Indexes ended August with an indecisive session ahead of the Labor Day weekend. Major benchmarks opened higher but seesawed between gains and losses, with the Dow Jones Industrial Average (DJINDICES:^DJI) closing up, but the S&P 500 (SNPINDEX:^GSPC) ending the day basically flat. The materials sector was the strongest, while consumer stocks were the laggards.
As for individual stocks, investors dumped shares of Ulta Beauty (NASDAQ:ULTA) after it issued terrible guidance, but snapped up Campbell Soup (NYSE:CPB) in the wake of better-than-expected results.
An ugly outlook from Ulta Beauty
Shares of Ulta Beauty got crushed, plunging 39.6% the day after the company reported disappointing second-quarter results and lowered guidance for the rest of the year. Net sales increased 12% to $1.67 billion and earnings per share rose 12.2% to $2.76. Analysts were expecting the company to earn $2.79 per share on $1.68 million in sales. Comparable sales grew 6.2% due to a 5.4% increase in transactions and 0.8% growth in the average ticket.
What really triggered the stock’s meltdown was Ulta’s outlook for the next two quarters. The company said that it now expects comparable-sales growth for the year between 4% and 6%, down from earlier guidance of 6% to 7%. Ulta believes Q3 earnings will be “flat to lower,” while analysts had been anticipating growth of over 20%. For Q4, the company expects mid-single-digit growth, but analysts on the conference call were clearly skeptical.
Ulta blamed industrywide softness in cosmetic sales, a view supported by Estee Lauder‘s recently reported falling domestic sales, the one blemish on the latter’s otherwise stellar results earlier this month. Ulta believes it’s still growing market share and maintains confidence in its long-term growth plans, but disappointed investors headed for the exits today.
Soup warms up at Campbell
Investors saw signs of a turnaround taking hold at Campbell Soup after the company reported results from its fiscal fourth quarter, and shares moved up 3.9%. Net sales increased 2% to $1.78 billion. Adjusted earnings per share jumped 14% to $0.50 and beat the analyst consensus by $0.09.
Campbell’s snacks segment provided the biggest boost to sales, with organic growth of 4%. But investors were also happy to see some positive results from the meals and beverage business, which managed a 1% organic sales uptick after recent declines. Sales of soup in the U.S. increased for the first time in years, up 3%.
Looking forward to fiscal 2020, Campbell expects sales from continuing operations to rise between 1% and 3% and adjusted EPS to increase between 9% and 11%, and that profit growth outlook from this dividend stock encouraged its shareholders today.
