Strong retail sales growth in July spurred stocks’ higher rate at the open, but there was no real bullish follow-through. The S&P 500 Index ended Tuesday’s trading at 2,464.61 , down 0.05%, with investors once again not confident enough in the future to keep bidding equities higher.
That minimal movement would have been a relative victory for owners of Home Depot Inc (NYSE:HD), Centurylink Inc (NYSE:CTL) and Coach Inc (NYSE:COH) today, though. These three names were among the worst of the worst performers, and for understandable reasons.
Coach Inc (COH)
The good news is, high-end handbag maker Coach earned more than the market expected it to last quarter. The bad news is, the luxury name fell short of revenue estimates in its fourth fiscal quarter of the year. Investors saw the glass as half-empty, sending COH shares lower to the tune of 15.2% on Tuesday.
For the quarter ending in June, Coach earned 50 cents per share, topping the forecasted profit of 49 cents per share of COH. Sales of $1.13 billion were not only down from $1.15 billion, but also missed the $1.15 billion top line analysts had modeled.
The future isn’t going expected to look much better … just different. Coach expects to turn a profit of between $2.35 and $2.40 per share, just barely touching the consensus estimate of $2.40 per share of COH. The 2018 sales forecast of between $5.8 billion and $5.9 billion, coming up short of the $6.04 billion the pros were calling for now that Kate Spade is a Coach brand.
Centurylink Inc (CTL)
At first glance, it looks like shares of beleaguered dividend darling Centurylink tanked today in response to news that a class action lawsuit — on behalf of CTL shareholders — was being levied. After a closer look though, it’s not difficult to see that’s nothing new. Those suits have been in the works for weeks. Today was simply the tipping point for a buildup of selling that had been put on hold last week.
All the lawsuits essentially make the same claim, accusing the company’s management of illegally billing customers for services they did not request, setting the stage for an expensive backlash.
With today’s 6.5% setback priced in, CTL shares have lost 22% of their value since last month’s peak.
Home Depot Inc (HD)
Finally, although the 2.6% setback Home Depot shares suffered on Tuesday wasn’t devastating, it’s a loss worth a look simply because of the circumstances.
The prod was the company’s second-quarter earnings report, which was by all standards “good.” Earnings of $2.25 per share were well up from the $1.97 per share of HD earned in the same quarter a year earlier, and topped the $2.21 per share the prod were calling for. Sales of $28.11 billion were up 6.1%, and topped the average outlook of $27.84 billion. It was a record-breaking Q2 for the top and bottom lines.
Still, the report and rhetoric didn’t obscure the reality that Amazon.com, Inc. (NASDAQ:AMZN) is finally starting to chip away at Home Depot’s dominance of the home-improvement arena. Fears of a housing market slowdown fanned the flames that burned HD shares on Tuesday.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. Follow him on Twitter, at @jbrumley.