Market Snapshot
briefing.com
| Dow | 33626.02 | +30.07 | (0.09%) | | Nasdaq | 11151.76 | -146.50 | (-1.30%) | | SP 500 | 3967.84 | -23.96 | (-0.60%) | | 10-yr Note | +29/32 | 3.69 |
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| | NYSE | Adv 1065 | Dec 1979 | Vol 867 mln | | Nasdaq | Adv 1463 | Dec 3137 | Vol 4.5 bln |
Industry Watch
| Strong: Consumer Staples, Utilities |
| | Weak: Consumer Discretionary, Information Technology, Energy, Materials |
Moving the Market
-- Mixed reaction to earnings news from retailers like Target (TGT) and Lowe's (LOW)
-- Mixed reaction to the October retail sales report
-- Lagging mega cap stocks
-- Normal consolidation period after a big run recently
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Closing Summary
16-Nov-22 16:30 ET
Dow -39.09 at 33556.86, Nasdaq -174.75 at 11123.51, S&P -32.94 at 3958.86
[BRIEFING.COM] Today's trade was mixed and reflected some normal consolidation efforts along with some festering concerns about the economic outlook. The S&P 500 and Nasdaq Composite had risen 6.5% and 9.7%, respectively, over the last week and were presumably due for a pullback. The Dow, for its part, spent the session dancing around the flat line while the S&P 500 and Nasdaq Composite chopped around in negative territory.
Some of today's selling interest was precipitated by disappointing earnings and guidance for the holiday quarter from Target (TGT 155.47, -23.51, -13.1%) and an indication from Micron (MU 58.87, -4.23, -6.7%) that it is cutting its DRAM and NAND wafer starts by ~20%, saying that the market outlook for calendar 2023 has recently weakened. Micron also said it is working toward additional capex cuts.
These factors had more influence over price action today than the favorable quarterly results from Lowe's (LOW 215.13, +6.29, +3.0%) and a stronger-than-expected Retail Sales Report for October.
Despite the stronger-than-expected retail sales data, the 10-yr note Treasury note yield fell 11 basis points today to 3.69%. The drop there reflected concerns about the Fed overtightening and forcing a hard landing for the economy. Accordingly, with rising interest rates, high inflation, a reduced wealth effect, and job security concerns as more companies announce layoffs, market participants showed some concerns about a slowdown in discretionary spending in coming months. Both Target and Walmart acknowledged that consumers were pulling back on discretionary purchases.
Another concern for market participants is that earnings estimates for 2023 are too high and will be subject to downward revisions. Investors took some money off the table today following the recent runup and are mindful about how much they are willing to pay for every dollar of earnings.
Broad selling left nine of the 11 S&P 500 sectors in negative territory. The energy sector (-2.2%) suffered the heaviest loss amid falling oil prices. WTI crude oil futures fell 1.2% to $85.67/bbl.
The consumer discretionary sector (-1.5%) was another top laggard today due to Target's losses, but the worst performing component was Advance Auto (AAP 156.24, -27.70, -15.1%) after the company disappointed with quarterly results.
Only the utilities (+0.9%) and consumer staples (+0.5%) sectors squeezed out a gain.
The 2-yr note yield rose one basis point to 4.36%, buffeted by Fed speak. Earlier in the session, San Francisco Fed President Daly (2024 FOMC voter) said that the idea of the Fed pausing its rate hikes is not even on the table for discussion right now and that she thinks a 5.00% fed funds rate is a reasonable level where the Fed can hold rates. Later in the day, meanwhile, Fed Governor Waller (FOMC voter) said that he's more comfortable stepping down to a 50-basis point hike at the December FOMC meeting following the economic data releases from the last few weeks.
Alibaba (BABA), NetEase (NTES), Macy's (M), BJ's Wholesale (BJ), Kohl's (KSS), and Dole plc (DOLE) are among the companies reporting earnings ahead of Thursday's open.
Looking ahead to Thursday, market participants will receive the following economic data:
- 8:30 a.m. ET: October Housing Starts (Briefing.com consensus 1420K; prior 1439K) and Building Permits (Briefing.com consensus 1518K; prior 1564K); Weekly Initial Jobless Claims (222K; prior 225K) and Continuing Claims (prior 1493K); November Philadelphia Fed Index (Briefing.com consensus -5.0; prior -8.7).
- 10:30 a.m. ET: EIA Natural Gas Inventories (prior +79 bcf).
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index 2.7%; Prior -0.1%
- October Retail Sales 1.3% (Briefing.com consensus 0.9%); Prior 0.0%, October Retail Sales ex-auto 1.3% (Briefing.com consensus 0.6%); Prior 0.1%
- The key takeaway from the report is that retail sales, which are not adjusted for inflation, were still solid in October, underscoring that consumer spending continues to hold up fairly well, supported by continued low levels of unemployment.
- October Export Price Index -0.3%; Prior was revised to -1.5% from -0.8%
- October Export Prices ex-ag. -0.3%; Prior was revised to -1.6% from -0.9%
- October Import Prices Index -0.2%; Prior was revised to -1.1% from -1.2%
- October Import Prices ex-oil -0.1%; Prior was revised to -0.3% from -0.4%
- October Industrial Production -0.1% (Briefing.com consensus 0.0%); Prior was revised to 0.1% from 0.4%, October Capacity Utilization 79.9% (Briefing.com consensus 80.3%); Prior was revised to 80.1% from 80.3%
- The key takeaway from the report is that industrial output is largely stalling with declines in four of the last six months (May -0.1%; June -0.1%; July +0.7%; August -0.1%; September +0.1%; and October -0.1%).
September Business Inventories 0.4% (Briefing.com consensus 0.5%); Prior was revised to 0.9% from 0.8%
- November NAHB Housing Market Index 33 (Briefing.com consensus 36); Prior 38
- Dow Jones Industrial Average: -7.7% YTD
- S&P Midcap 400: -11.7% YTD
- Russell 2000: -17.5% YTD
- S&P 500: -16.9% YTD
- Nasdaq Composite: -28.5% YTD
Market takes a turn lower ahead of close
16-Nov-22 15:30 ET
Dow -22.42 at 33573.53, Nasdaq -176.77 at 11121.49, S&P -30.97 at 3960.83
[BRIEFING.COM] The market moved a bit lower heading into the close.
After the close, Cisco (CSCO), NVIDIA (NVDA), and Bath & Body Works (BBWI) are set to report earnings.
Alibaba (BABA), NetEase (NTES), Macy's (M), BJ's Wholesale (BJ), Kohl's (KSS), and Dole plc (DOLE) will report earnings ahead of Thursday's open.
Looking ahead to Thursday, market participants will receive the following economic data:
- 8:30 a.m. ET: October Housing Starts (Briefing.com consensus 1420K; prior 1439K) and Building Permits (Briefing.com consensus 1518K; prior 1564K); Weekly Initial Jobless Claims (222K; prior 225K) and Continuing Claims (prior 1493K); November Philadelphia Fed Index (Briefing.com consensus -5.0; prior -8.7).
- 10:30 a.m. ET: EIA Natural Gas Inventories (prior +79 bcf).
Energy complex futures settle mixed
16-Nov-22 15:00 ET
Dow +30.07 at 33626.02, Nasdaq -146.50 at 11151.76, S&P -23.96 at 3967.84
[BRIEFING.COM] The major averages were confined to a fairly narrow trading range in the last half hour.
Earlier, Fed Governor Waller (FOMC voter) said that he's more comfortable stepping down to a 50-basis point hike at the December FOMC meeting following the economic data releases from the last few weeks. He added, "it is important to remember that this would still be a very significant tightening action."
Energy complex futures settled the session in mixed fashion. WTI crude oil futures fell 1.2% to $85.67/bbl and natural gas futures rose 1.9% $6.56/mmbtu.
On a related note, the S&P 500 energy sector (-2.0%) remains in last place among the 11 sectors.
Best Buy dips on TGT sympathy, W.R. Berkley/insurance names outperform
16-Nov-22 14:30 ET
Dow +6.58 at 33602.53, Nasdaq -146.51 at 11151.75, S&P -26.16 at 3965.64
[BRIEFING.COM] The S&P 500 (-0.66%) is still firmly situated in second place at this point on Wednesday afternoon, narrowly off lows.
S&P 500 constituents Best Buy (BBY 69.43, -6.17, -8.16%), Western Digital (WDC 36.69, -2.77, -7.02%), and EQT Corp. (EQT 41.17, -2.59, -5.92%) pepper the bottom of the standings. BBY dips in sympathy to Target's (TGT 155.94, -23.04, -12.87%) widely-documented losses, WDC slips in sympathy to Micron's (MU 59.06, -4.04, -6.40%) post-wafer start cut news, while EQT falls owing in part to losses in crude oil prices/weakness in energy space.
Meanwhile, Connecticut-based insurance firm W.R. Berkley (WRB 71.96, +2.85, +4.12%) is one of today's better performers.
Gold slips from overnight highs as dollar recoups overnight losses
16-Nov-22 14:00 ET
Dow -39.25 at 33556.70, Nasdaq -162.24 at 11136.02, S&P -31.27 at 3960.53
[BRIEFING.COM] With about two hours to go on Wednesday the tech-heavy Nasdaq Composite (-1.43%) is still the top laggard, though the S&P 500 (-0.78%) has dipped to near session lows.
Gold futures settled $1 lower (-0.1%) to $1,775.80/oz, fading off overnight highs as the dollar rallied from overnight lows as geopolitical tensions slowed to a simmer at midweek.
Meanwhile, the U.S. Dollar Index is now up about +0.2% to $106.56.
Page One
Last Updated: 16-Nov-22 09:06 ET | Archive
Consumer spending views mixed
Market participants aren't showing a great deal of conviction in the early going. Currently, the S&P 500 futures are down 12 points and are trading 0.3% below fair value, the Nasdaq 100 futures are down 55 points and are trading 0.4% below fair value, and the Dow Jones Industrial Average futures are down 40 points and are trading 0.1% below fair value.
There is a revolving door of news items that is making it hard to determine which way to go with strong conviction. Retailers Target (TGT) and Lowe's (LOW) are a fitting case in point.
Target is trading 15.5% lower after coming up well shy of Q3 consensus earnings estimates and issuing a disappointing Q4 comparable store sales outlook, noting a slowdown in discretionary spending that has been influenced by high inflation. Lowe's, on the other hand, is up 1.2% after comfortably beating Q3 consensus earnings estimates, raising its FY23 outlook, and its CEO saying he is not seeing a consumer slowdown.
The October Retail Sales Report captured both sentiments as well. Downturns were seen in some discretionary categories like electronics and appliance stores (-0.3%), general merchandise stores (-0.2%), and sporting goods, hobby, musical instruments, and book stores (-0.3%), yet there were some nice upswings in other discretionary categories like furniture and home furnishings (+1.1%), nonstore retailers (+1.2%), and food services and drinking places (+1.6%).
Total retail sales jumped 1.3% month-over-month in October (Briefing.com consensus +0.9%) following an unrevised unchanged reading for September. Excluding autos, retail sales also rose 1.3% month-over-month (Briefing.com consensus +0.6%) following an unrevised 0.1% increase for September.
The key takeaway from the report is that retail sales, which are not adjusted for inflation, were still fairly solid in October, underscoring that consumer spending continues to hold up fairly well, supported by continued low levels of unemployment.
There was also some more relatively good news on the inflation front, too. Import prices dropped 0.2% month-over-month in October, leaving them up 4.2% year-over-year versus an 11.0% increase for the 12-month period ending October 2021. Excluding fuel, import prices dipped 0.1%, leaving them up 2.9% year-over-year versus a 5.6% increase for the 12-month period ending October 2021.
Export prices fell 0.3% month-over-month in October, leaving them up 6.9% year-over-year versus an 18.3% increase for the 12-month period ending October 2021. Excluding agricultural prices, export prices decreased 0.3% month-over-month, leaving them up 6.4% year-over-year versus a 17.6% increase for the 12-month period ending October 2021.
The Treasury market has seen some roller-coaster action following the data set and is somewhat on the mixed side of things. The 2-yr note yield is up four basis points to 4.39% and the 10-yr note yield is down three basis points to 3.77%. It is an understandable response given the stronger-than-expected retail sales and the better-than-feared inflation data.
Elsewhere, yesterday's headline surprise (i.e. a missile strike in Poland) has been tempered this morning with follow-up intelligence reports suggesting that it was likely the result of Ukraine firing a missile to intercept an inbound Russian missile. In other words, it was not deliberate and it was unlikely a missile fired by Russia.
The
welcome assumption is that the incident should not induce any NATO-led military response.
It remains to be seen if there will be a stronger response in the stock market as the day progresses than the one we are seeing currently in the futures market. That response could tip more strongly in favor of the bulls or the bears, but at the moment, it isn't tipped too strongly in favor of the bulls or the bears.
Things are tipping modestly lower, but that is not entirely surprising given the rebound run that has been seen over the last week. Entering today, the S&P 500 is up 6.5% from a week ago and the Nasdaq Composite is up 9.7%, which is to say the lack of conviction in the early going is likely part of a normal consolidation effort coinciding with some mixed news headlines.
Restaurant Brands Int'l feels like a king after naming former Domino's CEO to Exec. Chairman (QSR)
Restaurant Brands International (QSR +7%) feels like a king today after appointing former Domino's Pizza (DPZ) CEO Patrick Doyle to Executive Chairman, effective immediately. The parent company of Burger King, Tim Hortons, Popeyes, and Firehouse Subs, QSR commands a vast footprint within the quick-service restaurant industry. Each restaurant also operates in a much-different field from the pizza-making environment that was Domino's Pizza.
Nevertheless, QSR is confident that Mr. Doyle's success at DPZ, where he grew system-wide sales to $13.0 bln from $5.6 bln during his eight-year tenure, will translate to its franchises, which in some cases have underperformed competitors.
- For example, Burger King, QSR's most prominent banner by far, boasting system-wide sales of $23.45 bln in FY21, comprising 66% of total revs, has registered overall comps lagging McDonald's (MCD) over the past five years running. Also, overall same-store sales growth from Wendy's (WEN) outperformed Burger King in FY21 and FY20.
- Mr. Doyle received a strong reputation for changing recipes and adding new menu items at DPZ. Burger King may need similar treatment to close the gap on its main rivals.
- QSR has started a "Reclaim the Flame" campaign at Burger King to entice store traffic and boost sales. The early stages of this initiative have shown success, with Burger King's same-store sales growth of +4% in Q3 closing the gap on its rivals.
- QSR also kicked off further initiatives in October after meeting with franchisees, including reclaiming a share of voice and media considerations, shoring up its brand equities, and introducing a modernized "You Rule" tagline.
- Given these new strategies, we think Mr. Doyle may monitor their progress over the next few quarters before possibly diving in with more radical ideas.
- Given the smaller size of QSR's other banners, they may not receive as much attention from the newly appointed Chairman as Burger King. That might not be a big deal, though, as Popeyes has posted comp growth relatively in-line with KFC (YUM). Furthermore, Tim Hortons' same-store sales growth surpassed total comps for two consecutive quarters as of Q3.
Bottom line, given Patrick Doyle's success at DPZ, it is not surprising to see such excitement today over QSR naming him as its new Executive Chairman. We think the enthusiasm is warranted. However, it could take multiple quarters before we get a sense of Mr. Doyle's vision for the future of QSR's four banners.
TJX shares not being discounted today after beating on EPS and nudging comp guidance higher (TJX)
Amid a mixed set of earnings reports from the retail sector, TJX (TJX) has emerged as a winner this quarter after beating Q3 EPS estimates, narrowing its FY23 EPS guidance range, and nudging its comparable store sales guidance higher. While the discount retailer did slightly miss on the top-line, mainly due to continued softness at its HomeGoods banner, the company's overall results look solid, especially when stacked up against Target's (TGT) discouraging report. When combined with Walmart's (WMT) strong earnings report from yesterday, TJX's performance solidifies the notion that many consumers are trading down to lower priced goods and apparel as inflation puts the squeeze on their budgets.
Despite lapping comparable store sales growth of 11% in the year-earlier period, Marmaxx (T.J. Maxx, Marshalls, and Sierra) generated comparable store sales growth of 3% in Q3. This growth was offset by a 16% decline for HomeGoods as consumer spending patterns shift, driving consolidated U.S. comps lower by 2%. However, that figure did exceed TJX's guidance for a decrease of 3-5%. CEO Ernie Herrman noted that the 3% comp growth for Marmaxx was driven by a strong increase in the apparel business. In addition to its favorable positioning within the value side of retail, Marmaxx is also benefitting from pent-up demand for clothing and accessories as employees return to offices and as people ramp up travel plans.
TJX's report wasn't pristine, as the revenue miss indicates, but the positives outweighed the negatives.
- In this inflationary environment, TJX still managed to hold merchandise margin steady due to its pricing initiatives and strong mark-on activity. This is an improvement from last quarter when merchandise margin slipped by 2.4 percentage points.
- Pre-tax profit margin of 11.2% represents a meaningful improvement from Q2's 9.2% mark and was ahead of TJX's guidance of 10.1-10.4%. However, we're not overly excited about the better-than-expected result for this metric since it was related to the timing of expenses, most of which will reverse out in Q4.
- TJX has a good handle on expenses as SG&A costs as a percentage of revenue decreased by 300 bps yr/yr to 18.0%. This helped TJX to keep EPS growth in positive territory (+2.4%) even as revenue fell by about 3% on a yr/yr basis.
- Consolidated inventories on a per-store basis are higher by 27%, but TJX says that it's "very comfortable" with its inventory situation and that it's well-positioned to provide a strong assortment of products for the holiday season.
Although TJX's earnings report wasn't spectacular, it was solid, illustrating that the company is operating within a sweet spot within the retail space. On that note, its positive results should bode well for fellow discount retailer Ross Stores (ROST), which is scheduled to report earnings after the close tomorrow afternoon.
Target is off-target again; Target again follows up strong Walmart results with a miss (TGT)
Target (TGT -14%) has done it again. A day after Walmart (WMT) posts big upside results and gets investors excited for Target's report the next day, Target then reports a disappointing result. This happened in Q2 (Jul) and now again in Q3 (Oct).
The stock is down big today after the retail giant missed badly on EPS, missed slightly on revenue and made cautious comments about the upcoming Q4 (Jan) holiday period, including that consumers are showing increasing signs of stress and pulling back from discretionary purchases, a pattern that worsened at the end of the quarter. That is not exactly the ringing endorsement you want to hear from a retailer heading into the holidays.
- Same store comps were not awful at +2.7% considering that Target was lapping huge +12.7% comps. However, that trailed Walmart US comps (ex-fuel) of +8.2% by a wide margin. Comps were led by growth in frequency items like Beauty, Food and Beverage and Household Essentials, which offset continued softness in discretionary categories. The Q4 comp guidance was more troubling. TGT sees a wide range of possible outcomes in Q4, centered around a low-single digit comp decline.
- What is troubling is that Target saw comp growth well above 3% during the first two months of the quarter, but then saw a deceleration to just under 1% in October. Even within October, results in the back half of the month were much softer than in the first half. Furthermore, while already soft, sales trends in discretionary categories softened even more in the last few weeks of the quarter -- a trend that has persisted into the first few weeks of November. Timing matters, it is worse to see a retailer close a quarter with weakness, because that likely extends into the next quarter. Also, the mix of Q3 sales tilted much more heavily towards promotions, which caused a headwind to margins.
- Speaking of margins, operating margin fell to 3.9% from 7.8% last year, but was higher than Q2's 1.2%. This result fell far short of expectations. TGT had not guided for Q3, but said in August that it expects 2H operating margin of 6%, so this was an unexpected result and explains the big EPS downside. The Q4 guidance was disappointing as well as TGT expects a wide range centered at just 3%.
Overall, this was another disappointing quarter for Target and the retail outlook generally. Walmart got us excited with its big beat and robust comps. Walmart even said it was seeing early signs that inflation was moderating which echoed the better-than-expected October PPI and CPI data. Then, Target comes a long and pours cold water on all of that optimism. Hopefully, Target's concerns about the upcoming holiday season turn out to be more company-specific, but we fear that is not the case. But it was definitely two different tones from two retailers that should be pretty similar. Finally, in recent years, it was Target that was consistently outperforming Walmart, but the tables have turned over the past two quarters.
Advance Auto changes gears to better capitalize on its strengths after another tough quarter (AAP)
Advance Auto (AAP -16%) registered another quarter that fell short of expectations, posting misses on its top and bottom lines in Q3 and lowering its FY22 adjusted EPS outlook to reflect intensifying FX headwinds. AAP also slashed its FY22 free cash flow outlook due to aggressive strategic inventory investments.
Management conceded that it was not satisfied with its sales growth in Q3 and viewed its FY22 margin forecast as inconsistent with its target of growing at or above the market over the long term. Because of its underwhelming margin expansion, AAP warned that reaching its targeted three-year range by the end of FY23 will be "very challenging."
Meanwhile, pouring gasoline on the fire is AAP's competitors O'Reilly Auto (ORLY) and AutoZone (AZO) not experiencing similar hiccups, illuminated by their shares climbing over 15% on the year while shares of AAP are now down by over 30%. In fact, ORLY's Q3 report was quite upbeat, crushing earnings estimates and delivering robust comp growth.
- What seems to be the issue specific to AAP that its rivals are not experiencing? One of the main problems plaguing AAP this year is its own brands, which have acted as a double-edged sword, boosting margins, but clipping sales and comp growth due to their lower prices. In Q3, owned brands took a 78 bp and 88 bp chunk out of sales and comp growth, respectively.
- AAP increasing its own-brand penetration has been an integral part of its margin expansion plans, so we would not expect AAP to pump the brakes on this initiative any time soon.
- AAP is changing gears on its approach to meet its FY23 goals, which include expanding margins by 200 bps. The company is pouring capital into its inventory to get more SKUs closer to the customer, particularly in the professional sales channel. It is also testing and planning to implement surgical pricing actions in specific categories to better address shifts in competitive pricing dynamics.
- The targeted inventory investment is the more critical step of the two to improve top-line growth. A result of these investments is AAP cutting its FY22 free cash flow guidance significantly to a minimum of $300 mln from a prior projection of $700 mln.
There were a few silver linings from Q3, such as AAP reiterating its FY22 sales and comp forecasts of $11.0-11.2 bln and -1.0% to 0.0%, respectively. The company also made meaningful progress on its footprint expansion, opening 37 new locations in Q3, and remaining on track to open 125-150 in FY22.
Still, AAP has a rocky road ahead of it. Although its own brands have helped margins, they can only do so much to boost profitability, which continues to suffer from a combination of limited net sales growth and higher SG&A costs. We think AAP could be a solid turnaround play. However, we believe in a wait-and-see approach regarding its new strategies.
Lowe's builds upon positive outlook for home improvement space with beat-and-raise report (LOW)
In the first half of the year, slowing demand in the DIY business provided a setback for Lowe's (LOW), causing the home improvement retailer to miss revenue expectations in Q1 and Q2. In Q3, however, that market experienced a rebound, joining the ongoing strength seen in the professional business. As a result, LOW exceeded top and bottom-line estimates and nudged its FY23 EPS and comparable sales guidance higher. Although Home Depot (HD) generated stronger comparable sales growth than LOW in Q3 (+4.3% vs. +2.2%), HD merely reaffirmed its FY23 outlook, suggesting that it's a little more cautious about its prospects for Q4 and the holiday shopping season.
With both LOW and HD issuing solid quarterly reports, one key takeaway is that rising interest rates and the cooling housing market are not significantly hindering their businesses like many had anticipated. In fact, home affordability issues resulting from higher mortgage rates may actually be helping LOW and HD. Instead of moving and taking on a much larger mortgage payment, many consumers seem to be choosing to update, repair, and renovate their existing homes. A substantial amount of home equity is also enabling homeowners to finance large scale projects with lines of credit.
Business may not be booming like it was during the pandemic when people were stuck at home, but LOW's results paint a bullish picture for its business.
- Since the DIY market accounts for about 75% of LOW's total business, the upswing in sales there is a major positive. The development that really catches our attention, though, is LOW's ongoing progress in the professional market. For the tenth consecutive quarter, Pro sales increased by double-digits in Q3, growing by 19% on a yr/yr basis. Although HD is still the clear leader in the professional market, LOW has made some meaningful inroads.
- Despite persistent inflationary pressures, gross margin expanded by 20 bps yr/yr to 33.3%. This indicates that LOW's pricing actions and inventory management efforts have been quite effective. On the latter point, LOW's merchandise inventory is higher by 12.5% from January 28, 2022, which is pretty reasonable considering that inflation/price increases are playing a role in that increase. For FY23, LOW reiterated its guidance for a slight increase in gross margin compared to last year.
- Bolstered by improving comparable sales growth, solid cost management, and the uptick in gross margin, LOW's adjusted EPS grew by nearly 20% yr/yr to $3.27. That figure excludes a $2.1 bln impairment charge related to the sale of its Canadian retail business on November 3. While the divestiture represents a 7% hit to LOW's FY23 sales outlook, it will also be accretive to operating margin by about 60 bps.
HD raised the bar following its solid quarterly results, but LOW met the challenge by issuing an impressive beat-and-raise Q3 report. Encouragingly, the DIY business is making a comeback, which should bode well for the holiday shopping season. Combined with LOW's pricing actions and an easing of some costs, the company is in line to close out the year on a strong note.
-- Patrick J. O'Hare, Briefing.com
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