A humorous look at the companies that caught our eye, for better or worse, this week
Cracker Barrel Old Country Store (DOG)
Cracker Barrel Old Country Store sounds like a place where kindly old men in overalls chew on sticks of grass and trade stories about the good old days, before everyone went all woke and the country went down the drain. Here’s something else that went down this week: Cracker Barrel’s share price. Citing a “challenging macro environment, including deteriorating consumer sentiment and high inflationary pressures,” the U.S. chain posted quarterly same-store restaurant sales that were just 1.3 per cent higher than the same period in 2019, before the pandemic. Things ain’t the same nowadays, that’s for darn sure.
Problem: You’ve been invited to a couple of weddings this summer, but with prices going up for everything, you don’t have any money left at the end of the month. Solution: Buy all of your wedding gifts at Dollarama. Just be sure to get there early to beat the crowds. Shares of Canada’s largest dollar store chain rose after same-store sales grew 7.3 per cent for the fiscal first quarter ended May 1, helped by easing pandemic restrictions and consumers trading down to cheaper goods. Here’s another tip: Put your flatware set or dishes in a fancy box from William Ashley or The Bay. Shhh. It will be our little secret.
Enghouse Systems (DOG)
Remember the good old days when you didn’t have to wear pants to a meeting? Enghouse Systems investors sure do. Shares of the company sank after second-quarter revenue and earnings both fell from a year earlier and missed analysts’ estimates, hit by weakness in its video conferencing and contact centre software businesses. With RBC estimating that Enghouse’s Vidyo subsidiary, acquired in 2019, has seen its annualized revenues fall by roughly two-thirds from its peak in 2020, investors are losing their shirts – and their pants.
Stitch Fix (DOG)
If the pandemic taught us one thing, it’s that the people across the street sure like to buy a lot of stuff online. Lately, though, the piles of boxes have been getting a little smaller. With people doing more shopping in person, online apparel retailer Stitch Fix said net revenue dropped 8 per cent in its fiscal third quarter ended April 30 and warned that sales could be down as much as 15 per cent in the fourth quarter. Citing “recent business momentum and an uncertain macroeconomic environment,” the company is also laying off 15 per cent of its salaried employees. No wonder Stitch Fix’s stock got ripped to shreds.
DocuSign investors probably wish they hadn’t signed up for this. Shares of the company – whose electronic signature software is used to validate contracts, invoices and other agreements – tumbled after its first-quarter loss widened to US$27.4-million, or 14 US cents a share, from a loss of US$8.4-million, or 4 US cents, a year earlier. Even as revenue jumped 25.5 per cent, DocuSign’s adjusted earnings fell short of analysts’ estimates, prompting heavy selling of the stock at a time when investors are focusing on profits over growth. This could be a sign of more bad things to come.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.