Plus, American Airlines and Southwest Airlines both posted second quarter profits on federal aid and surging travel demand, DiDi shares are dropping on reports that Chinese regulators are planning unprecedented penalties for the ride-share giant, and Uber Freight is buying shipping software company Transplace.
Stocks were slightly higher at the open on Thursday with the Dow trading just above the flatline. The S&P 500 rose less than 0.1%, while the Nasdaq added just over 0.1%.
Domino’s Pizza shares are up 11% after the pizza chain delivered an earnings beat posting earnings per share of $3.12 on revenue of $1.03 billion, while analysts had expected earnings per share of $2.87 on revenue of $972.3 million. “I am very pleased with our strong global retail sales and store growth momentum during the second quarter, which demonstrated the power of our investments in innovation, our focus on food quality and superior service, and our dynamic franchisees who are dedicated to serving their local neighborhoods,” Domino’s CEO Ritch Allison said in the earnings release. “Given our current operating environment, we are watching our two-year sales trends anchored to pre-Covid fiscal 2019 results. I am pleased that in the second quarter our cumulative two-year same stores sales were up 19.6% domestically and 15.2% internationally, signifying meaningful and sustained growth.”
In other earnings news, American Airlines and Southwest Airlines both posted second quarter profits on surging travel demand alongside federal aid. American reported net income of $19 million, snapping five quarters of losses, while Southwest said its sales rose nearly 300% year-over-year to $4 billion. “While the rapid ramp up in June travel demand provided stability to our financial position, it has impacted our operations following a prolonged period of depressed demand due to the pandemic,” Southwest CEO Gary Kelly said in the earnings release. “Therefore, we are intensely focused on improving our operations as we restore our network to meet demand.”
Jobless claims unexpectedly rose last week as cases of the COVID-19 delta variant surge across the U.S. The Labor Department reported initial claims of 419,000 for the week ended July 17, exceeding the 350,000 expected by economists and well above the upwardly revised total of 368,000 from the previous week. “There’s no question that the jump in jobless claims is an unwelcome surprise and a dent to momentum for continued improvement on the jobs front,” said Mike Loewengart, managing director of investment strategy at E-Trade. “The disappointing number may cause an initial shock to the system, but many could view this as short-term volatility in the labor market until we see benefits start to expire. For the most part, the market has shaken off Monday’s sell-off in favor of strong earnings, so market watchers could see the forest from the trees in this scenario.”
DiDi shares are down nearly 9% at the time of writing on reports that Chinese regulators are considering unprecedented penalties against the ride-hailing app, including a massive fine or a forced delisting after its IPO last month. Bloomberg reported that Beijing is planning a fine that will likely exceed the record $2.8 billion that Alibaba paid earlier this year, and the punishment could also include suspension of certain operations, and delisting or withdrawal of DiDi’s U.S. shares. “Beijing wants the internet sector to understand that cybersecurity and data security are now among the government’s top priorities, and individual companies’ profit can be sacrificed when cybersecurity and data security may be exposed to risks,” said Feng Chucheng, an analyst with consultancy Plenum.
Uber’s Freight trucking division said today that it is acquiring shipping software company Transplace in a deal that values the logistics company at $2.25 billion. “This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” Lior Ron, Head of Uber Freight, said in a press release. “This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most.” In other deals, Visa said it has agreed to buy British payments start-up Currencycloud, marking its second major fintech acquisition so far this year. “The acquisition of Currencycloud is another example of Visa executing on our network of networks strategy to facilitate global money movement,” Colleen Ostrowski, Visa’s Global Treasurer, said in a statement. “Consumers and businesses increasingly expect transparency, speed and simplicity when making or receiving international payments. With our acquisition of Currencycloud, we can support our clients and partners to further reduce the pain points of cross-border payments and develop great user experiences for their customers.”
Stocks We’re Watching
Lands’ End Inc (NASDAQ: LE): Lands’ End shares gained as much as 18% yesterday after the retailer raised its guidance for both the second quarter and fiscal year. “Following our strong financial results in the first quarter, we are very pleased with our performance in the second quarter-to-date, with results tracking ahead of our expectations,” CEO Jerome Griffith said in a press release. “Our strong topline momentum continues, driven by our global eCommerce business, as well as a faster than anticipated recovery in our Outfitters business, primarily in National Accounts and school uniforms. Our gross margin continues to benefit from our improved promotional strategies and enhanced data analytics capabilities contributing to exceptional growth in adjusted EBITDA compared to both last year and pre-pandemic 2019 levels. Given the strength in our business, we are increasing our guidance for both the second quarter and the full year, as we expect this momentum to continue into the back half of 2021.”