These 2 Stocks Show Consumers Are Fighting Hard – The Motley Fool

In the constant churning on Wall Street, Wednesday was a down day that gave up gains from the previous session. Optimistic views on the economy gave way to nervousness about the looming reading on inflation with the Consumer Price Index release later this week, and bond yields moved above 3% again. That sent the Dow Jones Industrial Average (^DJI -0.81%), S&P 500 (^GSPC -1.08%), and Nasdaq Composite (^IXIC 0.00%) down as much as 1% on the day.

Index

Daily Percentage Change

Daily Point Change

Dow

(0.81%)

(269)

S&P 500

(1.08%)

(45)

Nasdaq

(0.73%)

(89)

Data source: Yahoo! Finance.

Yet a couple of consumer-oriented companies released financial results that showed that U.S. consumers are still doing whatever they can to fight back against economic pressures, at least for now. Gains for Ollie's Bargain Outlet Holdings(OLLI 4.69%) were fairly substantial, while recreational vehicles specialist Thor Industries (THO 0.97%) had to settle for more modest gains. Read the details below.

Shares of Ollie's were up nearly 5% on Wednesday. The discount retailer reported results for the fiscal first quarter ending April 30, and although the numbers showed just how much strain consumers are under, investors liked the sentiment the company has about its future.

Ollie's reported a 10% year-over-year drop in quarterly net revenue to $407 million. Comparable-store sales were even worse, nearly entirely reversing last year's 18.8% gain with a drop of 17.3%. Adjusted net income plunged 76% to $12.8 million, resulting in earnings of just $0.20 per share.

Yet CEO John Swygert did a reasonably good job of putting Ollie's results in context. Consumers had just received stimulus payments in the year-earlier period, and that was especially important for the lower end of the retail industry in which Ollie's operates. Moreover, Swygert was optimistic about the near future, saying that sales trends in the current quarter have improved substantially.

In the long run, discount retailers like Ollie's have a huge opportunity to serve new customers who've had to move down in their shopping aspirations because of inflation. If it can capitalize, then Ollie's could see further gains ahead.

Shares of Thor Industries were up just 1% by the end of the trading session on Wednesday, after having been higher by as much as 4% earlier in the day. The RV manufacturer's fiscal third-quarter sales hit new records, and the situation for the industry looks strong.

Thor's numbers included a 35% jump in net sales to $4.66 billion. Gross profit margin improved, and earnings of $6.32 per share came close to doubling from year-ago levels. That marked yet another strong quarter on the bottom line for the RV specialist. Moreover, Thor reported a backlog of RV demand of $13.88 billion, working out to about three quarters' worth of sales.

Indeed, Thor is still seeing a bit too much of a good thing. The company has made some progress in managing and fulfilling orders, but supply constraints on RV chassis are holding back its ability to maximize production. Thor doesn't see itself getting inventory levels at dealerships back up to normal levels until early 2023 at best.

It's somewhat surprising to see demand for RVs remain strong even with gasoline prices at extremely high levels. Yet consumers have been stuck being unable to travel for a long time, and with hotel prices being equally expensive right now, Thor's financial performance suggests that consumers want the freedom that comes with hitting the open road with your own accommodations.

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These 2 Stocks Show Consumers Are Fighting Hard - The Motley Fool