Thursday’s pullback wasn’t brutal — the S&P 500 only lost 0.36% to end the session at 2,263.69. What has become brutal for investors, however, is the agony of a market that only seems willing to move sideways. Today’s close is essentially where the S&P 500 was in mid-December.
It could have been worse though. You could have owned GNC Holdings Inc (NYSE:GNC), Rent-A-Center Inc (NASDAQ:RCII) and The Western Union Company (NYSE:WU). These three names dished out the most pain to investors on Thursday, albeit for very understandable reasons.
The Western Union Company (WU)
Money-transfer outfit The Western Union Company didn’t commit the fraud itself, but the U.S. Department of Justice and Federal Trade Commission say knowing about fraud and doing nothing about it is just as bad. And, WU shareholders paid the price for Western Union turning a blind eye to what it knew — or should have known — was illegal activity. The stock fell 3.3% on news that the company had settled with the federal government, agreeing to pay $586 million in punitive fees.
The DOJ and FTC weren’t pointing to a handful of specific instances where Western Union facilitated money laundering and wire fraud. Rather, the government watchdogs essentially claimed the ability to use Western Union for illegal endeavors was essentially systemic, and willfully overlooked.
The company cautioned WU investors that it would be booking a charge of $570 million in its fourth fiscal quarter to account for the payment of the penalty.
Rent-A-Center Inc (RCII)
Furniture-leasing outfit Rent-A-Center didn’t just do poorly last quarter … it did horribly.
That’s the crux of the warning the company issued to RCII investors today anyway, offering preliminary Q4 numbers that fell well short of expectations. The company expects to report a loss of between 20 cents and 30 cents per share of RCII, versus analyst expectations for a profit of 10 cents per share. Heavy promotions were pegged as the primary culprit. The warning comes less than two weeks after CEO Robert Davis resigned.
RCII ended the day down 18.4%.
GNC Holdings Inc (GNC)
Last but not least, the health food and supplement retailer saw its shares tank to the tune of 17% on Thursday, though not as a result of bad news it posted. Rather, a downgrade from Goldman Sachs did the deed.
Analyst Stephen Tanal downgraded GNC from “Neutral” to “Sell,” simultaneously lowering his price target from $12 to $8. He explained: “the company cut prices meaningfully across half its assortment, and ended its long-standing Gold Card loyalty program, which had as many as 6 million members paying $15 annually in return for discounted ‘member pricing,'” suggesting the market’s current expectations of the company may be a tad optimistic.
It’s not exactly a new concern. Piper Jaffray said something very similar of GNC last month when it lowered its stance on the stock to “Underperform.”
After today’s plunge, GNC shares have fallen 85% since late 2013, as the company has struggled to remain relevant in a sea of online and offline competition.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.