Stocks traded in a narrow range Thursday as investors continued to watch news about trade negotiations with China. The Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) fell in the morning but recovered to close with small gains.
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Data source: Yahoo! Finance.
As for individual stocks, Kroger (NYSE: KR) missed third-quarter expectations but maintained guidance, and Five Below (NASDAQ: FIVE) reported strong results.
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Kroger misses expectations
Grocery giant Kroger reported accelerating comparable-sales growth in the third quarter, but the results still missed expectations, and shares fell 3%. Total company sales rose 0.7% to $28 billion and adjusted earnings per share came in at $0.47, $0.01 below EPS in the period a year ago. Analysts were expecting adjusted EPS of $0.49 on sales of $28.2 billion.
Identical sales excluding fuel grew 2.5% year over year, an improvement over 2.2% last quarter and 1.5% in Q1. Gross margin minus fuel fell 24 basis points, but actually improved slightly when excluding Kroger's pharmacy business.
Looking forward, the company reiterated guidance for adjusted EPS of $2.15 to $2.25 for the full year and for 2020 adjusted EPS between $2.30 and $2.40, which compares well with the $2.33 analyst consensus.
Kroger's stock popped 11% in one day last month after the company's analyst day, and today's solid report and outlook would seem to back up management's claims that its Restock Kroger strategy is working. But investors appear skeptical about the rosy guidance for next year, so the company may still have something to prove in upcoming quarters.
Five Below grows sales, but tariffs hit profits
Shares of discount retailer Five Below rose 4.8% after the company beat expectations for third-quarter sales and profit. Net sales increased 20.7% to $377.4 million, and EPS fell 25% to $0.18 due to the impact of tariffs and a higher tax rate. The company had said to expect EPS of $0.14 to $0.17 on sales between $369 million and $374 million.
Comparable sales by existing stores rose 2.9% after 2.2% growth last quarter. The company said that results were boosted by strong performance of its new stores. Five Below opened 61 new stores in the quarter and has increased its store count by 20% since the end of Q3 last year.
Five Below issued fourth-quarter guidance that was a bit below what analysts were expecting, but investors seem to think it's on the right track. The company reported that customers are responding very positively to in-store tests of merchandise between $5 and $10, and as a result, it's adding a "10 Below" gift display to its stores this holiday season.
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