The major benchmarks ended the session slightly higher on Tuesday after struggling for direction much of the day, as investors focused on geopolitical concerns and continued flooding in Texas in the aftermath of Hurricane Harvey. Reports that North Korea fired intermediate-range missiles over Japan gave investors pause, increasing worries of a potential stock market correction. Adding to the uncertain mood was bad news from a number of individual companies. J.Jill, Inc. (NYSE: JILL), The Finish Line, Inc. (NASDAQ: FINL), and Freeport-McMoRan Inc. (NYSE: FCX) were among the worst performers on the day. Below, we'll look more closely at these stocks to tell you why they did so poorly.
Jill came tumbling after
Shares of J.Jill fell 15.8% after the company reported its second-quarter earnings results. The women's apparel brand grew net sales to $181.4 million, an increase of 9.9% over the prior-year quarter, the result of comparable-store sales that jumped 7.8%. Income from operations, excluding one-time items, jumped nearly 37% to $25.6 million, and diluted earnings per share rocketed 53% higher, while adjusting for non-recurring expenses produced a more reasonable 21% gain.
President and CEO Paula Bennett commented on the results, saying, "We are pleased to deliver another quarter of strong sales and earnings growth. Our second quarter performance demonstrated the continued strength of our omnichannel model and the disciplined, data-driven approach we take to our business."
Investors were less pleased with J.Jill's forecast for earnings of $0.18 to $0.20 for the coming quarter, even though it still expects comparable-store sales to increase by high single digits. Today's move downward may be a bit of an overreaction to an otherwise solid performance for the apparel specialist.
Stumbling at The Finish Line
Finish Line stock plummeted 33.8% before settling for a 18.4% loss in the wake of the company's announcement of abysmal preliminary results for the second quarter. The footwear retailer reported net sales of $469.4 million, a decrease of 3.3% compared to the prior-year quarter, driven by comparable-store sales that slumped 4.6%. Increasing pressure on gross margin from continued markdowns led the company to expect earnings per share for the quarter in a range of $0.08 to $0.12. Adjusted earnings for the fiscal year were also slashed by more than half to a range of $0.50 to $0.60 per share.
CEO Sam Sato addressed the results, stating, "The marketplace for athletic footwear became much more promotional as our second quarter progressed resulting in challenging sales and gross margin trends."
The company also revealed that it adopted a new shareholder-rights plan, also known as a "poison pill," in order to prevent a hostile takeover. The plan was designed to prevent any shareholder or group from accumulating 12.5% or more of the common stock. Given these preliminary results, it's no wonder that shareholders are running for the hills.
Freeport-McMoRan digs itself a hole
Finally, shares of Freeport-McMoRan dropped 2.1% after the company said that it would divest nearly half its stake in one of the world's most productive copper mines. The miner reached an agreement with the Indonesian government to reduce its majority stake in the enormous Grasberg gold and copper mine from 90.6% to 49%. The company has long battled both political forces and negative public perception in the country, as residents objected to a foreign corporation depleting its natural resources, which led to violent protests in the Southeast Asian nation.
The agreement could potentially extend the company's permit to 2041 and will require investment of as much as $20 billion, but lifts the Indonesian government's threat to ban Freeport from exporting the copper. Investors apparently wondered if the concessions made to secure the deal were too much.
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