For a while during Wednesday’s trading session, it looked like the bulls were going to take the reins firmly again, with stocks well into the black. The rally wasn’t built to last though. By the time the closing bell rang, the S&P 500 was up only 0.02%, closing at 2047.63 and reaching a new multi-week low in the process.
Leading the bearish parade were Hormel Foods Corp (NYSE:HRL), Target Corporation (NYSE:TGT) and Vipshop Holdings Ltd – ADR (NYSE:VIPS).
Here’s a closer look at what went wrong for each.
Hormel Foods Corp (HRL)
By most accounts, Hormel Foods shares should be up today. The meat company topped its second quarter estimates, and raised its full-year earnings guidance. Yet, HRL shares fell a bit more than 8.5% on Wednesday, mostly stemming from concerns about shrinking profit margins.
Last quarter — its second fiscal quarter of 2016 — Hormel Foods earned 40 cents per share on revenue of $2.3 billion. The bottom line was better than the anticipated 38 cents, and much better than the profit of 33 cents per share of HRL the company earned in the second quarter of the previous year.
Sales, however, missed expectations of $2.33 billion, even though they rolled in just a tad better than the top line from the comparable quarter a year earlier.
Looking ahead, Hormel now anticipates posting a profit of between $1.56 and $1.60 per share this year, up from previous profit guidance of $1.50 to $1.56.
Still, HRL shareholders are concerned about shrinking margins, which contracted from 14.4% in Q2 of last year to only 11.9% last quarter.
Target Corporation (TGT)
Much like all the retailers that reported disappointing first-quarter numbers earlier in the month, Target Corporation became an easy target for traders today after posting its tepid quarterly results on Wednesday morning.
Actually, relative to earnings expectations, Target did ok. The retailer earned $1.29 per share versus estimates for a profit of only $1.19 per share of TGT. Same-store sales, however, rolled in at 1.2% versus guidance of between 1.5% and 2.5%. Meanwhile, sales of $16.2 billion were not only 5.4% less than their year-ago comparison, but fell short of the expected $16.3 billion.
The bulk of the 7.6% setback TGT suffered on Wednesday, however, stemmed from the retailer’s same-store sale outlook. Target said they could drop up to 2% for the quarter currently underway.
Vipshop Holdings Ltd – ADR (VIPS)
Last but not least, Chinese e-commerce outfit Vipshop Holdings was the worst of the worst on Wednesday, with VIPS shares losing 12% of their value following a sizable shortcoming of its revenue outlook for the current quarter.
Last quarter’s earnings were decent … good even. Profits of 1.04 yuan per share handily beat estimates of only 98 cents. Revenue growth of 41% still wasn’t good enough, however — the company’s top line of $12.17 billion yuan missed expectations of 12.32 billion.
The bearish flames were fanned following guidance of further stalling revenue growth. The company now anticipates top line growth of between 37% and 42% for the second quarter of 2016. That was in line with analysts’ outlooks, but that was a projection investors felt should have been topped.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
