With nothing new to spur another round of buying, not to mention the fact that the market’s key indices bumped into technical resistance, traders finished the last day of the week and expiration doing a bit of clean-out work. The S&P 500 ended the day at 2,181.90, down 0.24%.
It was much, much worse for anybody who owns Hibbett Sports, Inc. (NASDAQ:HIBB), First Solar, Inc. (NASDAQ:FSLR) and Gap Inc (NYSE:GPS) though. These three names fell deep into the red on the last trading day of the week.
Here’s the deal.
Gap Inc (GPS)
As bad as things were for tween retailer Abercrombie & Fitch Co. (NYSE:ANF) today, they were even worse for rival Gap. Whereas ANF shares ended the day down 13.8%, GPS fell to the tune of 16.6%.
The cause was the same in both cases … alarming earnings reports. Although Gap managed to meet income estimates of 60 cents per share and topped revenue projection of $3.74 billion by reporting a top line of $3.8 billion, that was still the seventh consecutive quarter of falling sales.
The retailer’s fourth quarter outlook was similarly discouraging. The company maintained its previous full-year outlook for a profit of between $1.87 and $1.92 per share of GPS, which suggests its fourth quarter results are on pace to come in lower than anticipated.
Abercrombie & Fitch logged its fifteenth straight quarter of falling year-over-year sales, also missing estimates.
First Solar, Inc. (FSLR)
After a year of declining revenue and shrinking profits, solar panel maker has finally opted to take action. It’s restructuring the company, starting with the layoff of 1,600 employees and a cancellation of its plans to make its touted Series 5 panels.
The move is expected to save money in the long run, and right-size the organization more appropriately with respect to demand. The maneuver, however, will cost between $500 million and $750 million to put in place.
UBS isn’t impressed, however, downgrading FSLR to a “Sell” on Friday in response to lackluster 2017 profit guidance of between a breakeven and earnings of 50 cents per share. That’s less than analysts had predicted. UBS is particularly worried First Solar will continue to burn through cash into 2018. Analyst Julien Dumoulin-Smith commented:
“We emphasize the inflows from legacy PPA projects are funding the capex in 2017, and expect a step-down in cash in 2018 as capex to ramp capacity back up eats into the defensive cash position bolstering the outlook.”
FSLR ended the day down 6.3%.
Hibbett Sports, Inc. (HIBB)
Last but not least, Hibbett Sports was yet another retailer to be up-ended by poor results last quarter; HIBB fell 11%.
The chain of sporting goods stores reported a profit of 66 cents per share on $237 million in sales. The bottom line fell well short of the 74 cents per share of HIBB experts had projected, while the revenue tally missed estimates of $237.8 million.
Prior to today, HIBB shares were up 50% year-to-date, and hit a new 52-week high on Monday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.