Zale Sails, Sears Fails on Holiday Sales

Dow slightly lower as Disney rises, anticipating Supreme Court hearing

Jan 10, 2014 at 6:27PM

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

When we think of publications that help us to understand the stock market, names like Barron's, The Wall Street Journal, and, hopefully, the Motley Fool come to mind. Call it heresy, but perhaps Psychology Today should be thrown into the mix, as well. After all, Wall Street's cognitive dissonance -- a "psychological conflict resulting from incongruous beliefs and attitudes held simultaneously," according to Merriam-Webster -- was on full display Friday.

U.S. nonfarm payrolls growth of 74,000 in December fell far short of expectations, which called for growth of nearly 200,000. "No matter," Wall Street shrugged. "That just means the Fed won't be in a rush to taper too quickly!" Two stocks gained for every one that fell today, though the Dow Jones Industrial Average (DJINDICES:^DJI) finished slightly lower, shedding seven points, or less than 0.1%, to end at 16,437. 

Optimistic Walt Disney (NYSE:DIS) shareholders bid the stock slightly higher, as it added 0.7% Friday. The U.S. Supreme Court officially agreed to hear a case that could squash the disruptive potential of Aereo, and other companies like it. Aereo allows subscribers to watch live and recorded broadcast TV over the Internet, without paying $0.01 to the broadcasters (read Disney, Comcast, CBS, etc.) themselves. By cleverly assigning each subscriber his or her own unique antenna, Aereo claims that no two subscribers are watching the same broadcast, and the company isn't violating any laws. Opening arguments may begin as early as April, according to The Wall Street Journal

Shares of Texas-based jewelry retailer Zale (UNKNOWN:ZLC.DL) rocketed 14.7% higher today, as same-store sales grew 2% in the last two months of 2013 from the final two months of 2012. While gross sales in the holiday period actually fell by $11 million, to $556 million, a revenue slip was already anticipated in the wake of Zale's overall store count declining by 91 locations. Same-store sales growth is the holy grail of retail metrics because, once the number of locations reaches a saturation point, same-store sales growth is the only way to boost revenues without involving the Internet.

Sears (NASDAQ:SHLD) shareholders, on the other hand, would love to see same-store sales growth of 2%. In fact, the stock probably would've been one of the day's best performers if it had mimicked Zale's modest numbers. Instead, same-store sales slumped 7.4% over the holiday months, causing the stock to plummet 13.8% to finish the week. Sears' projected fiscal year 2014, which comes to a close on Feb. 1, may see upwards of $1.3 billion in losses. This would put the beleaguered retailer's losses at more than $5.3 billion over just three years. With no compelling reason to believe a turnaround is in effect, investors are having a hard time figuring out where the upside could be with this stock.

The death of Wal-Mart: The real cash kings changing the face of retail
Just because Sears is bungling its retail opportunities doesn't mean the industry itself is doomed. To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

Fool contributor John Divine has no position in any stocks mentioned. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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