These three companies just didn't live up to Mr. Market's expectations last week. Sometimes an earnings stumble is a signal to sell, but digging in the dirt is also a good way to find turnaround candidates while they're getting beaten down.
On the catwalk
High-end retailer Saks
Sales came in 8.8% higher than last year and well ahead of expectations. As you might have guessed from the combination of disappointing earnings and swell sales, Saks ran more discount sales than usual. CEO Stephen Sadove was proud of his company's 8.4% same-store sales increase "in light of the ongoing challenging macroeconomic and increasingly competitive retail environment."
In other words, Saks is doing better than Nordstrom
Let's linger in the mall just a bit longer. Dick's Sporting Goods
Dick's is still growing rapidly, with 54 new stores planned for this year and entry into the Californian market through acquisition. The company is borrowing heavily to get all this done, and you have to wonder if it wouldn't be smarter to back off the growth plan until the retail market bounces back again.
As bad as last week was for this stock, Dick's remains the best-performing sporting-goods retail stock over the past year with "only" a 17% drop. Hibbett Sports
It's all about the consumer this week! Our last underperformer is high-end burger joint Red Robin Gourmet Burgers
The patty-flipping chain reported $0.43 of earnings per share on $256 million in sales, which was exactly the kind of revenue performance Wall Street had expected but less than the $0.50 earnings target per share.
Red Robin is another fast-growing chain-store concept, hoping to add eight stores or thereabouts in the coming quarter and also planning to buy a few of its own franchisees. The national advertising campaign, TV ads and the whole shebang, gets an $18 million budget this year to build on last year's $11.5 million marketing effort. Unlike Dick's, Red Robin is financing most of its growth with operating cash flows, and the company looks eminently capable of paying for its chosen path.
I happen to prefer Buffalo Wild Wings
The fat lady sings the blues
Some of these underperformers are victims of larger circumstances, while others might have only themselves to blame. It's up to you to decide which down-on-their-luck companies should be able to pull themselves up by the bootstraps, and which ones are stuck in the mud for real.
Further Foolish reading: