Why Blyth Shares Tumbled

Why Blyth Shares Tumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Blyth got banged up today, falling as much as 14%, and finishing down 8% after an offbeat earnings report.

So what: The direct-to-consumer marketing company said sales dropped 33%, to $179.5 million, due to poor results at ViSalus, a subsidiary multilevel marketing company. CEO Robert George said, "The overall sales decline year over year was driven by a lower North American Promoter count." As a result, Blyth posted a per-share loss of $0.70 per share, compared to a profit of $0.04 in the quarter a year ago. George sounded optimistic about the future of ViSalus, however, saying, "We are encouraged by the focused efforts to relaunch North America undertaken by the leadership team."

Now what: Blyth's two other segments didn't fare much better, as sales in Candles & Home Decor fell 3%, while Catalog & Internet revenues increased by just 0.3%. Operating loss for the two segments combined was $9.4 billion. The company also sharply reduced its full-year EPS guidance to $0.35-$0.45, from $0.75-$0.90. Considering the weakness in all three divisions of the company, and Blyth's lack of any competitive advantage in an uncompelling industry, it's hard to see a reason to invest here.

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