I would speculate the increases were driven by programmed institutional trading, possibly influenced somewhat by RSH buy-backs. A number of single-block tradws in the multiple tens-of-thousands of shares occurred, with price and voulume momentum building toward the end of the trading day. It would not be at all unusual for buy orders to be placed as particular dollar targets are reached. What will be more interesting will be to see whether this is a real firming of the stock with continued upwaed momentum, or is it merely a statistical fluke with no bearing on continued performance. As the next official earnings announcement is not slated until later in February, there is likely to be a good deal of volatility in this stock for some weeks to come. While a real upward trend would be welcome, it is neither assured nor even likely. This is one of those times I really hope I'm wrong, but I remain pessimistic. There are serious, core problems not being addressed by upper management, problems which will only worsen. K-Mart is a huge company with solid assets, great market presence, and a flawed business plan, too. So was Montgomery Wards. RS shows real signs of joining those ranks.
Comparing RSH to KMart is just wrong. KMart has proven they can not compete with WalMart and Target. RSH doesn't try to compete with BBY or CC. It is true that they, like any company, would like to take customers away from their rivals, but the RSH business model is in no sense comparable to KMart. RSH remains hughly profitable, with G.M. in the 39-41% range. BBY is in the 15-18% range. Remember that companys that have sales increases can and do go out of business, those with profit increase seldom do. Those with neither-KMart-usually got out of business. Anyone who thinks that RSH in on the ropes and will fail is not placing the core problem in the right light. The recession has hurt almost every company in America. You have to be nuts to think that because it has effectd RSH that the next step is for them to go out of business. What the economy will do is cause the company to re-evaluate and hopefully come out stronger. RSH was, is, and always be a cash cow.
RS is not K-Mart, granted. However, the business model of the company as currently structured is not enhancing the company's market position. As for gross profit, that is a very misleading indicator. Look at actual operating margins, earnings per share, cash on hand and return on investment. Click on
for a more comprehensive picture. No matter how RS is categorized or to what it is compared, the stock performance has been dismal and shows little real potential for significant near-term change, due largely to to management's inabillity to effectively address inherent problems. The firm has essentially abandoned and alienated the original core customer base, while current employee turnover is atrocious. Employee churn is now at an all-time high. Many of the best and most experienced people have left or will soon leave. A retailer stands on its customer base and its floor staff. RS has pretty much shot itself in both feet.
Timberlandko, I've been watching this stock's daily and intradaily price movements and am seeing that on down days, there is selling pressure in the final hour of trading which is when big money typically gets moved. RSH avg. daily volume is around 1.5 million shares or so. The ongoing corp. buyback may be enough to keep the price steady during the day until the last hour of trading. There is, I think, significant institutional liquidating going on here. Look at this chart - (hope it shows as a link!)
This stock is technically weaker now than at any point in the last six months, and looks as though it should have been trending down in price since late November, '01. There are negative divergences in both the A/D direction and money flows with regards to the price action. Compare this chart to any other stock's and you will likely see price follow the direction of the two indicators I've singled out.