Stocks finished mixed on Thursday, with the Dow Jones Industrial Average (DJINDICES: ^DJI) ending slightly higher and the S&P 500 (SNPINDEX: ^GSPC) index ticking down by less than 0.1%.
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Financial stocks took a step back from their recent rally, and that sent the Financial Select Sector SPDR ETF (NYSEMKT: XLF) down 0.24%. A rise in gold prices , meanwhile, pushed the Direxion Daily Gold Miners Bull 3X ETF (NYSEMKT: NUGT) up 3.3%.
As for individual stocks, TripAdvisor (NASDAQ: TRIP) and Kate Spade (NYSE: KATE) each made notable moves following the release their quarterly reports.
TripAdvisor's profit trade-off
TripAdvisor shares dropped 11% after the travel booking specialist announced fourth-quarter earnings results. Sales growth ticked up to a 2% pace from 1% in the prior quarter, but investors were looking for more robust gains . Profit fell 67% year over year.
Executives highlighted a few important user engagement wins for the year that just closed, including a 14% spike in average monthly visitors during peak summer travel season and 45% growth in the number of user reviews available through its service. Yet the year's financial results were dominated by its switch to an instant booking model that sent its marketing income tanking. CEO Steve Kaufer said in a press release that "2016 was an important transition year and one of great progress toward creating the best user experience in travel."
In a conference call with analysts, Kaufer and his team explained that, while staying in negative territory, TripAdvisor's revenue per hotel shopper improved for the third straight quarter, rising to a 7% decline from a 12% drop last quarter.
Revenue growth should start speeding up toward double digits in the coming quarters now that it has spent more than a year on the new booking platform. However, citing a "competitive travel landscape," management says that those gains will come at the expense of profit growth as TripAdvisor prioritizes scale over earnings in 2017.
Kate Spade shops around
Kate Spade shares spiked 15% following an encouraging quarterly earnings announcement that also telegraphed a potential sale. The retailer met management's holiday-quarter sales growth goal, as revenue improved by 10%. Profit margins also expanded both in the North American market and internationally.
"Our solid fourth quarter and fiscal year performance demonstrate the strength of our differentiated business model, as we continued to gain market share and deliver strong growth despite a challenging retail environment," CEO Craig Leavitt said in a press release. Executives also stressed the fact that cost cuts helped boost adjusted bottom-line profit margin by over 2 percentage points to 25% of sales.
Investors were apparently more excited about the prospect of the company being acquired, though. Kate Spade announced that executives are "reviewing their strategic alternatives" and have hired financial and legal partners to help them select the best way forward to maximize shareholder value.
Those are strong indications that the company is shopping itself around to potential buyers, although that's no guarantee that the process will yield anything. In the meantime, shareholders can celebrate the fact that Kate Spade's profitability is back up to double digits from less than 2% last year despite sluggish growth in the broader industry.
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