Why Blue Apron Holdings, Tronc, and American Eagle Outfitters Slumped Today
Thursday was a generally positive day on Wall Street, although the Dow and other major benchmarks finished with only small gains for the session. After focusing on potential fallout from tariffs from the Trump administration, market participants didn't react all that strongly to the final enactment of trade restrictions, which included the previously announced tariffs on steel and aluminum of 25% and 10%, respectively. Some were pleased that Mexico and Canada were excluded, but others still fear discord between the White House and lawmakers in Congress could lead to further problems. Some individual companies also had bad news, and Blue Apron Holdings (NYSE: APRN), Tronc (NASDAQ: TRNC), and American Eagle Outfitters (NYSE: AEO) were among the worst performers on the day. Here's why they did so poorly.
Blue Apron deals with competition
Shares of Blue Apron Holdings plunged 17% on news that weight-loss specialist Weight Watchers International (NYSE: WTW) is preparing to launch new meal kits that could boost the level of competition in the budding industry. Weight Watchers expects to sell its kits in grocery stores, putting together ingredients in a way as to allow for quick and healthy preparation. With the marketing power of Oprah Winfrey behind it, Weight Watchers could be a formidable opponent, and investors in Blue Apron fear that the advantage of home delivery might not be enough to overcome name recognition and promotional advantages.
A tough year for Tronc
Tronc stock plunged 24% after the newspaper company released its fourth-quarter and full-year 2017 financial results late Wednesday. Revenue for the full year fell 5% even with an extra week in its fiscal year compared to 2016, with advertising revenue in particular falling almost 12% year over year. Growth in digital advertising and circulation revenue cushioned the blow to some extent, but adjusted earnings per share fell by more than 35% from year-earlier figures. With Tronc having entered into a definitive agreement back in February to sell key newspaper properties, including the Los Angeles Times and San Diego Union-Tribune, investors can expect big changes at the company in the coming year.
American Eagle deals with disappointment
Finally, shares of American Eagle Outfitters fell more than 9%. The teen retail specialist initially gained ground after releasing its fiscal fourth-quarter financial results, which included double-digit percentage gains in revenue on an 8% rise in same-store sales growth. Solid guidance for the coming year was favorable, as was American Eagle's decision to increase its dividend by 10%. Yet investors reacted negatively to news that the company had to resort to margin-cutting markdowns in order to keep sales high. American Eagle will have to keep working hard if it wants to sustain the healthy share-price gains it enjoyed last year.
Offer from The Motley Fool: The 10 best stocks to buy nowMotley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. In fact, the newsletter they run, Motley Fool Stock Advisor, has tripled the S&P 500!*
Tom and David just revealed their ten top stock picks for investors to buy right now.
Click here to get access to the full list!
*Stock Advisor returns as of March 5, 2018.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.