Why Sears Hometown and Outlet Stores Shares Were Sheared

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

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  ) , a retailer of home appliances, lawn and garden, and other home accessories, dipped as much as 10% after reporting disappointing first-quarter results.

So what: For the quarter, Sears Hometown and Outlet reported a 3.2% decline in revenue, to $601.1 million, as operating income plummeted by 28%. The company blamed an exceptionally cooler winter for slowing sales of its lawn and garden segment, which drove its Hometown comparable-store sales down by a disappointing 6.9%. Sears Hometown and Outlet CEO Bruce Johnson noted that lawn and garden sales, which comprise its second-largest category, fell 45% in the first two months of the quarter.

Now what: It certainly appeared that the valuation on Sears Hometown and Outlet had gotten way ahead of itself, and today's disappointing results are merely proof in the pudding. I will say that this spin-off of Sears Holdings (NASDAQ: SHLD  ) is a far smarter way to play the home appliance sector than by purchasing former parent Sears, but it'll rely heavily on strong economic growth and accommodative weather patterns to fuel its bottom line. With the prospect of higher taxes, and the sequester draining some optimism out of the U.S. economy, I don't see this stock doing much more than muddling along in the interim.

Craving more input? Start by adding Sears Hometown and Outlet Stores to your free and personalized Watchlist so you can keep up on the latest news with the company.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

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.

Compare Brokers

Fool Disclosure

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: 2478562, ~/Articles/ArticleHandler.aspx, 9/24/2016 8:24:02 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...

Today's Market

updated 23 hours ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
SHOS $5.26 Up +0.14 +2.73%
Sears Hometown and… CAPS Rating: **
SHLD $11.54 Down -0.17 -1.45%
Sears Holdings CAPS Rating: *