This was supposed to be the quarter that showed that the economy had bounced back. Winter snowstorms held back what could have been a potent holiday shopping season. and when many consumer-facing companies shot blanks during the first three months of this year, they blamed the calendar. The shift of the Easter holiday from March last year to April this year disrupted seasonal spending patterns.
However, now that we are ready to discuss the second quarter — with the Easter holiday assist and not a snowflake in sight — corporate America is calling in sick. There were a lot of grim pre-announcements last week, just ahead of the wave of financial reports that will be flooding in over the next couple of weeks.
The market fell last week, and a major contributor to the tumbling indices was the flurry of companies warning that the second quarter wasn’t so hot. In what should have been an otherwise slow news week dominated by World Cup and NBA free agency news, a lot of familiar companies offered up uninspiring outlooks.
The Container Store (TCS) reported the comparable-store sales slipped 0.8 percent in its latest quarter. The retailer, which specializes in storage solutions, pins the weakness on a “retail funk” that’s coating many chains across the country.
Lumber Liquidators (LL) is the country’s leading discounter of hardwood flooring. This was a booming market during the early stages of the housing recovery, but Lumber Liquidators is telling investors to dial back near-term expectations after a sharp drop in comps.
Rent-a-Center (RCII) would seem to be a natural in this iffy climate as a leader in rent-to-own furniture, TVs, PCs and other home essentials. However, it too is pointing to a material weakness where sales and earnings will fall short of initial forecasts for the quarter. Things are challenging enough where it’s resorting to renting smartphones to help drive more traffic.
Bob Evans (BOBE) prides itself on serving up “homestyle” food at value prices, but that wasn’t enough to help the chain of casual dining restaurants in its latest quarter. Despite selling off its Mimi’s Cafe chain to help focus on its namesake concept, Bob Evans saw its same-store sales slip 4.1 percent in its latest quarter. With an activist investor already stirring up unrest, it’s not the kind of performance that Bob Evans needed to prove that it could bounce back on its own.
Liquidity Services (LQDT) isn’t a consumer-facing company, but it staffs a popular exchange for suppliers looking to unload clearance items. Liquidity Services also hosed down its projections last week, suggesting that there’s distress even in moving distressed merchandise.