It’s a good time to be a big-box retailer in America.
Costco (COST) said Thursday that sales at US stores open at least a year increased 5.5% during the first quarter of 2019 compared with the same period a year ago.
Costco’s profit beat Wall Street’s forecasts, but its stock ticked down slightly after hours.
Costco added to the string of strong results from big retailers such as Walmart (WMT) and Target (TGT) to start the year. As many department stores and mall brands struggle, these retailers have the size and muscle to drive down prices on an array of products.
More than half of Costco’s business comes from groceries. That helps it bring in steady foot traffic since most Americans still prefer to buy their food at stores.
Costco has won loyal members with its limited brand assortment at warehouses, its Kirkland Signature private-label brand and services like food courts and gas stations.
Gap (GPS) slid 10% after trading hours Thursday as the ailing brand stumbled to start off 2019.
Sales at Gap stores open at least a year plunged 10% during the brand’s first quarter compared with the same period a year ago, one of the biggest drops across retail this quarter.
“This quarter was extremely challenging,” Gap CEO Art Peck said in a statement.
Gap previously announced plans to close 230 stores over the next two years. Gap had more than 1,200 stores around the world open at the end of the quarter.
However, the company said it remains on track to spin off its Old Navy brand in 2020.
Old Navy has been outpacing the Gap for years, although the brand had a disappointing to the year.
Sales at Old Navy stores open at least a year dipped 1% during the first quarter compared with the same period a year ago.
US markets finished modestly higher on Thursday, recovering a small chunk of this week’s losses.
Despite the gains, all three major indexes are still down on the week. The Dow is on track for its sixth consecutive weekly decline, the longest since June 2011.
US oil prices tumbled nearly 4% to $56.59 a barrel – the lowest since March 8. Crude was slammed by a bearish inventory report and lingering worries about the trade war. Halliburton (HAL), Marathon Petroleum (MPC) and Baker Hughes (BHGE) fell sharply.
PVH (PVH), the owner of Calvin Klein and Tommy Hilfiger, plunged 15% after warning of “softness” in the United States and China. Dollar General (DG) jumped 7% on upbeat results.
United CEO Oscar Munoz said the airline wants Boeing to make up for all of the revenue it lost due to the 737 Max airplane grounding
The carrier announced last week that it had extended cancellations on routes using the troubled plane into August. United expects to cancel roughly 2,400 flights in June and July, a large chunk of the busy summer travel season.
United (UAL) has 14 Max 9s in its fleet. That plane is a longer version of the Max 8, the Boeing model that was involved in two fatal accidents.
Yesterday, Boeing (BA) CEO Dennis Muilenburg said the company will work with airlines on different forms of compensation for the grounding.
Muilenburg said some of that compensation could be in supplying services or future purchases at reduced cost.
Wall Street remains in the green, but stocks shed some of their gains from the open:
Taking a peek at the Dow 30 shows a mostly even mix of reds and greens. Verizon (VZ) is the biggest loser and is down 2.5%. McDonald’s (MCD) is the biggest gainer, up more than 1%.
Notably, the price of oil tumbled 1.7% to $57.83 a barrel in late morning trade.
The British pound dipped below $1.26 on Thursday, its lowest level against the dollar since late December. That makes for a 3.2% drop in the past month.
Fears that Britain will leave the European Union without a deal have been trashing the pound since Prime Minister Theresa May announced her departure last week.
That’s because whoever succeeds May as prime minister will face the same Brexit nightmare.
The European Union has said it’s done discussing the terms of Britain’s departure. And the current deal, negotiated by May, faces seemingly insurmountable opposition in Britain’s parliament.
Put another way: The risk of another delay to Brexit or a “no deal” Brexit are rising.
US oil prices turned sharply negative on Thursday on concerns about excess supply.
Crude came under pressure after the government’s weekly oil inventory report showed that stockpiles fell by 282,000 barrels last week. That’s far shy of the 857,000 barrel decline that analysts polled by Refinitiv estimated.
The bearish news sent crude sinking 1.7% to $57.83 a barrel in late morning trade. Oil had reached $59.70 a barrel earlier in the day.
Crude has been hurt in recent weeks by concerns about too much supply and fears that the US-China trade war will dent demand.
US commercial oil inventories now stand at 476.5 million barrels, or roughly 5% above the five-year average for this time of the year, according to the US Energy Information Administration.
The declines come a day after a particularly turbulent session in the energy market. US oil plunged nearly 4% on Wednesday to as low as $56.88 a barrel before staging a sharp rebound. Crude ended the day down just 0.6%.
The popularity for LaCroix has fizzled out, according to an analyst.
Sales for the flavored carbonated water are “effectively in free fall,” wrote Laurent Grandet, a beverage analyst for Guggenheim, in a new note.
He cited increased competition for similar-type beverages, the “lack of meaningful or disruptive innovation,” and blamed inexperienced management from its parent company, National Beverage (FIZZ).
Grandet added:
National Beverage CEO Nick Caporella once bizarrely said a drop in LaCroix sales “was the result of injustice!”
National Beverage’s stock is down 1.6% in early trading and down 35% for the year.
The news keeps getting worse for Kraft Heinz. Shares of the Warren Buffett-backed company tumbled 3% Thursday after an analyst at Credit Suisse cut his price target on the stock to $26 a share – below the current price. The stock is now down nearly 37% this year.
Kraft Heinz (KHC) has already said it was restating earnings from 2016 and 2017 because of employee misconduct. And the company has yet to report its most recent results for the second quarter. That’s not a good sign, according to Credit Suisse’s Robert Moskow.
Moskow argues that there could be more bad news to come, saying that “we have no visibility into whether the SEC is satisfied with the company’s response, whether its accounting firm PwC will sign off on the financials, or whether the company has put in place sufficient controls to restore confidence in its financial reporting.”
And Moskow said the aggressive cost cutting and layoffs at Kraft Heinz since Buffett’s investing partner 3G Capital took over may be the root of the problem.
CBS and Viacom might become a single company once again, according to a new report.
CNBC says merger talks could begin in mid-June.
Both stocks jumped on the news in early trading: CBS (CBS) popped nearly 5% and Viacom (VIAB) leapt 4%.
Viacom is best known for its cable channels, including MTV and Nickelodeon, and movie studio Paramount. CBS controls the CBS broadcast network, Showtime and streaming network CBS All Access.
The two companies split up in 2006.
Wall Street started Thursday’s session in positive territory, marking a modest rebound from the recent bout of selling.
The gains come after the S&P 500 declined 1.5% during the prior two trading days due to concerns about the US-China trade war and plunging bond yields.
The Dow is still on track for its sixth consecutive losing week. That hasn’t happened since June 2011.
Analysts said Wall Street could soon be due for a rebound given the recent tumble. Based on technical indicators, nearly half of the stocks in the S&P 500 are “oversold,” according to Bespoke Investment Group. That’s the highest since early January.
PVH (PVH), the owner of Timmy Hilfiger and Calvin Klein, plunged 10% after warning of weaker demand in the United States and China.
Dollar General (DG) jumped 5% on solid sales growth driven by higher traffic and shoppers spending more.
Corporate profits tumbled by 2.8% in the first quarter, according to a government reading released Thursday, the biggest decline since 2015.
The $65.3 billion drop in overall profits follows a $9.7 billion drop in the final three months of last year. It also marked the first time since 2015 that there had been consecutive quarters of declining profits.
Profits improved in the nation’s financial sector. But the brewing trade disputes between the United States and its trading partners apparently cut into the profits of non-financial companies. Domestic companies outside of finance suffered a 4.4% drop in profits, and earnings of foreign firms operating here fell 2.2%.
But the gross domestic product, the broad measure of the nation’s economic activity, climbed by 3.1% in the quarter, a slight revision lower from the initial reading a month ago.
Another day, another apparel retailer warning of weakening demand in both the US and China.
Shares of PVH (PVH), the owner of the Tommy Hilfiger and Calvin Klein brands, were set to plunge more than 10% Thursday after issuing a softer outlook.
The news comes one day after Michael Kors, Versace and Jimmy Choo owner Capri Holdings (CPRI) gave bleak guidance.
PVH chairman and CEO Emanuel Chirico didn’t blame the US-China trade war for its reduced forecast per se. But he made it clear that both economies are starting to show cracks – particularly when it comes to consumer spending.
Chirico added that the stronger dollar will take a bite out of earnings going forward. That’s something that will likely hurt other big multinational companies in the months to come.
The newly remodeled Family Dollar stores seem to be paying off:
The chain’s parent company Dollar Tree (DLTR) revealed the sales boost in its earnings report. But the stock is down 3.5% in premarket trading after warning that its second quarter sales will lower than expected.
Dollar General (DG) continues to grow at a steady pace, despite pressure from Walmart (WMT) and Target (TGT).
Sales at Dollar General stores open at least a year grew 3.8% last quarter compared with a year ago. An uptick in customer traffic and shoppers spending more when they visited stores lifted sales, the company said Thursday.
Dollar General beat Wall Street’s expectations on sales and profit, sending its stock up 5% during pre-market trading.
The company opened 240 new stores during the first quarter of the year and expects to open 975 new stores this year. Dollar General has around 15,600 across the country.
Dollar General is now turning its focus to the latest technology in retail: mobile apps, self-checkout and buy online, pickup in store.
The company’s shoppers are increasingly using this tech to shop. Digital is becoming a “big part” of customers’ lives, Dollar General chief executive Todd Vasos has said.
China’s Ministry of Foreign Affairs has accused the United States of committing “economic terrorism” as the two countries fight a trade war.
The White House has “brought huge damage to the economy of other countries and the US itself,” spokesperson Lu Kang told reporters in Beijing on Thursday.
Lu added that US trade policy is “typical economic terrorism, economic hegemonism, and economic unilateralism.”
A growing number of lawmakers and Facebook insiders are raising concerns about whether the company, and its CEO Mark Zuckerberg, have too much power.
Now, Facebook shareholders are about to make a similar case to Zuckerberg and other Facebook executives.
Facebook (FB) investors are set to vote on eight stockholder proposals presented at the company’s annual shareholder meeting on Thursday, including multiple recommendations to put checks on Zuckerberg’s ironclad grip on the company he founded.
CNN Business’ Christine Romans spoke with Disney (DIS) CEO Bob Iger ahead of the opening its new Star Wars: Galaxy’s Edge attraction in California.
They talked about a number of issues, including the trade war between the United States and China.
Romans: I know a couple years ago you were on the President’s business advisory council, and clearly the people who were advising then were saying, “Look, a trade war’s not good long term.” That appears to be the strategy that we’re holding out on here.
Iger: I don’t want to speak to the administration. Obviously it’s a very complex issue. I think there are issues the United States has to grapple with in terms of doing business in China, and with China, that are important to the US economy. That said, I think we have to recognize the importance to China, and its economy, to the world.
I think we have to create balance there and figure out how to balance what’s good for the US, but with the reality that China is not just a flash in the pan.
This is a big country. If you’re a global company based in the United States, and you’re not doing business in China, or your business in China is not successful, then you’re limiting yourself significantly. Just from a Disney perspective, it’s an important market to us.
Uber (UBER) will have a chance today to reassure investors that it’s on track after a disappointing Wall Street debut.
The company is set to release earnings from the first three months of 2019 after US markets close.
Investors will look for management to more clearly outline Uber’s plans to start making money. Right now, the company isn’t profitable. That’s weighing on Uber shares, which have dipped 4% below their IPO price.
Another batch of retailers will share first quarter results Thursday. They’ll need to impress in order to buck the dismal narrative set by rivals earlier this week.
DSW owner Designer Brands (DBI), Dollar General (DG), Dollar Tree (DLTR) and Express (EXPR) report earnings before US markets open.
Gap (GPS) and Costco (COST) follow after the close.
Others in the sector haven’t been so lucky: Abercrombie & Fitch (ANF) shares plummeted more than 26% on Wednesday after it reported weak sales growth. Canada Goose (GOOS), which also reported slowing growth, saw its stock drop 31%.
