Diamonds and Dogs

2/25/16

Sprouting from the depths of the market to become today's diamond, Sprouts Farmers Markets (SFM). The natural and organic food retailer posted fourth quarter revenue of $930.3 million exceeding Street forecasts. The Phoenix based company saw revenue rise 27% year over year and also raised guidance for 2016. The company's major competitor Whole Foods, on the other hand, is cutting 1,500 jobs over the next two months. Maybe Sprouts Farmers Markets is making inroads into their business.

Restore your portfolio by getting rid of today's dog, Restoration Hardware (RH). It's been a tough year and tough six months for the retail sector in general. Restoration Hardware is slumping over 25% after releasing its preliminary Q4 results well below expectations. The company now expects earnings per share to be $0.99 on $647.2 million in revenue. The consensus estimates call for $1.35 in EPS on revenue of $707.73 million. The same period from the previous year had $1.02 in EPS on $582.73 million in revenue. Management said they are experiencing shipping delays as certain vendors are struggling to ramp up production of this new product line. Management also said they expect the majority of the demand/written orders to turn into revenues in the first and second quarter.