The stock market hasn't been able to keep a rally going, and after Tuesday's declines, Wall Street prepared itself for another downward open on Wednesday morning. Investors are hoping that the minutes of the latest Federal Reserve meeting will provide some insight that could point toward greater clarity on the future course of monetary policy and the economy. As of 8:30 a.m. ET, futures on the Dow Jones Industrial Average (^DJI 0.82%) were down 159 points to 31,721. S&P 500 (^GSPC 0.59%) futures had fallen 22 points to 3,919, while Nasdaq Composite (^IXIC 0.55%) futures were lower by 84 points to 11,687.
Retail stocks have generally been a drag on the stock market lately, with even some of the largest retailers in the world seeing new pressure from inflation. This morning, Dick's Sporting Goods (DKS 6.28%) added itself to the list of retail companies seeing struggles, and its shareholders weren't pleased with what they saw. Unfortunately, the headwinds the retailer is seeing don't appear likely to let up in the near future, and other industry peers are also feeling the pinch.
Is Dick's losing the game?
Shares of Dick's Sporting Goods were down 13% in premarket trading Wednesday morning. The sporting goods retail specialist is set to fall to its worst levels in about a year and a half following its release of first-quarter financial results.
Dick's first-quarter report took a big hit from macroeconomic conditions. Net sales fell 7.5% to $2.7 billion, with the company reporting an 8.4% drop in comparable store sales. Adjusted net income was down 29% year over year to $261 million, and the corresponding declines in adjusted earnings to $2.85 per share failed to satisfy shareholders following the company.
Dick's did its best to try to put its results in the most favorable light possible, noting that revenue is up 41% compared to pre-pandemic levels three years ago. CEO Lauren Hobart expressed confidence that Dick's would be able to continue to adapt to changing readings on the economy.
However, the company adjusted its outlook for 2022, now expecting adjusted earnings of $9.15 to $11.70 per share and comparable store sales down 7% to 8% for the full year. The bottom-line number is down from a range of $11.70 to $13.10 per share previously, and the sheer size of the range shows just how uncertain times are right now for the retailer.
Widespread trouble in retail
Dick's wasn't the only retail stock seeing declines. Best Buy (BBY 3.50%) was down 4% in premarket trade, giving up all of its gains from Tuesday.
Investors seemed to have second thoughts about Best Buy's earnings report from early Tuesday, which spurred a 1% rise for the stock yesterday. Best Buy saw a similar 8% drop in comparable sales from year-earlier levels, leading to an 8.5% drop in revenue. Adjusted earnings of $1.57 per share were down nearly 30% year over year.
The electronic retailer's results reflected a repositioning of consumer demand. Computing and home theater products saw the biggest declines, as work-from-home trends reversed. However, demand for appliances rose, helping to cushion the blow somewhat.
Best Buy also cut its current fiscal-year guidance, with sales projections cut by about $1 billion to a new range of $48.3 billion to $49.9 billion and a $0.15 to $0.45 per share earnings cut to $8.40 to $9 per share on an adjusted basis.
Across the industry, retailers are baking in much more pessimistic assumptions about what the future will bring. That's hitting their stocks now, but it could set the stage for a recovery if things turn out better than the worst-case scenario.