The stock market jumped higher on Thursday after President Trump tweeted about a Friday meeting with Chinese vice-premier Liu He. By early afternoon, the major stock indices had logged solid gains.
|Index||Change at 1:30 p.m. EDT|
|Dow Jones Industrial Average (DJINDICES:^DJI)||0.53%|
|S&P 500 (SNPINDEX:^GSPC)||0.62%|
|Nasdaq Composite (NASDAQINDEX:^IXIC)||0.51%|
Shares of Bed Bath & Beyond (NASDAQ:BBBY) trounced the market on Thursday, exploding higher after the retailer announced its pick for CEO. Meanwhile, shares of HEXO (NASDAQ:HEXO) plummeted after the cannabis company reported abysmal preliminary results and pulled its fiscal 2020 guidance.
Bed Bath & Beyond finds a CEO
Struggling home-goods retailer Bed Bath & Beyond put forth a plan in September to turn itself around, but one thing missing was a permanent CEO. The company solved that problem on Wednesday evening, announcing that it had snagged Target (NYSE:TGT) chief merchandising officer Mark Tritton to lead the company, effective Nov. 4. Investors were thrilled with the news, pushing up shares of Bed Bath & Beyond by 19.1% at 1:30 p.m. EDT.
Target's success transforming itself into an omnichannel retailer capable of competing with Amazon is part of why hiring a Target executive is getting such a positive reaction. Target has rolled out or expanded various e-commerce initiatives, including free two-day shipping, curbside pickup, and next-day delivery for home essentials. Target has also greatly increased its selection of private-label merchandise, which is one of the long-term goals of Bed Bath & Beyond's strategy.
Whether following the Target blueprint will work for Bed Bath & Beyond remains to be seen. The latter retailer's results have already deteriorated significantly, and it won't be easy to win back lost customers. During the second quarter, Bed Bath & Beyond's comparable sales tumbled 6.7%, and the company posted a large loss thanks to various charges, including an inventory writedown.
Tritton has a tough hand to play as Bed Bath & Beyond CEO. A turnaround isn't impossible, but it's also not a sure thing.
HEXO pulls its guidance
Cannabis company HEXO gave investors quite a shock on Thursday morning. The company announced preliminary fourth-quarter results that fell far short of its previous guidance, and it pulled its fiscal 2020 outlook entirely. This news came about a week after the sudden resignation of HEXO's CFO (chief financial officer), and by 1:30 p.m. EDT Thursday it had triggered a 21.9% decline in the stock.
HEXO now expects to produce fourth-quarter revenue between $14.5 million and $16.5 million. Previously, the company had predicted that revenue would double in the fourth quarter from the previous quarter. HEXO produced net revenue of $13.0 million in the third quarter. Weak product sell-through was the reason given for the lackluster fourth-quarter guidance.
HEXO's original forecast for fiscal 2020 called for net revenue of $400 million. The company has now withdrawn that guidance, citing slow store rollouts, delays in government approvals for cannabis derivative products, regulatory uncertainty, and early signs of pricing pressure. HEXO will be putting a heavier focus on profitability.
HEXO will release its full fourth-quarter results, as well as more details regarding its strategy, before the market opens on Thursday, Oct. 24.