Consumer Sector Update for 03/09/2018: UNFI,DTEA,BIG,PRTY,MAT,HAS,JAKK,TOY.TO

Top Consumer Stocks

WMT +0.57%

MCD +1.66%

DIS +0.39%

CVS +1.31%

KO +0.65%

Consumer stocks were mostly higher today, with shares of consumer staples companies in the S&P 500 adding over 0.4% in value this afternoon while shares of consumer discretionary firms in the S&P 500 were climbing more than 1.3%.

In industry news,

Toy company shares retreated Friday amid reports that Toys 'R' Us was preparing for liquidation after seeking bankruptcy protection last year. Shares of Mattel ( MAT ), Hasbro ( HAS ) and Jakks Pacific ( JAKK ) were all in the red after multiple media reports that the toy retailer will close down permanently unless creditor talks produce a deal helping it emerge from bankruptcy. Following those reports, analysts at Barclays lowered their investment rating for Mattel to Underweight from Equal weight while BMO Capital Markets analyst Gerrick Johnson today said the toy industry is facing many challenges in a new research note for Canadian company Spin Master (TOY.TO). "Among toy industry executives we've spoken with, there is a high level of concern regarding the performance of the toy industry in 2018," Johnson said. "The Toys 'R' Us bankruptcy, changing nature of retail, underperformance of movie toys, and the new light-speed at which kids' tastes change has created the highest level of trepidation and uncertainty we have seen in years."

Among consumer stocks moving on news:

+ United Natural Foods ( UNFI ) advanced Friday, rising just under 13% to a session high of $49.40 a share after the company late Thursday reporting adjusted fiscal Q2 net income easily beating analyst forecasts following a 10% year-over-year increase in net sales. Excluding one-time items, the company earned $0.71 per share, topping the Capital IQ consensus by $0.14 per share. Net sales rose to $2.53 billion from 2.29 per share during the same quarter last year and also exceeding the $2.45 billion Street view. The company also is projecting FY18 net income in a range of $3.06 to $3.14 per share on between $10.01 billion to $10.16 billion in net sales. Analysts, on average, are modelling EPS of $3.08 on $9.92 billion in sales this year..

In other sector news:

+ Party City Holdco ( PRTY ) celebrated Friday, with shares of the specialty retailer rising 15% to a session high of $16.73 each, after reporting better-than-expected Q4 results and issued upbeat FY18 guidance. Excluding one-time items, Party City earned $0.81 per share, up from $0.76 per diluted share during the year-ago period and beat the Capital IQ consensus by $0.01 per share. Total revenue grew to $789.6 million from $749.3 million last year, also beating the $781.3 million Street view. Looking forward, the company is projecting adjusted FY18 earnings in a range of $1.76 to $1.87 per share on between $2.44 billion to $2.49 billion in revenue. Analysts, on average, are looking for Party City to earn $1.83 per share this year on $2.46 billion in revenue. The company also said it has entered into an agreement to acquire the master franchise group representing 11 franchise stores in Maryland for $14.0 million.

+ DAVIDsTEA (DTEA) jumped out to an early 7% advance on Friday, topping out at $3.90 a share, after saying company co-founder Herschel Segal Monday resigned from its board of directors and is now leading a prospective going-private transaction for the specialty retailer. Segal, who owns about 47.2% of the company's stock through his controlling interest in Rainy Day Investments Ltd, told the company in a Feb. 20 letter he was exploring a privatization bid for DAVIDsTEA and buying out all of its minority shareholders. He also was considering unspecified strategic transactions, the company said, adding it was examining Segal's proposals and was also looking at other alternatives. In a related move, Lorenzo Salvaggio, the chief operating officer at Rainy Day Investments, also plans to leave the company's board.

- Big Lots (BIG) stumbled Friday, falling almost 14% to reach a session low of $46.55 a share, after the discount retailer reported below-consensus Q4 net sales and issued a sub-par Q1 forecast. Sale rose to $1.64 billion during the 13 weeks ended Feb. 3 from $1.58 billion during the year-ago period but still lagging the Capital IQ consensus by around $10 million. Excluding one-time items, its earned $2.57 per share, also improving on a $2.26 per share adjusted profit last year and beating the Street view by $0.14 per share. For the current quarter, the company is projecting adjusted per-share earnings between $1.15 to $1.22, lagging the analyst mean by at least $0.10 per share.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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