A number of key specialty retail stocks are getting smashed lower on Tuesday despite a better-than-expected retail sales report. Sales increased 0.6% month-over-month vs. the 0.3% rise that was expected. For whatever reason, the market believes this isn’t good enough.
As a result, the SPDR S&P Retail (ETF) (NYSEARCA:XRT) is threatening to violate critical multi-month support, which could set up a return to levels not seen since early 2016. The industry group has been beleaguered for months, pressured by everything from Amazon.com, Inc.’s (NASDAQ:AMZN) ongoing success to lingering doubts about the health of the U.S. consumer.
This fresh selling impetus is hitting a number of specialty retail stocks particularly hard. Here are five to watch:
Retail Stocks That Are Getting Smashed: Advance Auto Parts (AAP)
Advance Auto Parts, Inc. (NYSE:AAP) shares dropped 24% in mid-day trading after the company reported results before the open. Earnings of $1.58 per share missed estimates by 8 cents despite a 0.3% rise in AAP’s revenue. Same-store sales were flat as the gross margin dropped 0.9% on an increase in supply chain costs and a hit from an inventory reduction.
The latter is the consequence of a “LIFO” inventory accounting strategy, which means that higher cost inventory was held as an asset until now, resulting in a large expense.
Retail Stocks That Are Getting Smashed: Genuine Parts (GPC)
Genuine Parts Company (NYSE:GPC) shares are down 3.7% in trading on Tuesday, wiping out support from the lows seen in the mid July. As a result, the $80-a-share level was touched for the first time since early 2016. This represents a more than 20% decline from the summer 2016 high near $100.
GPC will next report results on Oct. 19 before the bell. Analysts are looking for earnings of $1.28 per share on revenues of $4.1 billion.
When the company last reported on July 20, earnings of $1.29 per share missed estimates by 2 cents despite a 5.1% rise in revenues.
Retail Stocks That Are Getting Smashed: Dick’s Sporting Goods (DKS)
Dicks Sporting Goods Inc (NYSE:DKS) shares gapped lower at the open on Tuesday and are extending the downside move after the company reported quarterly results before the open. The move ends a four-month downtrend consolidation range, violates the January 2016 low and returns the DKS share price to levels not seen since 2011.
The company reported earnings of 96 cents per share, 4 cents less than expected, despite a 9.6% rise in revenue year-over-year. Comp-store sales growth of 0.1% were well off of the 2-3% guidance expected. Forward guidance was cut as well, with Q3 earnings per share lowered to a range of 22 to 30 cents vs. the 55 cents analysts were expecting.
Retail Stocks That Are Getting Smashed: Tractor Supply (TSCO)
Tractor Supply Company (NASDAQ:TSCO) shares are down nearly 4% after reporting disappointing results before the open. Earnings of $1.25 per share were 2 cents below estimates despite a 8.9% rise in year-over-year revenue and a 2.2% comp-store sales growth rate. Forward guidance was cut, which spooked investors.
The company will next report results on Oct. 25 after the close. Analysts are looking for earnings of 68 cents per share on revenues of $1.68 billion.
Analysts at Telsey Advisory Group recently lowered their price target on the stock on broad industry pressures related to cooler weather in May and June.
Retail Stocks That Are Getting Smashed: Ulta Beauty (ULTA)
Ulta Beauty Inc (NASDAQ:ULTA) shares are dropping hard out of a two-month consolidation range, down nearly 4%. The move takes shares down to levels not seen since late 2016. This represents a decline of roughly 25% from its early June high. Watch for ULTA shares to settle near prior lows around $225, which would be a about a 4% drop from here.
Ulta Beauty will next report results on Aug. 24 after the close. Analysts are looking for earnings of $1.78 per share on revenues of $1.3 billion. Oppenheimer analysts issued a downgrade in late July after defending the stock for weeks during its pullback.