What happened
Shares of At Home Group (HOME) fell 34.5% in December, according to data from S&P Global Market Intelligence, after the home decor retail chain announced solid fiscal third-quarter 2019 results, but followed with underwhelming guidance.
To be sure, while the broader stock market offered little support -- the S&P 500 fell 9% on concerns of slowing global economic growth and political strife -- nearly all of At Home Group's drop came early last month on the heels of its Dec. 6 report.
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So what
At Home Group's quarterly revenue climbed a healthy 25.5% year over year to $267.2 million, helped by 29 new locations and a 5.2% increase in comparable-store sales. On the bottom line, that translated to adjusted pro forma earnings of $12 million, or $0.18 per share, up from $0.07 per share in the same year-ago period.
Analysts, on average, were only expecting earnings of $0.15 per share on slightly lower revenue.
For the current fiscal fourth quarter, however, At Home Group told investors to expect sales in the range of $347 million to $352 million, assuming seven new store openings and a much more modest comps increase of 1% to 2%. That should translate to adjusted pro forma EPS of $0.45 to $0.48.
Now what
CEO Lee Bird noted the disappointing comps guidance "reflects a patch of softness early in the quarter before the business rebounded."
As such, and given its relative outperformance to date, At Home Group was able to reiterate its full fiscal-year 2019 outlook calling for sales of $1.159 billion to $1.164 billion (or growth or 22% to 23%), and for adjusted pro forma earnings of $85 million to $87 million, or $1.28 to $1.31 per share.
Still, investors will want to ensure the aforementioned "patch of softness" was not indicative of some other underlying weakness in At Home Group's business -- something we'll receive more color on when the company next reports quarterly results in late March. In the meantime, given the uncertainty swirling around the rest of the stock market, I suspect At Home Group shares will remain depressed in the near term.
Check out the latest At Home Group earnings call transcript.
