This Week's 5 Dumbest Stock Moves
Aug 23rd 2013 6:25PM
Updated Aug 23rd 2013 6:26PM
Stupidity is contagious. It gets us all from time to time. Even respectable companies can catch it. As I do every week, let's look at five dumb financial events this week that may make your head spin.
1. Not exactly a page-turner
The chapters don't get any easier for Barnes & Noble . The fading bookseller stumbled after posting uninspiring quarterly results and the fizzling out of a partial exit strategy.
Chairman and founder Leonard Riggio revealed that he's abandoning efforts to take the company's retail bookstores private. With Barnes & Noble's once promising Nook business also seeming less and less marketable, with its 23% slide in hardware sales for the period, it seems as if Barnes & Noble will fade into its final chapters on its own.
2. Penney hard-a-way
Things continue to get worse for J.C. Penney . Once again, the struggling department-store chain posted a wider adjusted deficit than analysts were expecting. Comps plunged 11.9%, and that was after a 21.7% freefall during the same period a year earlier. Put another way, this is a 31% plunge in comps over the past two years.
The chain is still trying to undo the damage done by former CEO Ron Johnson's poorly received concept makeover. It's not a shock to see customers wanting items stocked by category instead of by brands and at more compelling price points.
However, Penney has the gall to claim that online sales at jcp.com fell "just" 2.2% during the quarter. A decline is a decline, especially when even many retail laggards are posting positive online sales.
3. Putting the "oh" in IPO
It's an unspoken rule, but the most important quarter for any IPO is its first report as a public company. Disappoint the market, and it will be hard to regain credibility. Well, LightInTheBox became the latest debutante to let the baton drop during the talent portion of the pageant.
The online retailer of wedding gowns, illuminated faucets, and other trinkets saw revenue climb 53% to $72.2 million, but Wall Street was betting on sales of $75.8 million. LightInTheBox could've saved itself with rosy guidance, but that didn't happen. It sees a sequential decline while analysts were modeling a sequential increase.
LightInTheBox is an interesting story, sourcing goods in China that it sells to the rest of the world with free shipping for larger orders. The company is profitable and clearly growing. However, it's hard to bounce back from a lousy first impression.
4. Kenmore, meet Ken Less
One of the rare silver linings for Sears Holdings in recent years -- as its Sears stores struggle and its Kmart sibling fares worse -- is that shoppers still gravitate to its tools and appliances.
Well, its appliances aren't selling so well these days. Sears Holdings posted a larger loss than Wall Street was expecting this week, with negative comps at both of its flagship chains. That's not a surprise. The real shock is that Sears was bellyaching about weak appliance sales.
The housing market is booming, and with new construction comes heightened demand for new appliances. Several companies reporting ahead of Sears confirmed the trend of strong appliance sales. There's something seriously wrong when even a silver lining at Sears is tarnished.
5. There's never an "easy" button when you need one
The market gave Staples the business after the office-supply superstore chain disappointed investors with fresh financials. The stock tumbled 15% on Wednesday after the retailer posted declining sales and profitability.
The market's known for some time that the operator's overseas business is struggling, but now Staples is revising its outlook even lower. Staples is eyeing a decline in revenue and no more than $1.25 a share in earnings for the year. Its earlier view was calling for a modest increase in sales on earnings of $1.30 to $1.35 a share.
This would seem to be a good time to be Staples. Corporate America's hiring again. New small businesses are starting up. Two smaller rivals have combined in a move that should firm up product pricing. However, the retailer just isn't getting the job done. Staples sells staple removers, but this week it was investors removing Staples.
The article This Week's 5 Dumbest Stock Moves originally appeared on Fool.com.Longtime Fool contributor Rick Munarriz owns shares of LightInTheBox. The Motley Fool owns shares of Staples. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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