Urban Outfitters (URBN):Universal themes impacting the broader retail sector have also hurt Urban Outfitters. A shift in consumer spending habits towards fast fashion and online retailers have been especially concerning for sales. The company has of course been putting forth the effort to boost its online revenues. However, holding onto merchandise that is not resonating with customers has resulted in a glut of excess inventory.
Fortunately, the company still has a mostly solid financial position with reasonable debt levels and valuation. A strong comparable sales number coupled with robust guidance could be enough to send this stock even higher.
Cree (CREE): Cree is best known as the market leading innovator of lighting and semiconductor products. The company made headlines this quarter when it sold its Wolfspeed Power and RF unit to German company, Infineon Technologies, for $850 million. The deal will clearly have an impact on earnings in the short-term. The business generated about 11% of Cree’s total revenue. By selling, the company becomes a pure play in next generation of lighting technology. The extra cash flow can be used for future capital investments, acquisitions or buybacks.
Popeyes Louisiana Kitchen (PLKI): Popeyes has been largely left out of the broader rebound in the fast food sector. The chicken chain has continued to fall short of both earnings and revenue expectations. Management did indicate that they were still on track to meet full year guidance with a confident outlook for the future. The market hasn’t reacted too poorly, despite weak results of the past few quarters. Shares are flat from a year earlier and down only 2.5% year to date. If the company can manufacture a beat this quarter, investors could be in for a treat tomorrow afternoon.
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