It's one of the mysteries of the Street. On a down day, a company like Linens 'n Things
The details are a bit more grim than that flyby. The firm had expected Q2 earnings in the range of $0.03 to $0.09 per share, and now management expects a loss of around $0.11 to $0.15 per share. If this sounds eerily familiar, it's because the same thing happened last quarter: Sunny predictions for profit melted into red ink.
The tale isn't much more complex than crummy revenues, at least according to the press release. Comparable store sales are expected to decline somewhere between 5% and 10%.
I'm trying hard to look at the bright side of things here, but about the best I can do is give management a nod for at least not making a mess of inventory. Last quarter's results showed decent inventory management, and the debt-free balance sheets mean there's little worry of a complete burnout.
Still, it's hard for this Fool to get excited about a firm that has such a checkered history with free cash flow, especially one that competes against just about everyone, from specialty competitors like Bed Bath & Beyond
As for catalysts, just how excited should any of us be about the exclusive upcoming collection from Nate Berkus? (Yeah, I've never heard of him either, but I guess a few Oprah viewers have.. )
The firm hopes it's in the midst of a turnaround, but it's tough to see that from the numbers. Growthies won't find anything to admire here. Investors looking for a real value should turn their attention elsewhere, or wait for shares to present a much deeper discount. Things could change to the upside in a hurry if sales come around, but there's no margin of safety if the company continues to run the business as usual.
For related Foolishness:
- Like small companies that are actually growing? Learn how we look for the next home run stock.
- Or, if you prefer to shop the bargain aisle, see what we're up to in our search for dirt-cheap dream stocks.
- Check out the yawns at Bed Bath & Beyond.
Seth Jayson never was one to spend much on the fancier sheets. That's why, at the time of publication, he had no positions in any firm mentioned here. View his stock holdings and Fool profile here. Fool rules are here.