Unsure if disappointing retail sales for October is bad for the economy or if disinflation last month is good in the sense that it could postpone a rate hike, traders were content to continue this week’s downtrend on Friday. The S&P 500 finished the day at 2,023.04, down 1.12%. It was the worst week for the market since mid-August.
For owners of Cisco Systems, Inc. (NASDAQ:CSCO), Fossil Group Inc (NASDAQ:FOSL) and Nordstrom, Inc. (NYSE:JWN) shareholders though, it was even worse, with two of them losing ground at a double-digit pace. Here’s what investors need to know.
Nordstrom, Inc. (JWN)
Not to be outdone by big plunges from peers and rivals Macy’s, Inc. (NYSE:M) and J C Penney Company Inc. (NYSE:JCP) this week, department store chain Nordstrom dished out some serious pain of its own on Friday, with JWN stock falling a hefty 15%.
As was the case with J C Penney and Macy’s, the culprit for Nordstrom was earnings and sales… or lack thereof. The company posted a profit of 57 cents per share on sales of $3.33 billion in its third quarter of 2015. Analysts, however, were looking for a top line of $3.37 and a bottom line of 71 cents per share of JWN.
The bulk of the damage done to JWN, however, may have been the revised full-year profit outlook. The retailer had previously called for earnings of between $3.85 and $3.95 per share. Now, though — thanks to unusually warm weather and the impact it had on Q3’s results — Nordstrom is only looking for a profit of between $3.40 and $3.50 per share of JWN in 2015.
The company earned $3.72 per share last year.
Cisco Systems, Inc. (CSCO)
JWN was hardly the only major name to take on water today after a disappointing quarterly report. Networking giant Cisco Systems also fell following decent prior-quarter results, but unimpressive forward-looking figures.
Last quarter, Cisco earned 59 cents per share on sales of $12.65 billion. Both were better than analyst estimates for a profit of 56 cents per share of CSCO and a top line of $12.65 billion. But, with core router sales off by 8% and a Q4 profit outlook that was less than had been anticipated, investors understandably saw the glass has half-empty.
BMO Capital Markets analyst Tim Long may have summed up the analyst community’s concerns and optimisms best, saying:
“Mixed. There were many positives in the quarter, including very strong margins, uptake of new products, impressive growth in subscription-based product deferred, switching, data center, and a rebound in emerging markets. However, guidance was light on macro concerns and the impact of a strong U.S. dollar, and our estimates are moving lower. While the lower guidance raises some concerns, we still believe Cisco is a well-positioned company, and expect recent partnerships, new products, and Cisco’s strategic initiatives to develop greater revenue predictability and sustain margins over the long term. We are lowering our price target to $33 from $34, which represents 14x our FY17 EPS estimate of $2.38. We continue to rate CSCO shares as Outperform.”
CSCO shares ended the day down 6%.
Fossil Group Inc (FOSL)
Last but certainly not least, watch and accessory maker Fossil Group couldn’t buy a friend on Wall Street today, though it did make a questionable purchase of a smartwatch company that managed to exacerbate the post-earnings concerns of FOSL shareholders.
It was a good news/bad news day for Fossil. The good news is, last quarter’s earnings of $1.19 per share handily cleared estimates of $1.13. The bad news is, sales of $771.3 million came up short of the expected $794.4 million.
The bulk of Friday’s 37% setback for FOSL, however, was a combination of a 40% decline from the $1.96 per share it earned in the same quarter a year earlier and the fact that Fossil Group thinks fourth-quarter sales could fall as much as 16%.
The advent of the smartwatch era has prompted Fossil to buy Fitbit Inc. (NYSE:FIT) rival MisFit for a cool $260 million, but doubts remain that the purchase will bear much-needed meaningful fruit for the struggling company.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
