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MarketPulse: Canada Goose, MGM Resorts Dent Consumer Discretionary Stocks

Stock MarketsFeb 14, 2019 01:55PM ET
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© Reuters. - Canada Goose shares plunged midday Thursday, despite blowout earnings, leaving Wall Street watchers a bit puzzled as to why this high-flying stock was shot down.

Shares of Canada Goose (NYSE:GOOS) fell nearly 12%.

The apparel maker reported fiscal third-quarter earnings of C$0.96 a share on revenue of C$399.3 million, beating estimates compiled by for earnings of C$0.61 on revenue of C$269.86 million.

The strong results, which sent shares up premarket, seemingly played second fiddle to signs U.S. consumers may be starting to tighten their belts after retail sales dropped by the most in nine years.

Department-store sales were of particular concern, dropping 3.3% in December, the most since January 2016.

The United States accounts for roughly a third of Canada Goose's total revenue.

Some also pointed to the company's ambitious expansion plan in China as a potential headwind as it comes at a time when China's economy is showing signs of a slowdown.

Consumer discretionary was also stifled by a drop in MGM Resorts as investors punished the company for posting a surprise loss.

MGM Resorts International (NYSE:MGM) posted a reported earnings of $0.14 a share on revenue of $3.05 billion in the fourth quarter, exceeding estimates from for earnings of $0.13 on revenue of $2.99 billion.

The company's outlook for 2019 was "prudent" but "reasonable," according to Union Gaming.

"We believe management delivered an upbeat but prudent picture for 2019 that pinned $1,773m of Consensus EBITDA for the Las Vegas Strip as a reasonable forecast today," Union Gaming analyst John DeCree said in a note.

But the mixed report did draw cheers from some analysts on Wall Street.

"We see a potential rejuvenation at MGM's Las Vegas resorts and at the regional operations," said CFRA, an independent research provider. "Also, MGM seems poised to consolidate its market share gains in China."

Other casino stocks followed MGM Resorts International (NYSE:MGM) lower as Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) fell more than 1%.

MarketPulse: Canada Goose, MGM Resorts Dent Consumer Discretionary Stocks

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