December is a huge month for retailers since it includes the peak holiday shopping period, which can make or break their wider fiscal year. That’s why stocks in this industry can swing wildly as investors process day-by-day updates on consumer spending trends around the holidays.
And this month promises even more volatility for a few retailers set to announce quarterly earnings results while giving shareholders updates on how the season is progressing. With that in mind, let’s look at…
1. Stitch Fix: Delivering faster growth
Its subscription-based selling approach means Stitch Fix doesn’t have the same seasonal sales bump as traditional rivals like Amazon.com. That could change a bit this year thanks to the apparel seller’s new direct-purchase functionality. But there are bigger reasons investors will be closely following Stitch Fix’s earnings announcement on Monday, Dec. 9.
The e-commerce specialist said back in early October that a few challenges were likely to harm its growth in the fiscal first quarter. But CEO Katrina Lake and her team assured investors that the slowdown would be temporary and that sales gains would speed back up as profitability improved through the rest of the year.
Wall Street took the more cautious view and sent shares lower over the last few months. We’ll find out whether investors were right to prepare for a potential downgrade when Stitch Fix updates its official 2020 outlook in early December.
2. GameStop: Resetting the game
GameStop’s shares have soared in the last three months, yet remain in deeply negative territory for the year: down roughly 50% in 2019. Investors should get more clarity about which of those conflicting outlooks is right when the video game retailer announces its fiscal third-quarter results on Tuesday, Dec. 10.
GameStop’s last report contained few hopeful signs, with declines in comparable-store sales worsening to 11% as gamer spending continued shifting online. The chain is also dealing with pressure from a move to next-generation video game consoles, which always tends to hurt results in the year leading up to their release.
These issues are likely to dominate the retailer’s third-quarter results, which are expected to show a 15% sales drop. Yet the stock’s movement will be more sensitive to the comments that management makes about its wider rebound strategy. CEO George Sherman is on a mission to win back investors’ trust, and that starts with improving GameStop’s finances and articulating a clear path back toward sales growth…
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