that anything in the positive direction is going to move this stock?

Barker: I would say yeah. I mean, it was hemmed in by the strategy of wedding itself to Sears for so many years, and it's still extracting itself from that catastrophe. It's really gone nowhere over the last decade. It's really no bigger in terms of sales than it was two decades ago. It's still around. You still see it. It's still a hallmark -- well, not the hallmark -- of preppiness, but it's sort of a B team on that. Your favorite, LL Bean, is still, I think, the standard bearer.

Hill: For preppy?

Barker: Yeah. Oh, yes!

Hill: I feel like there are niche brands that are more standard bearers. LL Bean makes a lot of outdoor gear, a lot of durable gear. So, yes, there are elements of LL Bean --

Barker: Did you ever read The Preppy Handbook?

Hill: No. I think it was required reading at your alma mater, not mine. 

Barker: It was. [laughs] My prep school, I think, was No. 2 in one of its lists.

Hill: Oh, I was just referring to Yale. I wasn't referring to your prep school. 

Barker: No, no. Yale isn't nearly as preppy as people think. 

Hill: Hah, OK. 

Barker: [laughs] It's not! But, prep schools, almost by definition, are a good deal preppier. No, it's no Princeton, I mean, when it comes to preppiness. Come on! Be serious for a minute! Anyway, you're defending LL Bean, as well you might, because it doesn't only stand for preppiness, although it does stand for that. It also stands for all things main. So, Land's End is sort of a me-too in that category. It's OK. I mean, it's still around. A lot of brands have had a rougher go over the last 20 years than Lands' End, in which case they're probably gone. But it's a treading water type of brand.

Hill: But it has some brand equity, its quality merchandise that they make. And it really does seem like someone could make this brand work better than the stand-alone company right now. This is basically a $400 million company right now.

Barker: For fiscal 2019, here's what the company expects. Net revenue to be between $1.45 [billion and] $1.5 billion. That sounds pretty good. Selling around $1.5 billion. But the actual net income is expected to be $10 [million to] $16 million. That's a lot of work to do to wind up with, let's take the midpoint, call it $13 million of profit off 100 times that in sales. There is, obviously, some possibility of doing better than having 1% of your sales be the net profit when you're a retailer, when you're a brand, when you've got brand power. But they're not doing it at the moment. So, yeah, today, the report makes it appear that they're not on the verge of death, as one might have feared in the wake of the Sears story.

Hill: But you're not interested in this, from a stock perspective?

Barker: No. Retailing is hard, generally, fashion retailing. It is even harder today, I think, with the situation in the malls. They're opening some stores. I hope they're not in malls. There's a lot of competition. There are a lot of places that are going to be probably going out of business if the trade wars expand and continue. I don't know where they're sourcing their clothing, but it's not a great situation for retailers generally, and Lands' End in particular hasn't shown anything over the last two decades that would make me be especially interested.

Hill: Last year, a California judge ruled that cups of coffee sold in the state would have to come with a warning label regarding an increased risk of cancer. We talked about that story last year at the time because we thought, well, that's crazy, because coffee is amazing and incredibly healthy. Yesterday, Monday, I'm happy to say, California's Office of Administrative Law officially signed off on an exemption recommended by the state regulator in charge of the list of chemicals that require warnings. Also yesterday, new research was presented at the British Cardiovascular Society Conference. Thank you to the many dozens of listeners who emailed this story, tweeted this story, @MarketFoolery and at me directly, also posted in our Facebook group. It's a study of more than 8,000 people, resulting in the conclusion that drinking up to 25 cups of coffee a day is safe for the heart. 

I'm not going to lie, I'm a big coffee enthusiast, as I think any listener who's been around for a while knows. That top line number surprised me. I was like, 25? Well, we were talking earlier this morning, like, what's the most cups of coffee you've consumed in a day? And mine probably tops out at low double digits.

Barker: Well, first you have to get at the math. What is a cup of coffee? A cup is eight fluid ounces. But you have told me that somewhere, the Grand Council has determined that for coffee, there's a special measurement, and it's six ounces.

Hill: Somewhere in my past, I remember coming across that. And by my past, I mean probably 30 years ago. I think this harkens back to a time when coffee was less popular, less consumed. Certainly, this is the pre-Starbucks era. The actual cup that coffee would be served in, unless you wanted to fill it right to the top, held about six ounces. So that's how that was calculated. Which, by the way, that's the only place I ever encountered a liquid being, like, "I know for liquids, we measure a cup as eight ounces. But for this one liquid, and only this one liquid, we're going to say a cup is six ounces."

Barker: All right, let me confuse it further. I just googled this while we're doing this. Although a standard cup in U.S. measurements is eight fluid ounces, a cup on your coffee maker is five fluid ounces. If you set your brewer to make two cups, you get 10 ounces of coffee, which seems crazy. So, anyway, let's just take that for a moment because it makes the numbers slightly more comprehensible. Let's say that 25 cups is, at five fluid ounces, 125 ounces of coffee. I've done that in a day, I'm pretty sure. Not every day. [laughs] But there are some days where pretty sure I would have had 125 ounces of coffee. If we're talking about eight ounces to a cup... 200 ounces of coffee in a day is heroic. [laughs] I confess, I don't think I've ever achieved that.

Hill: I'm not sure I agree with the word "heroic."

Barker: Oh, yes! Homer would have written epic poetry about the heroes who could have done that. There are probably a few lines in the Iliad, the Odyssey. Somewhere in there. The Aeneid. About coffee drinking. One imagines that Achilles in his magical powers might have been able to consume 200 ounces of coffee in a day, and if so, probably would have demonstrated that to the masses in order to increase his stature. I assume I'm right about this.

Hill: [laughs] I assume you are. We're one month away from Independence Day, which coincides with the hot dog eating contest on Coney Island. Maybe one year, they could just say, "Look, we're going to sub out the hot dogs. This year, it's just going to be who can drink the most coffee." You'd have to do it in a finite amount of time. 

Barker: We could Guinness Book that.

Hill: Let's not do that, because this is already bad podcast material, and googling the Guinness record for drinking coffee, that doesn't necessarily make it better. 

All of which to say, for anyone -- just to bring it back to the stocks, we did see a dip last year. We did see some weak souls panic and sell their shares of various coffee stocks when this judge in California handed down this ruling last year. In hindsight, that was the wrong time to sell.

Barker: Yeah, it's just one more study indicating the fact that coffee virtual is -- it is, it's a little bit like Achilles, who was immune because of being dipped in the River Styx. I think that similar powers are acquired by drinking coffee and only coffee. Your only weakness, and I can attest to this, is your Achilles' heel, which I've ruptured in the last year. I've had no other injuries.

Hill: You know why?

Barker: Due to my coffee drinking.

Hill: Coffee. We'll wrap up there. You can read more from Bill Barker and his colleagues at MFAM Funds, just go to You can sign up for Declarations, it's the free monthly newsletter that they publish. Did I mention it's free? It's free, and it's actual good content. It's not this nonsense that we've been talking about for the past few minutes about coffee. It's actual smart commentary and analysis about stocks and investing. You should check it out! Thanks for being here!

Barker: Thank you!

Hill: As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of MarketFoolery! The show is mixed by the immortal Dan Boyd who is back behind the glass. Thank you, New Orleans, for returning him safe and sound! I'm Chris Hill. Thanks for listening! We'll see you tomorrow!