Markets remained on edge on Wednesday, as investors couldn't find a bounce after a turbulent Tuesday session. Market participants seem worried that the economy has put them in a no-win situation, because signs of strength could spur faster interest rate hikes from the Federal Reserve even as weakness could signal a recession. As of 11 a.m. ET, the Dow Jones Industrial Average (^DJI +0.02%) was down 195 points to 32,796. The S&P 500 (^GSPC +0.84%) fell 26 points to 4,107, and the Nasdaq Composite (^IXIC +1.71%) lost 38 points to 12,043.
One area that has been particularly weak in recent weeks has been retail. Yet today, a couple of retailers released financial results that sent their shares higher. Below, you'll learn more about why Victoria's Secret (VSCO +1.03%) and Capri Holdings (CPRI 0.86%) were in the green on Wednesday despite the weaker market.
Image source: Getty Images.
No lingering doubts for Victoria's Secret
Shares of Victoria's Secret were up nearly 7% on Wednesday morning. The sleepwear and intimate apparel retailer reported its fiscal first-quarter results for the period ending April 30, and despite stiff headwinds that stopped the company from growing, investors seemed generally pleased with what they saw.
The numbers for Victoria's Secret weren't pretty. Revenue of $1.48 billion was down 4.5% year over year. Sales from North American stores were flat, but direct-to-consumer sales dropped 19% from year-ago levels, and international sales gains of 32% were enough to offset e-commerce-related declines. Adjusted net income fell a steeper 44% to $97 million, and that produced adjusted earnings of $1.11 per share. However, both numbers were better than many investors had anticipated.
NYSE: VSCO
Key Data Points
Victoria's Secret noted that its sales results were at the upper end of its previous guidance, and CEO Martin Waters took credit for stabilizing the business in preparation for a long-term turnaround. Although macroeconomic challenges will persist, Waters is optimistic about the company's strategy to sustain its dominant position in intimates.
Fiscal second-quarter guidance suggested sales could come in roughly flat compared to year-ago levels, with earnings projected to be between $0.95 and $1.25 per share. That's still not up to par with the company's past success, but investors are hopeful that Victoria's Secret will once again be able to find growth in the long run.
Capri looks luxurious
Shares of Capri Holdings were up between 3% and 4% on Wednesday. The parent company of Michael Kors and Versace released its fiscal fourth-quarter report for the year ending April 2, and the luxury retailer saw impressive performance in its business.
Capri's results spoke for themselves. Revenue for the quarter of $1.49 billion was up nearly 25% year over year, although 6 percentage points of that gain came from there being an extra week in the fiscal quarter. Capri saw strong growth on its bottom line, with adjusted net income jumping more than 150% to $152 million and working out to earnings of $1.02 per share on an adjusted basis.
NYSE: CPRI
Key Data Points
All of Capri's concepts did well. Versace segment revenue jumped 34%, while Jimmy Choo gained 26% and Michael Kors picked up 22% from year-ago levels. Margin performance improved at all three store chains as well.
Capri hopes to keep up its momentum, projecting 5% sales growth and earnings of $6.85 per share for fiscal 2023. Moreover, with a $1 billion stock repurchase program, investors can look for more support from the company if the stock's price remains attractive.
