Discount stores

Delta Cuts Flights Ahead of Summer Travel, Gamestop Stock Appears, Discount Stores Beat Profits

Delta Air Lines is cutting flights amid an ongoing shortage of pilots, Gamestop shares are up on the announcement of a new crypto and NFT wallet, and Dollar Tree and Dollar General both beat profits in an inflationary environment.

Video transcript

RACHELLE AKUFFO: Welcome to all. It’s time for our triple play, and I’m picking one that can help stretch a little, which I’m talking about dollar stores. A strong day for dollar stores here. We saw Dollar Tree and Dollar General perform well as the two brands met and comparable sales exceeded first quarter estimates. Now, after its earnings beat, you see the Dollar Tree there is up over 20%. And look at Dollar General. It is also an increase of almost 14%.

Now we have seen that both were able to handle supply chain headwinds better than many others and were able to maintain their margins. Now it comes down to their more budget-conscious consumers that these dollar stores cater to even lower prices than Walmart or Target. You have to keep in mind, of course, that inflation really eats away at a lot of discretionary spending.

Now, Michael Witynski, CEO of Dollar Tree, he said, we are taking the necessary steps now to position ourselves for accelerated growth in what I consider to be the most attractive retail sector, particularly in the current economic environment. Now we saw similar gains in 2009 during this Great Recession. So maybe the accelerated growth could repeat itself again, again.

SEANA SMITH: Yes, we will see. Rachelle, I think the big takeaway and what interests me the most about these two earnings reports, comparing this to what we saw at Walmart and Target last week, because it looks like two totally different stories. And they’re still, as you said, for the low-income consumer, the consumer who’s been hit very hard by inflation or by inflation. So the fact that Dollar General and Dollar Tree are doing so well, I think, also speaks to management and what their management team is doing, just in terms of navigating this uncertainty.

All right, my choice today is Delta. There’s a lot going on in the travel space, but Delta is specifically cutting around 100 flights a day from July, early July, through mid-August. Now is the heart of the very, very busy summer travel season. Now the airliner says it’s doing it in advance – moving forward, excuse me – of canceled flights as the industry grapples with pilot shortages. Now Delta is asking pilots to work extra shifts this weekend as it plans to fly about 2.5 million people, 25% more than a year ago.

Now Delta isn’t the only airline to cut flights. JetBlue and Spirit also announced similar moves. But you see the move today. And just intraday today, Delta is up 6%. It has a lot to do, Dave, with the fact that we’ve heard some of their competitors, Southwest and JetBlue, raise their forecasts due to the very, very strong demand they’re seeing so far this summer.

DAVE BRIGGS: And we talked about it off camera, but I had personal experience of these shortages and cutbacks at Delta. A canceled flight going to VCON, which we’ll talk about later in the show. Was never informed that it was cancelled. I went online, couldn’t find a single flight from New York to Minneapolis, which usually you can find 20 or 30 on a Friday night. Can’t reach customer service rep, can’t reach anyone on chat.

It was an absolute slump from start to finish, and now I’m scrambling to get a refund that takes a few weeks. So it hits the consumer hard. It may not hurt their stock, but it certainly doesn’t help their reputation.

SEANA SMITH: But you also have to ask the question, however, when do some of those loyal customers – we know that’s a big deal if you’re changing airlines, if you’re just using Delta. But at some point, I think they’re going to see a backlash. But we will see.

DAVE BRIGGS: I absolutely do. They will see it here, my friend. My game is a memory – GameStop stock is increasing again. The current two-day rally on news that the video game retailer would be launching – you guessed it – its own cryptocurrency and Ethereum-powered NFT wallet. GME shares were trading at just over $80 per share two weeks ago and are now threatening $130. GameStop is still down, however, by more than 45% year-over-year. But right now, today, they are standing. They are up more than 10%. Rachelle, it’s often very difficult to predict where they’re going to go. And that rally might be coming to an end, but it’s been a nice rally the past few weeks.

RACHELLE AKUFFO: I mean, you have to give credit to some of these meme stocks. They’re getting very creative, whether it’s investing in gold and silver mining with your businesses and movies, or, as you see here now, going into cryptocurrency, something so volatile. So I don’t know if they’re betting on the right horse here, but I appreciate the creativity in trying to find ways to diversify their business to at least stay afloat and maybe prepare for the next phase of the Web 3.0 and where some of these other tech investors seem to be heading.

SEANA SMITH: Rachelle, I like the positive spin you put on this. I’m a little more skeptical. I think GameStop is really doing everything it can to generate buzz, to keep some of that excitement alive. We know that many of these retail traders, even though they got burned last year, still come back to GameStop. You can see it in the intraday movements of this stock. So I’m not sure if NFTs are the right bet here for the business, but maybe I’m wrong.

DAVE BRIGGS: I will split the difference. I guess I will say that Ethereum, along with Bitcoin, are the two cryptocurrencies that I have some confidence in. But I am with you, my friend, on the NFT space. And we’ll talk about that a lot later in the program.