Stocks rallied last week on hopes that the U.S. economy might emerge from the COVID-19 pandemic slump just as quickly as it had entered it. Both the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX:^SPX) gained over 4% to put indexes within striking distance of positive territory so far in 2020. In fact, the S&P is down just 1% after having posted a 30% decline by late March.
A few big-name stocks will announce earnings results over the next few trading days, including Stitch Fix (NASDAQ:SFIX), lululemon athletica (NASDAQ:LULU), and Five Below (NASDAQ:FIVE). Let's take a look at the key trends that might send these stocks moving this week.
Stitch Fix's average order size
Stitch Fix shares were lower by about 60% at one point this year but have rallied in recent weeks to approach positive territory. That surge raises the bar for the online apparel specialist's third-quarter report on Monday afternoon.
Three months ago, Stitch Fix reported strong user gains and encouraging market share growth in new areas like menswear and kid's apparel. However, executives said they saw some signs of weakening demand that convinced them to lower their outlook for the second half of fiscal 2020. That forecast came before the worst of the COVID-19 pandemic, too, which temporarily closed a few of Stitch Fix's distribution centers.
Investors will find out this week whether that move disrupted the business, but the bigger metrics to watch will be around shopper engagement. Follow average spending, especially by new customers, for clues about whether Stitch Fix is headed for a quick growth rebound in late 2020.
Lululemon's digital business
Most of Lululemon's locations were closed for much of the fiscal first quarter, but investors have still bid shares higher in anticipation of good news from the yoga apparel specialist. The chain's last report was sparkling, after all, with sales jumping 20% and gross profit margin improving by nearly a full percentage point to 58% of sales.
Those metrics only ran though late February, though, so this week's announcement will include the full impact of COVID-19 closures in key markets like the U.S., Canada, and Europe. The good news is that Lululemon's booming online business likely blunted the damage from collapsing store traffic. But the chain is still sure to report pressure on its business and may stay cautious about its outlook in the face of uncertain economic trends and the continued pandemic threat.
Five Below's Friday
Five Below's first-quarter report on Tuesday comes as the youth-focused retailer is nearly finished reopening all of its stores. But investors are still bracing for tough sales and earnings metrics due to store closures and related inventory writedown charges.
Beyond detailing those temporary hits, look for CEO Joel Anderson and his team to back up their optimistic expansion plan with some concrete data about how consumers are responding to reopened mall space. Five Below has been getting most of its growth from an expanding store base rather than increased traffic or spending at existing locations.
That strategy should deliver solid returns as Five Below fills out the geographic holes in its selling footprint over the next few quarters. But the retailer still needs to show steady comp gains to have any chance at returning to the over 20% revenue spike shareholders saw as recently as fiscal 2018.