The beginning of September has not been kind to American markets.
Some of the country’s biggest names have seen their stocks plummet for various reasons. The decrease in oil prices and the slowdown of American factories have definitely taken the wind out of their sails. Nonetheless, some companies, such as Vera Bradley (VRA, Financial), Charter Communications (CHTR, Financial) and even Karyopharm Therapeutics (KPTI, Financial) have managed to soar higher on good news.
Unfortunately, a larger number of companies experienced a dramatic downturn on Sept. 1. Five Below (FIVE, Financial), Bob Evans (BOBE, Financial) and Shoe Carnival (SCVL, Financial) have been hit hard by negative news. Their stocks have reflected the turning tide while bringing a world of hurt to investors.
Costco (COST, Financial) is one of the biggest wholesalers in the U.S. The company is considered to be one of Walmart’s (WMT, Financial) biggest competitors, and the company is always attempting to expand its grasp. Its determination to grow bigger may well be its downfall. According to the company, its August sales have been hurt substantially due to it decision to open an excessive number of warehouses overseas. The company has recently opened warehouses in Australia and Asia. It's also established new warehouse clubs in Mexico, Spain and the United Kingdom.
The company’s ventures in Mexico, Spain and the U.K. have proven to be fruitful. Unfortunately, Asia and Australia have not been kind to the company, and this was clearly evident in its recent revelation. Due to the news, the company’s stock has plummeted almost 4%. Meanwhile, Bay Area movers have seen a boost in business due to the increase in home sales.
Another company that has experienced a downturn is Bob Evans. The company’s troubles have led to talks about a potential split between the company’s restaurants and other businesses.
This has resulted in one activist investor urging the company to set its restaurant business apart from the rest of its business activities. The company’s earnings were dramatically lower than Wall Street analysts expected. The sales for the last quarter came in at $306 million, which is approximately $15 million lower than last year’s number.
The closing of many restaurants has certainly played a role in the reversal. Nonetheless, the company increased its outlook for 2017, and this has helped the company’s stock linger around $40.
The Shoe Carnival is showing weakness, but this does not stop buyers from investing in the stock. According to Shoe Carnival Executive Vice President Kerry Jackson sales were down for athletic footwear in the second quarter, but nonathletic footwear such as sandals performed extremely well.
However, Jackson has high hopes and expects sales increases throughout the rest of the year. This is a result of declining foot traffic, but back-to-school sales held strong. As the summer season is nearing an end, the company hopes to see an increase in athletic wear, boots, etc.
Other companies that fell hard on the first day of September include Apple Hospitality (APLE, Financial), Campbell Soup Company (CPB, Financial), SolarCity (SCTY) and Tesla (TSLA). And of course, oil has fallen below $44. This could be a warning sign of an unstable September for investors.
Disclosure: I do not own any shares or any stocks mentioned in this article.
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