Why Lumber Liquidators Got Chopped and American Apparel Popped

The blue chips sank on news out of Portugal, while Lumber Liquidators brought down the home-improvement sector. Meanwhile, American Apparel soared on a plan to overhaul its leadership.

Jul 10, 2014 at 10:00PM

Major indexes opened the day sharply lower on concerns about Portugal's largest bank, but gained throughout today to finish down only moderately. The Dow Jones Industrial Average (DJINDICES:^DJI) closed 71 points lower, or 0.4%, as the S&P 500 also fell 0.4%, and the Nasdaq lost 0.5%.

Images

Meanwhile, most indexes in Europe fell more than 1%, with Portugal's PSI sinking 4.2% as Espirito Santo Financial Group, the biggest shareholder in Portugal's largest bank, suspended trading of its stocks and bonds due to "material difficulties" at its parent company, which had missed some debt payments. It's been a while since concerns about European defaults last rocked global markets, but many smaller eurozone economies are still struggling to maintain positive growth. Government officials stood by the bank, which said it missed payments to a just "a few clients," but investors fear that the news could be a sign of more problems to come.

Back at home, initial unemployment claims last week fell from 315,000 to 304,000, lower than estimates of 311,000, indicating that strong job growth seems to be continuing into July after last week's official report showed that nearly 300,000 jobs were created in June. Continuing unemployment claims for the week ending June 28 rose slightly to 2.584 million, but still remained near post-recession lows as the four-week moving average hit its lowest point since October 2007.

Home-improvement retailers dropped today after Lumber Liquidators (NYSE:LL) said its second-quarter results would be much weaker than expected, blaming lower existing home sales and internal operational issues for the drop in profits. Comparable sales fell 7.1% after jumping 14% a year earlier, as customer traffic fell sharply and worsened throughout the quarter. Shares of the hardwood flooring retailer fell 21%, and brought down peers including Tile Shop Holdings, which dropped 9%, Home Depot, down 1.7%, and Lowe's, which lost 1.4%.

Elsewhere, American Apparel (NYSEMKT:APP) shares popped 21% in late afternoon trading, and continued to gain after hours as the hedge fund Standard General took a stake in the struggling clothing retailer. Standard General will inject $25 million into American Apparel, and ousted CEO Dov Charney agreed to become a strategic consultant as a result of the agreement.

Shares of American Apparel, which makes casual clothes for teens and young adults, have fluctuated wildly since Charney was pushed out of the leadership role for personal misconduct just weeks ago. Among other possibilities, Charney had considered taking the company private, though today's development seems to remove that outcome. As part of the deal, five of the board's seven directors will also step down, and Standard General will nominate three new ones. American Apparel has not seen a profit since 2009, but a change in leadership could help lead a turnaround for the respected brand. An investigation into Charney's misconduct, which revolves around his knowing of an employee's plan to publish nude photos of a co-worker, is ongoing, and Charney's status with the company will be decided after its conclusion.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Lumber Liquidators. The Motley Fool owns shares of Lumber Liquidators. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers