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At Home (HOME) Jumps More Than 30% on Preliminary Q4 Release

At Home Group Inc.’s HOME shares skyrocketed more than 30% on Mar 10, following the release of preliminary fourth-quarter and fiscal 2020 financial results. This home décor super store released preliminary fourth-quarter fiscal 2020 sales, comparable store sales or comps and pro-forma adjusted earnings per share, which exceeded management’s most recent guidance and the consensus mark.

Key Takeaways

Per the preliminary results, the company expects fiscal fourth-quarter sales of $397.7 million, representing growth of 12% from the prior-year period. This figure was above the Zacks Consensus Estimate of $391.1 million. The company’s guidance for the same was toward the high end of $385-$393 million, which indicated 9-11% growth on a year-over-year basis.

It now expects comps to decline 3.1% year over year. Comps were earlier expected to decline between 4% and 6% during the quarter. It also expects adjusted EPS of 37 cents per share, which was above analysts’ expectation of 35 cents and the prior guidance of 33-36 cents.

For fiscal 2020, the company expects sales to be $1,365 million, higher than the consensus mark of $1,359 million. Earlier, the company had expected net sales in the $1,352-$1,360 million range for the full year. Comps are now expected to be down 1.7% compared with the company’s prior guidance of decline toward the higher end of 2-2.6% during the year.

At Home — which is slated to report fiscal fourth-quarter results on Mar 24 — now anticipates full-year adjusted EPS of 57 cents, up from analysts’ expectation of 54 cents and the prior guidance of 53-56 cents.

The company highlighted that it remains optimistic of comps improvement during the back half of the fiscal fourth quarter, year-end healthy inventory position and more than $100 million improvement in free cash flow during the year.

For fiscal 2021, management remains focused on improving comps, profitability and free cash flow. Key initiatives comprise the company’s latest EDLP Plus merchandising strategy, focus on category reinventions, enhancing the loyalty program, reducing new store cannibalization and launching buy-online pick-up in store.

At Home — which shares space with RH RH, Williams-Sonoma, Inc. WSM and Ethan Allen Interiors Inc. ETH in the Zacks Retail - Home Furnishings industry — has been closely monitoring the impact of coronavirus outbreak on the supply chain and consumer demand. Given the constantly changing scenario, it expects to share an update on current trends during the fiscal fourth-quarter earnings call.

Shares of the company have underperformed its industry year to date. Nonetheless, At Home’s solid store opening strategy, continued enhancement of marketing strategies and optimization of brand awareness are likely to drive the stock higher in the near term. Also, focus on product innovation is driving revenues and giving this Zacks Rank #2 (Buy) company a competitive advantage over its peers. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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