Stock Market Today: Costco's Fourth Miss and Abercrombie's Big Jump
The Dow Jones Industrial Average has gained 29 points in pre-market trading, suggesting a positive start to the stock market today. Still, markets could find direction from fresh economic data out this morning. Investors learned today that the U.S. economy shrunk at an annual pace of 1% in the first quarter of 2014, or about twice the drop that economists had expected. Keep in mind, though, that today's report was only the government's second estimate of quarterly GDP change and the figure will be revised several additional times.
Stocks on the move
Meanwhile, Costco and Abercrombie & Fitch stocks should both see heavy trading today after the retailers announced their quarterly numbers this morning.
Costco posted a 7% rise in quarterly revenue to $23.55 billion. That result was right in line with Wall Street's expectations. However, the warehouse retailer's profit came in below analysts' estimate for the fourth quarter in a row: earnings of $1.07 per share were just shy of the $1.09 that the Street wanted. That slight miss aside, Costco's overall results looked strong. Comparable-store sales rose by a hefty 5% in the U.S., meaning the company is still grabbing market share from rivals. Wal-Mart's Sam's Club, for example, suffered a 0.5% decrease in comps over the same time period. That kind of outperformance is why Costco's stock has been such a great investment for long-term shareholders, and that trend isn't in question even after a few slight misses on quarterly profit estimates. Costco's shares were up 0.14% in pre-market trading.
Abercrombie today announced results that beat Wall Street's low expectations. The clothing retailer posted a 2% decline in sales, along with a net loss of $0.17 a share. Analysts were looking for a 5% revenue drop and a $0.19 loss. Abercrombie's Internet business was its sales savior, rising by 22% -- enough to cleave 5 percentage points off of its overall comparable-store sales dip. Cost reductions were the driver behind that surprisingly small quarterly loss: marketing expenses fell by 4% and store costs came down significantly. Still, the retailer isn't out of the woods yet, as this quarter's 4 percentage point dip in gross profit demonstrates. But Abercrombie expects profitability to ramp up through the year: it reaffirmed its prior guidance for 2014 earnings of as much as $2.35 a share. The stock was up 5.4% in pre-market trading.
The article Stock Market Today: Costco's Fourth Miss and Abercrombie's Big Jump originally appeared on Fool.com.Demitrios Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool recommends Costco Wholesale. The Motley Fool owns shares of Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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