Friday brought some much-needed relief for stock market investors as major market benchmarks managed to rebound from their worst levels of the week. Market participants are still nervous about the many countervailing factors affecting the business world, but they nevertheless felt comfortable bidding stock prices modestly higher. As of 10:45 a.m. EDT, the Dow Jones Industrial Average (^DJI +0.66%) was up 141 points to 35,035. The S&P 500 (^GSPC +1.18%) had gained 26 points to 4,432, and the Nasdaq Composite (^IXIC +1.96%) had picked up 147 points to 14,689.
Foot Locker (FL +0.00%) and HEXO (HEXO +0.00%) were among the most noteworthy of the big movers. Below, we'll look more closely at what they said and why their stocks moved so dramatically.
Foot Locker runs higher
Shares of Foot Locker climbed nearly 7% Friday morning. The athletic footwear and apparel retail specialist reported strong second-quarter financial results that signaled a big comeback from the worst days of the COVID-19 pandemic.
Image source: Getty Images.
Foot Locker's numbers were solid. Revenue climbed nearly 10%, with comparable-store sales picking up 6.9% in the second quarter compared to year-earlier levels. Yet what was especially impressive was Foot Locker's bottom line, as adjusted earnings of $2.21 per share more than tripled results from the same periods in both 2020 and 2019.
Foot Locker has been working to restructure its operations, and those efforts continued apace. The company closed 57 stores while opening 16 new stores, and it also remodeled or relocated nearly two dozen more retail locations. That left the retailer with more than 2,900 store locations across 27 countries around the world.
Recent acquisitions have revealed elements of Foot Locker's longer-term strategy. So far, investors like what they're hearing, yet the stock's current price suggests that there's still some skepticism about whether Foot Locker can mount a full recovery.
HEXO shareholders deal with dilution
Elsewhere, shares of HEXO were down more than 25%. The move followed a big drop on Thursday as the company announced plans to raise capital at a less-than-ideal time.
The initial decline yesterday came on HEXO's announcement of a secondary offering of stock and warrants. The subsequent continuation of the downward move on Friday followed the release of details on how the offering went. The underwriters ended up pricing units at $2.95, with each unit including one share plus half a warrant to buy a share at $3.45 over the next five years. That was highly discouraging, given that HEXO stock had closed at $3.20 per share on Thursday afternoon.
Cannabis companies have wrestled with ongoing restrictions related to the pandemic in Canada, and the rise of the delta variant could extend those troubles well into the future. That's making some of HEXO's recent moves, including the acquisition of Redecan, look riskier. Moreover, the pandemic could make it harder for HEXO to move forward with its plans to expand into the U.S. market over time.
Investors have gotten used to volatility in HEXO's stock, but the share price is now approaching levels last seen at the worst points of the coronavirus bear market in early 2020. The cannabis company has to work hard -- and quickly -- to restore its reputation and regain confidence among its shareholders.
