Attention, retail shoppers. Shares of specialty retailer Sharper Image
Last quarter, the slick and impressive results had the company upbeat about the second quarter. The stock, at $27 a share, was a mere 16 times earnings -- before the deep discounters on Wall Street took over. The stock is now $20 and change.
If you have children in the room, make sure they do not see these words: July sales were up 18%. The horror.
To be fair, the growth in sales is slipping. July's sales growth was 2% below last year's growth, and the second quarter's sales growth of 20% was 4% lower than last year's 24% increase. Same-store sales, the best way to measure retail store strength, were flat this quarter. And Internet sales, which jumped 57% a year ago, were up just 14% this quarter.
Revel in rival Brookstone's
Sharper Image made a dramatic cut to its late-May second-quarter earnings guidance of $0.09 to $0.11 per share -- which had indicated a 100% increase in earnings was coming. The new guidance, at $0.03 to $0.05 a share, leaves open the door for earnings to actually decline from last year's $0.05 a share. The crystal ball must need a high-tech microfiber wipe.
The company also lowered full-year guidance to $1.82 to $1.87 a share -- roughly a 12% increase in profits. But, the debt-free company, selling at 11 times forward earnings, has a bargain-basement price that reflects its dimming prospects.
Retail, in general, has been weaker than analysts had expected. Pier 1
Retail is a tough business. Sharper Image did lower expectations. Although the company is profitable, the trends in profitability and same-store sales bear watching.
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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.