Phillies infielder Neil Walker did something on Thursday for the first time in his 10-year major league baseball career. He pitched in a game.
The Phillies were getting beaten up by the Baltimore Orioles, and rather than use someone from a bullpen that is already the worst in the majors (as my son pointed out), manager Joe Girardi handed Walker the ball. Using a fastball in the high 70s, Walker walked one, gave up no hits, and got the final two outs. What a nice surprise.
Struggling retailer Fossil Group (FOSL) put up its own surprise on Thursday with second-quarter results that were not as bad as expected, which is 2020's version of "better than expected." That provided Fossil shares a 14% boost.
Not that expectations were high, mind you. Revenue of $259 million beat expectations -- or should say "expectation" singular as just one analyst currently covers the name -- of $182 million by a wide margin. The loss per share of 28 cents was much better than the expected loss of $1.43 a share.
You would expect there to be a wide spread between actual results and expectations in this crazy environment, especially for a retailer with little coverage. This was a "things were bad, but not nearly as bad as we thought" quarter, which is certainly welcome.
The thing that is amazing to me, and we've seen this with other retailers and restaurants, are the year-over-year numbers, which are telling us just how much the economy was (and still is, perhaps to a lesser extent) shut down. Fossil's revenue for last year's second quarter was $501 million, so revenue dropped more than 48%. Now, I don't know how much revenue fell for companies during the Great Depression, but that sure sounds like depression-like numbers to me.
Fossil's results were aided by cost-cutting measures, namely a reduction of 33%, or $86 million, in operating expenses. The balance sheet has held up fairly well so far; the company ended the quarter with $278 million, or $5.41 per share, in cash and $269 million in debt. Debt is up $64 million since year-end 2019 courtesy of Fossil tapping its revolver, but down from $320 million at the end of the first quarter as the company paid back more than $50 million in debt during the second quarter.
Fossil expects to have between $250 million and $300 million in cash at the end of the third quarter; that's a fairly wide range, but it does indicate the company does not expect to burn much if any cash during the quarter.
The "consensus" expectation for the third quarter is revenue of $326 million, which would be down from $539.5 million a year earlier) and a loss of 72 cents a share.
In this environment, not as bad as expected is what is rewarding investors. The days of better than expected are on hold for now, especially with retailers and restaurants.