For Immediate Release
Chicago, IL – May 12, 2020 – Zacks Equity Research highlights 1-800-FLOWERS.COM, Inc. (FLWS - Free Report) as the Bull of the Day and Columbia Sportswear Company (COLM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sony Corporation (SNE - Free Report) , Ciena Corporation (CIEN - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
1-800-FLOWERS.COM, Inc.is perfectly positioned in 2020 as its products are ordered digitally and provide a way for people to connect during the stressful COVID-19 time. This Zacks Rank #1 (Strong Buy) just reaffirmed its full year guidance after seeing strong April momentum.
1-800-FLOWERS.COM is more than just 1-800-Flowers. It is a leading provider of gifts designed to express, connect and celebrate including the brands such as Cheryl's Cookies, Harry & David, Shari's Berries, Moose Munch, The Popcorn Factory, Wolferman's Bakery, Simply Chocolate, 1-8OO-Baskets.com, Goodsey, FruitBouquets.com and Personalization Universe.
It also offers steaks and chops through StockYards.
The Celebrations Passport loyalty program offers free standard shipping and no service charge across its portfolio of brands.
Another Beat in the Fiscal Third Quarter
On Apr 30, 1-800-FLOWERS.COM reported its fiscal third quarter results and beat the Zacks Consensus Estimate by 6 cents. Earnings were a loss of $0.14 versus the consensus of a loss of $0.20.
It was the 8th earnings beat in a row.
Revenue rose 12.2% to $278.8 million from $248.4 million.
It saw revenue increases across all three of its business segments, led by Gourmet Foods and Gift Baskets, which jumped 27.1% to $95.9 million up from $75.4 million a year ago.
The gains were due to growth in the business as well as contributions from the acquisition of Shari's Berries, which was acquired in August 2019.
Consumer Floral, the largest segment, saw revenue rise 5.4% to $152.6 million, up from $144.8 million a year ago. It saw double-digit growth for the Valentine's Day holiday period but it did see a weakness the last 2 weeks of March due to COVID-19.
BloomNet Wire Service revenue increased 7.9% to $30.4 million from $28.2 million.
Reaffirmed Fiscal 2020 Guidance
Despite the weakness it saw in business at the end of March, that turned around in April as demand increased "significantly" to start its fiscal fourth quarter.
Consumers want to connect while sheltering-in-place and to do that they are sending gifts digitally.
1-800-FLOWERS.COM is one of the few businesses that is actually seeing business increase during the COVID-19 months.
It continues to see earnings growth in a range between 15-17% over last year.
Zacks only has one analyst estimate for 1-800-FLOWERS.COM but that analyst is bullish.
The fiscal 2020 Zacks Consensus Estimate has risen to $0.62 from $0.52 over the last week. 1-800-FLOWERS.COM made $0.52 a year ago so that is earnings growth of 19.2%.
Fiscal 2021 is also looking strong with another 14.5% earnings growth expected.
Shares Soar to 5-Year High
The Street is loving companies that are doing business digitally in 2020.
1-800-FLOWERS.COM certainly fits into that category.
Shares are up 22% year-to-date to new 5-year highs.
They aren't cheap, with a forward P/E of 36.2.
Investors are buying the growth as it doesn't pay a dividend.
But with a strong start to its fiscal fourth quarter, and the re-affirmation of full year guidance, 1-800-FLOWERS.COM is one digital consumer products company to keep on your short list.
Bear of the Day:
Columbia Sportswear Companyis getting hit globally due to COVID-19 impacts. This Zacks Rank #5 (Strong Sell) has taken steps to boost its liquidity and prepare for reopening of the global economy.
Columbia Sportswear is a global retailer in the active outdoor lifestyle apparel, footwear, accessories and equipment industry. It operates in 90 countries through its four brands: Columbia, Mountain Hardwear, SOREL and PrAna. The company has both online and brick and mortar stores.
Global Impacts of COVID-19
Columbia got hit earlier than some other retailers due to its business in Asia which began to feel the impacts of COVID-19 in late January in China, early February in Korea and Japan and in March in North America and Europe.
Retail traffic trends declined in North America and Europe, even before the official store closures which happened in mid-March.
As of Apr 30, the vast majority of its stores in China and Korea have reopened but many are still operating with reduced store hours.
In those markets, traffic trends have been improving but remain well below the pre-COVID levels.
Japan experienced a similar improving recovery until earl April when a spike of new cases in and around Tokyo prompted store closures.
As of Apr 30, the vast majority of its North American and Europe stores remained closed, as did its wholesale customers.
It's online business has mostly stayed operational during this period.
First Miss in Five Years in Q1
On Apr 30, the company reported its first quarter results and it missed the Zacks Consensus by 45 cents. Earnings were flat, or $0.00, compared to the Zacks Consensus of $0.45.
This was Columbia's first earnings miss in 5 years.
No one stays perfect for forever on earnings. It was a great run. COVID-19 is just the perfect storm for a global retailer.
Net sales fell 13% to $568.2 million from $654.6 million a year ago.
Gross margin contracted 360 basis points to 47.8% from 51.4% of net sales in Q1 of 2019.
Given the slowdown in consumer demand, and the actions taken by their wholesale customers, aka the department stores, to preserve their capital and liquidity, Columbia anticipates significant Spring and Fall 2020 sales orders cancellations.
To mitigate the impacts of the cancellations, Columbia has curtailed planned Fall 2020 inventory purchases.
Because of the elevated inventory within its own stores, it expects to increase the amount of clearance inventory that is sold through their outlet stores.
The current environment is very promotional. Who hasn't seen 50% to 70% off already from the apparel retailers? Because of that, it anticipates impacts to its net sales and gross margin.
Additionally, Columbia also has seen supply chain disruptions at some finished goods suppliers due to closures in Asia from COVID-19. Those disruptions will likely affect Columbia's ability to timely fulfill some Fall 2020 orders.
Withdrew Guidance for 2020
It's not a surprise that due to the COVID-19 uncertainties, it withdrew its full year guidance.
Columbia did provide some "color" on the second quarter, however.
Q2 is historically their seasonally lowest sales volume period. It expects, based on current and anticipated store closures and uncertainty regarding traffic at the stores as they reopen, to see a significant decline in second quarter sales and an operating loss.
What Does the Balance Sheet Look Like?
As of Mar 31, 2020, it had cash and equivalents of $706.9 million.
Previously, the company had no short-term debt but it now has short-term borrowings of $174.4 million.
Dividend and Share Buybacks Suspended
In the first quarter, the company had repurchased $132.9 million in shares and still had $82.2 million available under the stock purchase authorization.
That has been suspended.
The dividend has also been suspended.
Combined with reduced capital expenditures, the company is expected to see reduced capital outflows of about $130 million in 2020 from these actions.
Earnings Estimates Cut
Given the hit to demand, it's not surprising that the analysts moved to cut earnings estimates for 2020 and 2021.
6 estimates were lowered after the earnings report for 2020 pushing the Zacks Consensus down to $2.00 from $4.83 just 90 days ago.
That's an earnings decline of 58% as the company made $4.83 last year.
Analysts are split on what 2021 might look like with 4 cutting and 2 raising over the last month, which still pushed the 2021 Zacks Consensus Estimate down to $3.91.
Shares at 3-Year Lows
Shares of all retailers have been pummeled.
Columbia shares have fallen 34% year-to-date to 3-year lows.
Given the earnings estimate cuts, they now trade with a forward P/E of 33.9, so they're not exactly "cheap" on a P/E basis.
There's really nowhere to hide in 2020 for the retailers.
Cash and brand strength are key for investors digging around for bargains.
What's in Store for Sony's (SNE - Free Report) Earnings?
Sony Corporationis scheduled to report fourth-quarter fiscal 2019 results after the closing bell on May 13. The company is likely to have generated lower consolidated revenues on a year-over-year basis in the fourth quarter due to volatility in demand resulting from the coronavirus pandemic.
Factors at Play
Sony is likely to have generated lower revenues from the Game & Network Services segment due to lower-than-expected third-party software sales and deferral of sales in the next fiscal year. The company is likely to have recorded lower sales from PS4 as it marked the transition to the PS5's new-generation console. In addition, Sony is anticipated to have faced higher manufacturing costs for PS5, with scarce components and erratic supply of raw materials compounding its problems to set a balanced retail price.
During the quarter, Sony launched a low-cost, silicon-based vision sensor for autonomous vehicles in order to gain a foothold in the electronics market. Leveraging the LiDAR (Light Detection and Ranging) vision-sensing technology, which is a vital part of safety and functionality in self-driving vehicles, the product is likely to be more affordable and resistant to vibrations.
In the fiscal fourth quarter, the company also expanded its long-standing partnership with Carl Zeiss AG (branded as ZEISS), from digital imaging to Xperia smartphones. The latest flagship smartphone — the Xperia 1 II (Xperia One, Mark Two) — which is the first 5G smartphone from Sony, will feature ZEISS optics with T-Star anti-reflective coating to enhance the quality of images and deliver the best images to consumers for a creative entertainment experience with 5G connectivity.
Despite pro-active steps to expand the adoption of its imaging and sensing technology in the mobility space and the diverse industrial and factory automation space, Sony is likely to have witnessed lower demand trends owing to challenging macroeconomic conditions triggered by the virus outbreak. The broadcast and professional use products business has also seen a significant slowdown in China, which is considered to be an important market for the business, due to latent U.S.-China trade friction.
For the March quarter, the Zacks Consensus Estimate for total revenues stands at $17,002 million, implying a decline of 12% from the year-ago quarter’s reported figure. Adjusted earnings per share are pegged at 31 cents, indicating a 50% decline from the prior-year quarter’s reported figure, led by tough year-over-year comparison induced by the coronavirus pandemic despite operational efficiencies and cost-cutting initiatives.
Our proven model does not predict an earnings beat for Sony this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP:Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at 31 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank:Sony currently has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat this quarter:
Ciena Corporation has an Earnings ESP of +2.37% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Cisco Systems, Inc. is +6.29% and it carries a Zacks Rank of 3.
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