Why Sears Hometown and Outlet Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sears Hometown and Outlet Stores (NASDAQ: SHOS  ) were off as much as 14% after a disappointing quarterly earnings report today.

So what: On the surface, it seemed like a decent quarter for the retail chain, which was spun off of Sears Holdings (NASDAQ: SHLD  ) last September. Operating income jumped 40.2% to $17.3 million, and EPS increased 23.5% to $0.42. The quarter, however, includes an extra week in the calendar, and comparable sales excluding the extra week declined 0.5%. CEO Bruce Johnson said November and December were strong, but "we did see some softening in January."

Now what: The improvement in income was largely due to the extra week in the calendar year and the result of store closing costs in the year before. Like its former parent, SHO is still a struggling enterprise, though management seems to be making some solid moves. Namely, it's eliminating sales of consumer electronics, which will free up space for better-performing segments and boost same-store sales. In fact, without that category, comparable sales improved 1.1% in the quarter. This is just SHO's second report as a standalone company, and I wouldn't be too quick to dismiss it despite today's drop.

Want more? Add Sears Hometown and Outlet Stores to My Watchlist.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2308654, ~/Articles/ArticleHandler.aspx, 11/21/2014 9:50:57 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement