Corporate America's Earnings Season Gets Off to Bad Start

Before you go, we thought you'd like these...
Before you go close icon
Bob Evans, Allentown, PA
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.

Warning Signs

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.
Get Ready to Rumble

These are just some of the companies that took hits last week after unleashing negative news. We can also dive into the soft June sales at the once-trendy Gap (GPS) or even tech weakness at networking solutions provider Gigamon (GIMO) after it warned that it failed to convert potential customers that are being more cautious with their tech decisions.

An optimist will argue that this isn't all horrendous. Companies that aren't announcing or pre-announcing a sloppy quarter now may be ready to live up to expectations -- if not surpass them entirely -- when they report in the coming days. However, that would be naive.

There will certainly be retailers that don't fall into The Container Store's "retail funk" and tech companies that don't face Gigamon's challenges to win over new business.

Then again, given the ominous tone established by a handful of prolific companies last week, it's hard to dismiss concerns. This was supposed to be the turnaround season -- and it's just not living up to the hype.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Liquidity Services, Lumber Liquidators, and The Container Store Group. The Motley Fool owns shares of Lumber Liquidators and The Container Store Group.

8 Retro Ways to Save Money
See Gallery
Corporate America's Earnings Season Gets Off to Bad Start

Remember what your parents told you to do when you were bored? That's right: Go outside and play. Not only is this an important lesson for kids –- finding ways to have fun using only your imagination –- it's free. It's easy today to get caught in the trap of spending money to entertain our families, whether it's buying an smartphone app, spending money at the mall or the movies or buying new toys. These are fun treats every once in a while, but keep it to a minimum and remind your family of the great outdoors.

Libraries are fighting to stay relevant in today's technology-centric society, so why not help them out while you save money on books and entertainment? Library cards are still free, and your taxes pay for these resources. Borrow books as well as DVDs of movies and television shows and cut back on your digital purchases and on-demand subscriptions.

Before you protest, this is definitely a major lifestyle change if you already use a smartphone regularly, but worth considering if you want to save a lot of money each month. Opting for a phone without Internet access –- or even a pay-as-you-go phone, if you rarely need to use it –- will cut costs; it might offer the added benefit of unplugging from constant connectivity.

Carpooling became popular during a countrywide effort to save gas in the 1970s, and today there are signs of resurgence with technology that allows commuters in the same area to easily find each other. If you don't have the option of public transportation, search in your own community for carpooling groups or talk to your coworkers to figure out a schedule.

Commit to skip the expensive salad bar or lunch spot across the street and pack a bag lunch at least three or four days a week. This can add up to a lot of money saved over time. 

While you don't need to use a pencil and paper to write down every purchase as was done years ago, the routine of tracking everything you buy can be an important habit for more careful spending. If you'd prefer to stay digital with this tactic, use Excel, Google (GOOG) Docs or an online tool that collects your daily transactions and sorts them for you.

This concept is no stranger to those who lived during economically challenging times years ago; if you didn't make enough money, you simply found another job to boost your income. Today, while job availability, familial roles and time commitments differ greatly from back then, you can still look for additional income opportunities. Freelancing is one option for those that need to spend time at home with family; you can also find seasonal opportunities in retail.

Take a tip from earlier generations and make your contributions to savings accounts the same, rather than adding more or less depending on other unexpected expenses. This might mean rethinking the amount you put away each month; even if you lower it, more regularity over time can have a bigger impact.
Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading