Abercrombie Makes a Comeback

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• 🕺Markets continue the slide down

• 🐻 Will the debt ceiling drama go away already?

• 💰 Oh wow…Abercrombie & Fitch?

📉 Market Blues - Uh-oh, the US equity futures are singing the sad song of the red zone, but they're trying to find their way back from the lows. Eurozone indices joined the gloomy party, with a wide sell-off across various sectors. Autos, industrials, banks, insurers, and real estate are having a rough day, while telecoms and energy are showing some rebellious resilience. In Asia, stocks took a plunge, giving us a collective "oh no!" Lenovo took a beating after earnings, and Macau casino names decided to join the sinking ship. Meanwhile, the debt ceiling process is playing hard to get, but the market seems to be stuck in a complicated relationship with it. Let's hope for some clarity soon! On a brighter note, UK's CPI sprang a surprise, and New Zealand said "adios" to rate hikes for now. Earnings reports from Tuesday were as unpredictable as a game of chance. So, what's happening today? Hold on tight, we're about to find out! 🎢

🔎 Focus on Debt Ceiling and FOMC - It's like the debt ceiling negotiations and the market are playing a game of "spot the difference" while Washington gets ready for the Memorial Day holiday. The market's reaction to the debt ceiling situation has been lukewarm, but hey, caution is never out of style. Keep an eye out for the FOMC minutes at 2PM ET, as they might hold some secret clues about the Fed's next moves. In the world of earnings, we have a star-studded lineup with ADI, ANF, DY, and KSS stepping into the spotlight before the opening bell. Then, after the closing bell, we'll witness the grand finale with AEO, GES, NTNX, NVDA, SNOW, SPLK, and UHAL. Get your popcorn ready! Let's navigate the twists and turns of the debt ceiling negotiations, dive into the mysterious FOMC minutes, and eagerly await the results of the latest earnings releases. It's a market extravaganza! 🎉💼

🔍 Macro Tracker – On the US-China front, a dinner date is set for Thursday between Commerce Secretary Gina Raimondo and her Chinese counterpart, as they attempt to smooth out the bumps in their relationship. China also wants us to know that the Micron ban is just a one-off incident, not part of a grand crackdown on foreign companies (phew, no need to panic... maybe?). In retaliation, a senior Republican member of the House wants to add Chinese memory maker Changxin Memory to the US blacklist. Oh, and guess what? Buybacks are still all the rage, with over $600 billion worth of repurchase authorizations announced this year. Dividends from the world's largest companies also decided to join the party, rising 12% YoY in CQ1. But wait, there's more! Bank stocks are now the new meme stocks, as regional banks get caught up in the frenzy of gamified trading. And just to provide some peace of mind, regional banks are rushing to offer customers reciprocal deposit arrangements because, well, reassurance is always nice. So, buckle up and enjoy the wild ride of macro news! 🎢🌎

🦌 ANF (Abercrombie) - the fashion sensation that can make teenage heads turn and hearts skip a beat - delivered a jaw-dropping surprise with their shockingly bullish results. Their EPS of 39c left the street in disbelief, as they were expecting a humble break-even performance. The revenue runway was equally impressive, soaring to $836MM, outshining the Street's $815MM estimate. But wait, the real showstopper was the impressive 3% rise in comps, proving that Abercrombie knows how to keep the fashion game strong. While Abercrombie stole the spotlight with a stunning 14% spike in comps, Hollister stumbled a bit with a 6% drop. In the US, comps confidently rose by 3%, while EMEA experienced a 4% decline. APAC, on the other hand, took the fashion world by storm with a jaw-dropping 22% surge. Talk about a global fashion sensation!

And the surprises don't end there. Abercrombie flaunted their fashion prowess with a striking 570bp surge in gross margins, landing at an impressive 61%. This remarkable achievement was driven by a clever combination of lower freight costs (+760bp benefit) and higher prices (+230bp benefit). Oh, and let's not forget their inventory, which took a delightful tumble of 20% year over year, showcasing their exceptional inventory management skills.

With the curtain rising on their increased annual guidance, Abercrombie sets the stage for even more fashion triumphs. They now project revenue growth of 2-4%, amplifying their earlier projection of 1-3%. As for their operating margins, Abercrombie aims to dominate the runway with a range of 5-6%, up from their previous 4-5% goal. And the excitement doesn't stop there! For the upcoming FQ2, they anticipate revenue to sizzle with a 4-6% increase, while operating margins take the spotlight at 2-3%. Abercrombie is strutting confidently, ready to make fashion waves and leave a lasting impression on the industry. Get ready to embrace the style and embrace the flair! 👕🌟

🛍️ EXPR (Express), the trendy fashion retailer, delivered disappointing results with a 15% decline in revenue to $383.3MM (vs. the Street's $390MM). Gross margins took a nosedive, collapsing by 1260bp, including a 900bp drop in merchandise margins. EBITDA also plummeted to negative $55.9MM (compared to the Street's negative $17.5MM estimate). Express needs a fashion makeover ASAP! 😬

👕 KSS (Kohl's), the retail powerhouse, surprised everyone with solid EPS and margin performance in FQ1. Gross margins rose by 67bp YoY, beating expectations. Comps fell 4.3%, in line with the Street's forecast. Kohl's full-year outlook remains intact, proving that they know how to navigate the retail jungle. Keep those Kohl's cash coupons coming! 💸

👶 PLCE (Children's Place), the go-to destination for stylish kids' clothes, stumbled in FQ1/April. Their EPS missed the mark at (2.00) (vs. the Street's estimate of (1.82)), and revenue fell short at $321.6MM (vs. the Street's $337MM). While the outlook for FQ2/Jul is soft, management remains optimistic about a rebound in the second half of the year. Let's hope for some adorable fashion comebacks! 🧒👗

👟 SCVL (Shoe Carnival) had a rough time in FQ1/April, resulting in a guidance cut. Unfavorable weather and consumer pressures from inflation and lower tax refunds impacted their performance. Revenue dropped by 11.4% to $281.2MM (vs. the Street's $288MM), and EPS came in at 60c (vs. the Street's 69c). Looks like Shoe Carnival needs a pair of lucky shoes for their next earnings report! 🎠👞

🐾 WOOF (Petco), the pet care specialist, showcased solid top-line growth with comps up 5.1% (vs. the Street's 1.2%). EPS met expectations at 6c, driven by strong sales in consumables and services/other categories. Let's paws for a moment to appreciate Petco's continued success in the pet care market. Keep those tails wagging, WOOF! 🐶🐾

PPG (PPG Industries) 🌈🎨, the Picasso of paints and coatings, unveiled its masterstroke with long-term financial objectives that'll make other companies green with envy. Get ready for 2-4% organic top-line growth annually and an 8-12% EPS compound annual growth rate through '26. Talk about painting a vibrant future! 🎨💪

ADI (Analog Devices) ⚡️💡, the tech wizard in the semiconductor realm, pulled off some serious magic in FQ2. With an EPS shocker of 2.83 (vs. the Street's 2.76) and a revenue showstopper of $3.263B (vs. the Street's $3.2B), ADI proved they're not just analog, but an all-star digital performer. Prepare for electrifying innovation! ⚡️🔥

DY (Dycom) 🔌🌐, the teleporter of telecommunications infrastructure, delivered mind-blowing results in FQ1/April. Revenue surged a staggering 19% to $1.045B, and their EPS soared to 1.73 (vs. the Street's 70c). Dycom is connecting the world, one wire at a time. Buckle up for a high-speed digital journey! 🚀🌐

PLAB (Photronics) 📸💰, the photography guru of photomask solutions, developed picture-perfect FQ2/April results. Their EPS hit a dazzling 54c (vs. the Street's 44c), and revenue shone bright at $229.3MM (vs. the Street's $211MM). With their impressive net cash position, PLAB is capturing the market's attention one snapshot at a time. Say cheese! 📸💸

🌯 Wrap for earnings. Have a fantastic day! 🌯

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