Stocks were generally higher Monday, with the S&P 500 (SNPINDEX: ^GSPC) managing a gain, but the Dow Jones Industrial Average (DJINDICES: ^DJI) edging downward slightly.
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Today's stock market
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Utilities led the market today, with the Utilities Select SPDR ETF (NYSEMKT: XLU) gaining 0.9%. Healthcare stocks were among the laggards; the SPDR S&P Biotech ETF (NYSEMKT: XBI) fell 2%.
As for individual stocks, Kohl's (NYSE: KSS) rose after the retailer reported holiday sales, and GoPro (NASDAQ: GPRO) went into a tailspin following the release of the company's preliminary Q4 report.
Kohl's reports strong holiday sales, raises guidance
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Kohl's reported surprisingly strong sales for November and December, and the stock rallied 4.7%. The retailer's total and comparable sales rose 6.9% compared with the period a year earlier, and the strong performance caused the company to raise profit guidance for the full year. Earnings per share for the fiscal year that ends later this month are now expected to be $4.10 to $4.20, compared with earlier guidance of $3.72 to $3.92.
Chairman and CEO Kevin Mansell commented:
We are very pleased with our Holiday period sales, which were consistently strong through November and December. All lines of business and all regions reported positive comp sales. As expected, growth in digital demand accelerated significantly in the Holiday period from the year-to-date trend. In addition, we experienced positive sales in our stores driven by stronger traffic.
As sales numbers trickle out for the month of December, the holiday season's winners and losers are starting to become evident, with Kohl's definitely landing in the former category. Last quarter, Kohl's announced good sales in the second half of October, and reports of a strong holiday season pushed the stock price up in December.
GoPro announces disastrous holiday sales, exits the drone business
Action-camera maker GoPro reported preliminary fourth-quarter results that showed sales plummeted during the holiday season, and announced it was exiting the drone business and laying off hundreds of employees, sending shares crashing 12.8%. Revenue fell 37% to $340 million, significantly below the $470 million the company gave as guidance in November. The revenue number includes $80 million of price protection that GoPro will pay retailers for lowering prices on Dec. 10.
Regarding the drone business, the company said in the press release:
Although Karma reached the #2 market position in its price band in 2017, the product faces margin challenges in an extremely competitive aerial market. Furthermore, a hostile regulatory environment in Europe and the United States will likely reduce the total addressable market in the years ahead. These factors make the aerial market untenable and GoPro will exit the market after selling its remaining Karma inventory.
The price reductions were primarily because the company saw low demand for its older Hero 5 models that were still offered at the launch price from a year ago. The inability of GoPro to foresee this before the holiday season cost the company sales during the critical Black Friday sales window, not to mention tens of millions in price protection payments. As for drones, GoPro was just never able to catch up with market leader DJI. In the last conference call, the company said it was restricting distribution of the Karma drone because of low margins.
After a series of missteps, the investor community seems to be throwing in the towel on GoPro, which now sells for only 0.75 times trailing-12-month sales. The company hasn't given any indication that it is looking for a buyer, but rumors about that possibility were circulating today.
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