It hasn't been a great year for investors in home furnishings retailer Cost Plus
Cost Plus told investors to expect Q3 sales of $188 million, up nearly 11% from last year's quarter but down from previous guidance of between $195 million and $197 million. Same-store sales are expected to come in up 1% at best; the company had hoped for as much as 3%. And management is now hoping to break even for the quarter -- well off previous estimates of a profit of $0.05 or $0.06 per share. An "off" product mix in some categories, along with a downbeat transaction trend and other factors, were cited as causes for the decrease.
This is more or less a continuation of what the company experienced in its first six months when it saw better same-store sales increases, but had profit margins come under fire because of markdowns.
Investors watching this sector know it's a tough time -- just ask investors in companies like Bombay
As a result, Cost Plus hasn't been able to capitalize on a strong housing market to the degree that it would like -- heck, it actually scaled back advertising in the first half. Management hasn't rested this year as it's tried to improve inventory levels, reduce promotional pricing, and keep sales growing as it expands, but last week illustrates the challenge it faces quite well.
Fool contributor Dave Marino-Nachison doesn't own any of the companies mentioned in this story.