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Consumer discretionary sector bests S&P 500 index in August

The Market Intelligence Platform


Consumer discretionary sector bests S&P 500 index in August

The S&P 500 Consumer Discretionary index posted a total negative return of 1.3% in August, compared to a 1.6% decline of the overall S&P 500 index, according to data compiled by S&P Global Market Intelligence.

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Utilities stocks led the gains during the month with a 5.2% return, while energy stocks were the weakest with a negative return of 8.1%.

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Target Corp. enjoyed a remarkable 24.8% gain in August and was the top performer of the overall S&P 500 index. Shares of the general merchandiser have traded strongly since Aug. 21 after the company raised its fiscal 2019 adjusted EPS outlook to between $5.90 and $6.20. Target reported that adjusted EPS for the second quarter rose 23.9% to $1.82 from the year-ago period. The company's stock peaked at $107.93 on Aug. 29.

Following Target's performance was Newell Brands Inc., which posted an 18.6% return. The Rubbermaid and Sharpie parent maintained its normalized EPS forecast for fiscal 2019 despite reporting that second-quarter normalized diluted EPS declined to 45 cents from 78 cents year over year. The figure also beat the S&P Global Market Intelligence consensus normalized EPS estimate of 36 cents.

Dollar General Corp. returned 16.5% during the month and was the sixth-best performer of the overall S&P 500 index. Shares of the discount chain jumped to $156.09 on Aug. 29 after it raised its diluted EPS for fiscal 2019. CEO Todd Vasos also said Dollar General will continue to move its product sourcing out of China in a bid to mitigate the impact of the trade war between Beijing and Washington, D.C.

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Lowe's Cos. Inc., which recorded a 10.7% return in August, surpassed analysts' estimates for the second quarter of 2019. Shares of the home improvement retailer surged following the results Aug. 21 and traded as high as $112.59 on Aug. 29.

Homebuilding company D.R. Horton Inc. rounds out the list of the top 5 performers of the consumer discretionary index with a return of 8%. Its shares hit a 52-week high on Aug. 22 at $50.64.

Out of the 10 worst performers across the overall S&P 500 index in August, half were consumer discretionary companies, consisting of L Brands Inc., Macy's Inc., Tapestry Inc., Ulta Beauty Inc. and Capri Holdings Ltd.

L Brands, which saw a negative return of 35.4%, was the worst performer in the consumer discretionary index. The owner of Victoria's Secret on Aug. 22 reported that adjusted EPS for the second quarter fell to 24 cents from 36 cents in the year-ago period. Shares of the company were on a downward trend throughout the month and reached a low of $16.15 on Aug. 27.

Macy's total return declined 35.1%. Shares began to drop Aug. 14 after the department store chain lowered its fiscal 2019 outlook. Adjusted diluted EPS for the second quarter slid year over year to 28 cents from 70 cents, and CEO and Chairman Jeffrey Gennette said he anticipates that U.S. President Donald Trump's 10% tariffs on $300 billion in Chinese imports will negatively affect the company's full-year earnings.

Tapestry, the owner of labels Coach and Kate Spade, posted a 33.2% negative return. Similar to Macy's, Tapestry stocks fell to $19.45 on Aug. 15 after its adjusted diluted EPS missed analysts' expectations.

Ulta Beauty saw its total return slide 31.9% during the month. The cosmetics store chain's shares dropped to $237.73 by August-end after it cut on Aug. 29 its fiscal 2019 outlook.

Capri Holdings reported a negative return of 25.9% in August. The fashion group, which owns Versace and Michael Kors, posted on Aug. 8 adjusted EPS for the first quarter of 2020 that decreased to 95 cents from $1.32 in the year-ago period. Its shares were on a downward path during the month and hit a low of $25.89 on Aug. 27.