When my sister called me on Tuesday and remarked that the "Dow is tanking," I knew the latest bout of market volatility had gone mainstream and that nervous small investor eyes will be glued to their favorite financial news sources today and beyond.
As someone who uses a simple method of defining market volatility as days that the S&P 500 rises or falls at least 1%, I'll need to set Sis straight on following that index and not the Dow Jones Industrial Average. Still, the last three days have been eye-opening to say the least.
It is the first time since late December of 2018 that the S&P 500 has fallen at least 1% for three consecutive days. Indeed, from Dec. 19 to Dec. 24 of 2018 the Index was down for four consecutive days. From Dec. 13 to Dec. 24 of that year the index was down at least 1% six out of seven days, and from Dec. 4 to Dec. 24 it fell at least 1% eight out of 14 days. During that span the S&P 500 was down nearly 13%. Most have forgotten that period because the market recovered the lost ground by the end of January.
The S&P 500 is down 7.2% over the last three trading sessions amid coronavirus-driven volatility, and where she goes from here, nobody knows. We all have our theories, running the gamut from "this too shall pass" to "doomsday." I fall into the first category, but acknowledge that the ride could continue to be very bumpy, with more sharply down days as pandemic fears continue to grow, followed by up days when fears settle, if they indeed settle.
Speaking of a bumpy ride, that is what specialty retailer Fossil Group Inc. FOSL likely faces here on Wednesday after this morning's release of fourth-quarter earnings. Revenue of $711.6 million missed "consensus" (just two analysts cover the name) estimates by $13 million. Fossil reported a bottom-line loss of six cents a share, which is not comparable to consensus estimates of earnings of 77 cents from continuing operations, but when we figure out the comparable number it will likely be well off the mark.
The news sent Fossil shares down around 15% shortly after Wednesday's opening bell.
If there was any good news, it was Fossil's debt has been paid down to $195 million from $264 million last quarter and $396 million at the end of 2018. FOSL also ended the quarter with cash of $200 million, or about $4 per share. The company is leaner, for sure.
Now all Fossil needs to do is start turning a meaningful profit again in order for investors (and potential acquirers) to take notice. That will be difficult in 2020, as company guidance is calling for sales declines in the 4.5 % to 11.5% range, which includes potential disruptions from the coronavirus. Full-year income guidance ranges from a pre-tax loss of $57 million to income of $3 million.
Buckle up.
