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Why Weight Watchers, Conn's, and Boston Beer Slumped Today

By Dan Caplinger - Jan 8, 2016 at 5:41PM

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These stocks were among the worst performers on another down day Friday. Find out why.

Beer-maker Boston Beer had a tough time Friday. Image: Boston Beer.

Investors have had to come to grips with the idea that the stock market can post substantial declines, as 2016 has begun on a down note the extent of which hasn't been seen for decades. Friday looked like it might give hard-hit market participants some respite, as the monthly numbers on job creation were stronger than expected. Yet by the end of the day, investors were instead focusing on the potential for accelerated interest rate increases on top of pressures on the global economy. Among the worst performers on the day were Weight Watchers International (WW 0.32%), Conn's (CONN 5.89%), and Boston Beer (SAM 1.06%).

Weight Watchers plunged almost 25% in a reversal of gains from speculation new 10% shareholder and board member Oprah Winfrey might make a more dramatic move to take over the company entirely. The stock has performed badly throughout the week, losing about half its value just from where it finished 2015. Rivals in the weight-loss industry have said that Oprah's new commercials for Weight Watchers haven't had an impact on their business during the key post-New Year's period, and that might have been disappointing to those who expected a stronger reaction from the move. Yet long-term shareholders have still benefited from Oprah's presence, as even after taking the declines into account, Weight Watchers shares have still more than doubled since Winfrey initially announced taking her position in the weight-loss specialist.

Conn's fell 15%. Investors continued to react to the company's sales and delinquency data from December, which it released Thursday morning. The company said that sales rose just 2.5% compared to the year-ago period, with same-store total net sales falling 5.6%. Strength in the furniture and mattress area was more than offset by double-digit percentage plunges in consumer electronics, home-office equipment, and the company's Other category. Delinquency rates on outstanding amounts of greater than 60 days rose to 9.9%, up from year-ago levels but down from November's 10.1% reading. Conn's decision to exit the video game products and digital camera areas, as well as stopping offering certain tablets, contributed to the weakness. Yet the retailer also said that markets that had benefited from the energy boom showed softer results, pointing to stresses in certain localities.

Finally, Boston Beer dropped 8% following a downgrade from Jefferies. The analyst firm said that the beer and spirits industry has gotten increasingly competitive, with consolidation at the top end of the market and an explosion in interest among small craft-beer microbrewers seeking to make a name for themselves and develop a following. Consumers have therefore gotten used to seeing new products come at an ever-quicker pace, and that has put pressure on companies like Boston Beer to keep up. Boston Beer will have to keep threading the needle between retaining its craft-beer reputation while growing into a major force in the U.S. beer market if it wants to sustain its past growth rates going forward.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Boston Beer. 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.

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Stocks Mentioned

The Boston Beer Company, Inc. Stock Quote
The Boston Beer Company, Inc.
SAM
$379.84 (1.06%) $3.97
Conn's, Inc. Stock Quote
Conn's, Inc.
CONN
$10.42 (5.89%) $0.58
WW International, Inc. Stock Quote
WW International, Inc.
WW
$6.20 (0.32%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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