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At Home (HOME) Gears Up for Q3 Earnings: What's in Store?

At Home Group Inc. HOME is scheduled to report third-quarter fiscal 2020 (ended Oct 27) results on Dec 4, after the closing bell.

In the last reported quarter, this leading luxury home decor superstore reported adjusted earnings of 18 cents per share, which surpassed the Zacks Consensus Estimate by 20% but declined 47.1% year over year. Meanwhile, revenues lagged expectation by a slight margin of 0.3% in the fiscal second quarter but grew 18.8% from the year-ago figure.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for loss per share has been unchanged at 2 cents over the past 60 days. This estimated figure indicates a plunge of 111.1% from earnings of 18 cents per share reported a year ago. The consensus mark for revenues is pegged at $315.1 million, suggesting a 17.9% improvement from the year-earlier reported number of $267.18 million.

At Home Group Inc. Price and EPS Surprise

Factors at Play

At Home’s sales are expected to be have witnessed growth in the fiscal third quarter. Store opening and expansion strategy to increase its brand presence across the target market, reinvention of its annual assortments plus improved and innovative marketing techniques might have generated higher sales.

For the fiscal third quarter, At Home projects net sale in the range of $312-$317 million, indicating 17-19% growth from the prior-year reported figure.

However, relentless competition, tariffs and tough comparisons are likely to have been pressing concerns. The company, which shares space with RH RH, Williams-Sonoma, Inc. WSM and Tempur Sealy International, Inc. TPX in the Zacks Retail - Home Furnishings industry, anticipates comps to decline within 2.5-0.5% for the fiscal third quarter.

Additionally, higher marketing and advertising expenses might have affected its margins in the to-be-reported quarter. Product margin contraction due to incremental markdowns, increased occupancy costs, higher preopening expenses associated with the second distribution center (DC) are also likely to have weighed on its bottom line.

Some macroeconomic/geopolitical issues at play are the high-end housing slowdown in the United States and the persistent U.S.-China trade spat. Due to these headwinds, the company anticipates adjusted loss in the band of 1-4 cent.

Adjusted operating margin is projected between 1.9% and 2.4% inclusive of 110-bps impact from second DC compared with 7.7% reported in third-quarter fiscal 2019.

What the Zacks Model Unveils

At Home does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of 0.00%.

Zacks Rank: At Home currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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