For a while it looked like stocks might manage to overcome a rough start to Wednesday’s trade and eke out a gain.
The rug got pulled out from underneath the market in the last hour of trading, however, when the European Central Bank decided Greece’s government debt would no longer suffice as collateral for loans. The fallout from the decision sent the S&P 500 back into the red for the day, to the tune of 0.4%.
It could have been much worse, however. In fact, it was much worse for owners of Fastenal Company (NASDAQ:FAST), Ralph Lauren Corp. (NYSE:RL) and Wynn Resorts, Limited (NASDAQ:WYNN). These three names were among the worst of the worst on Wednesday, primarily for earnings-based reasons.
Ralph Lauren (RL)
Considering Tiffany & Co. (NYSE:TIF), Michael Kors Holdings Ltd (NASDAQ:KORS) and Coach Inc. (NYSE:COH) all started to wave red flags earlier this year, it shouldn’t be entirely surprising that Ralph Lauren didn’t have an encouraging quarter or outlook when it hosted its fiscal Q3 (calendar Q4) earnings call.
Yet, with RL stock down 18% today, the market was clearly caught off-guard.
In its previous quarter, which included the important holiday shopping season, Ralph Lauren earned $2.41 per share of RL stock on $2.03 billion in sales. Earnings were shy of estimates of $2.52 per share, and revenue failed to meet expectations of $2.11 billion. Currency volatility was the core cause for the shortcoming.
Ralph Lauren poured salt in the wound by dialing back its 2015 revenue outlook.
Fastenal Company (FAST)
Fastenal Company didn’t exactly hit the ground running as well as it had hoped it would. And, FAST stock paid the price for it, falling nearly 8% to a three-month low.
The specific prompt for the selloff was disappointing revenue of $926 million for the quarter, nearly $10 million short of analyst expectations. Today’s drop puts Fastenal down 11% in 2014, lagging the broader market by about 10 percentage points.
Wynn Resorts (WYNN)
The Macau contagion continues to take a toll on U.S.-based casino companies that have set up shop in China’s gambling enclave. The latest victim is Wynn Resorts, or more specifically, owners of WYNN stock. Shares slumped more than 6% on Wednesday after posting weaker-than-expected fourth quarter results. The company earned $1.20 per share of WYNN stock last quarter, on revenue of $1.14 billion. Analysts were expecting a profit of $1.44 per share on $1.24 billion in sales.
As was mentioned, the sore spot was Macau. Macau-driven revenues fell 32% on a year-over-year basis in Q4, to $761.2 million. Still, it’s not like its Las Vegas business was a champ in Q4. Sin-City revenue for Wynn Resorts fell 5.8% in the fourth quarter.
Nomura Securities analyst Stella Xing observed in response to the fourth quarter numbers:
“Despite Chairman Steven Wynn trying to avoid margin-damaging promotional wars, we still foresee a likely margin squeeze in 2015F, owing to increasing promotional spending, as a percentage of GGR, in the current competitive environment.”
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
