Why At Home Group Stock Plunged 34.5% in December — The Motley Fool

What happened

Shares of At Home Group (NYSE:HOME) fell 34.5% in December, according to data from S&P Global Market Intelligence, after the home decor retail chain announced solid fiscal third-quarter 2019 results, but followed with underwhelming guidance.

To be sure, while the broader stock market offered little support — the S&P 500 fell 9% on concerns of slowing global economic growth and political strife — nearly all of At Home Group’s drop came early last month on the heels of its Dec. 6 report.

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So what

At Home Group’s quarterly revenue climbed a healthy 25.5% year over year to $267.2 million, helped by 29 new locations and a 5.2% increase in comparable-store sales. On the bottom line, that translated to adjusted pro forma earnings of $12 million, or $0.18 per share, up from $0.07 per share in the same year-ago period.

Analysts, on average, were only expecting earnings of $0.15 per share on slightly lower revenue. 

For the current fiscal fourth quarter, however, At Home Group told investors to expect sales in the range of $347 million to $352 million, assuming seven new store openings and a much more modest comps increase of 1% to 2%. That should translate to adjusted pro forma EPS of $0.45 to $0.48.

Now what

CEO Lee Bird noted the disappointing comps guidance “reflects a patch of softness early in the quarter before the business rebounded.”

As such, and given its relative outperformance to date, At Home Group was able to reiterate its full fiscal-year 2019 outlook calling for sales of $1.159 billion to $1.164 billion (or growth or 22% to 23%), and for adjusted pro forma earnings of $85 million to $87 million, or $1.28 to $1.31 per share.

Still, investors will want to ensure the aforementioned “patch of softness” was not indicative of some other underlying weakness in At Home Group’s business — something we’ll receive more color on when the company next reports quarterly results in late March. In the meantime, given the uncertainty swirling around the rest of the stock market, I suspect At Home Group shares will remain depressed in the near term.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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