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4 Consumer Stocks That Tanked in Q1

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A rocky first quarter ended in surprisingly ordinary fashion. By the time the first three months of 2014 were up, we had the Dow trading slightly lower while the S&P 500 and Nasdaq inched slightly higher.

Individual stocks certainly didn't stand still, especially with consumer-facing stocks in an environment rocked by crummy weather and equally chilly consumer sentiment. Let's take a look at four consumer stocks that posted significant slides during the first quarter.

Aeropostale (NYSE: ARO  ) -- down 45% in Q1
Fickle teens seem to be flying away from Aeropostale. The mall-based apparel retailer had a rough holiday shopping season with adjusted sales slipping 9.5%, taken down by a brutal 15% plunge in same-store sales. Even chains that are struggling at the physical cash register level are holding up well in cyberspace, but Aeropostale is one of the few chains to have experienced a decline in online sales this time around.

It's not pretty. Analysts see sales continuing to slide through at least the next two years. The stock may seem cheap after shedding nearly half of its value, but after posting a loss in each and every single quarter in its latest fiscal year and with no end to the red ink in sight, there's little reason to expect Aeropostale to take off anytime soon. (NASDAQ: OSTK  ) -- down 36% in Q1
Online retailers haven't been very popular this year, but Overstock has been particularly fragile. The online discounter took its biggest hit after offering up disappointing financial results for the holiday quarter. Sales rose at a modest 16% clip, but the path down the income statement proved cruel. 

Overstock wound up barely breaking even as margins took a hit. This is a far cry from the $0.52 a share that Wall Street was targeting. The former market darling has now fallen short on the bottom line in back-to-back quarters. 

Best Buy (NYSE: BBY  ) -- down 34% in Q1
One of last year's most surprising turnaround stories was Best Buy. The market's credibility was restored as a new CEO was able to control costs while improving the consumer electronics retailer's reputation with shoppers. The stock soared 237% along the way, but it's not as if Best Buy's fundamentals improved that dramatically. After all, despite the share price more than tripling, we still saw sales slide in fiscal 2014.

Investors found out the hard way in January of this year when Best Buy revealed that it rang up negative comps during the holiday shopping season, and its language suggested that margins would be challenged in its push to woo last-minute shoppers. Wall Street sees flat sales through the next two fiscal years, so it's not as if last year's gains will be validated anytime soon.

Roundy's (NYSE: RNDY  ) -- down 30% in Q1
Supermarkets have been volatile investments in recent years, defying the logic of neighborhood grocery stores as all-weather institutions. Roundy's is a Midwest grocer that has been disappointing this year. One setback came in early February when Roundy's offered 8.8 million shares in a secondary offering. A whopping two-thirds of those shares were sold by early investors.

Later in the month, Roundy's slipped after posting uninspiring financial results with same-store sales slipping 2.4% of the quarter. The outlook was even uglier with Roundy's range topping out at $0.40 a share for all of 2014. Analysts were holding out for annual profitability of $0.74 a share. With Roundy's now unlikely to cover its quarterly dividend of $0.12 a share through earnings alone, it will be interesting to see if it slashes its yield the way it did in late 2012. 

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  • Report this Comment On April 03, 2014, at 3:16 PM, IlluminatInvest wrote:

    "With Roundy's now unlikely to cover its quarterly dividend of $0.12 a share through earnings alone, it will be interesting to see if it slashes its yield the way it did in late 2012."

    Top notch analysis, considering that Roundy's already announced that they were suspending the dividend 4 months ago to focus on growing the Mariano's banner through the acquisition of 11 Dominick's stores from Safeway:

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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Related Tickers

9/1/2015 10:23 AM
ARO $1.07 Up +0.01 +0.94%
Aeropostale CAPS Rating: **
BBY $36.00 Down -0.74 -2.01%
Best Buy CAPS Rating: *
OSTK $19.45 Down -0.20 -1.04% CAPS Rating: *
RNDY $2.43 Down -0.02 -0.82%