Thursday was another down day for the stock market, although things didn't end up quite as badly as it appeared they might early in the day. Ongoing reaction from yesterday's release of the latest minutes from the Federal Reserve's Federal Open Market Committee meeting on the future course of interest rates heightened fears that a rate hike could come as soon as next month.
For a long time, investors have been afraid that a prolonged rising-rate environment would be the death knell for the seven-year-old bull market, and major market benchmarks finished the day down around half a percent after falling more than 1% earlier Thursday. Some individual stocks performed much worse, and among the biggest decliners were Teekay Tankers (TNK -1.42%), Regis (RGS -6.04%), and Toro (TTC -3.89%).
Teekay Tankers fell 8% after the crude-oil shipping company reported its first-quarter financial results. Revenue jumped by about two-thirds thanks to the acquisition of 19 modern mid-size tankers during the past year, but lower spot tanker rates in this year's period compared to 2015's first quarter held back Teekay Tankers' overall growth.
Adjusted net income rose by $7 million, to $46 million, but an increase in outstanding share count sent per-share earnings lower by $0.05, to $0.29 per share. CEO Kevin Mackay blamed the downturn in spot rates on "a heavy refinery maintenance schedule, a milder winter in the Northern Hemisphere, and higher bunker fuel costs." Teekay Tankers expects its fleet to return to near-full utilization following some unanticipated repair needs, but investors weren't willing to give the shipper the benefit of the doubt before that happens.
Regis dropped 9% on a strange day for the hair salon and haircare products company. Early in the day, Regis stock fell much more sharply, plunging as much as 20% on a report from analysts at Piper Jaffray reducing their estimates on Regis' growth potential. Yet after a brief trading halt, the stock recovered much of its losses after Regis issued a clarifying statement.
The haircare specialist said that Piper Jaffray's initial report had incorporated $81 million in costs to comply with new overtime rules from the U.S. Department of Labor. However, Regis said that the true cost of compliance would likely be much smaller, estimating about $5 million annually, and explained that the reason why Piper Jaffray's larger figure was incorrect is that many Regis employees, who the analyst assumed were salaried employees, were actually already treated as hourly workers. The new regulations will still hurt Regis, but it hopes that alternative mitigation strategies could cut the higher costs further.
Finally, Toro declined 5%. The maker of lawn and outdoor equipment reported record earnings of $1.89 per share, up 15% from the year-ago quarter. However, revenue was up only 1%, and CEO Michael Hoffman noted that the residential side of the business suffered because of poor weather late in the quarter.
Investors failed to respond positively to Hoffman's positive comments about solid overall retail demand, instead focusing on the high inventory levels overall, and weaker pre-season retail demand for snow-related products. Those issues could continue to weigh on results into the second half of the year, but Toro hopes to reduce inventory to more-normal levels, and find ways to keep sales growing, at least moderately, in the future.