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Why Shares of At Home Plunged on Thursday

Lou Whiteman, The Motley Fool

What happened

Shares of At Home Group (NYSE: HOME) lost nearly half of their value on Thursday, trading down more than 45% after the home decor retailer missed on earnings and provided guidance that fell short of expectations.

So what

After markets closed Wednesday, At Home reported net income of $0.21 per share for the quarter, down from $0.28 per share a year prior. Adjusted for one-time items, earnings came in at $0.03 per share, shy of the $0.08 consensus, on revenue of $306.3 million that lagged expectations for $360 million.

Comparable-store sales decreased 0.8% in the quarter. At Home opened 11 new stores during the period, ending the quarter with 191 locations in 38 states.

A home decor display.

Image source: Getty Images.

Company chairman and CEO Lee Bird in a statement called it "a challenging first quarter as we faced unusually adverse weather across a majority of our markets, resulting in comparable store sales below our expectations."

However, At Home also tempered expectations for the quarters to come. The company said it expects adjusted second-quarter earnings of $0.14 to $0.17 per share, short of the $0.26 consensus, on revenue of between $340 million and $345 million compared to expectations for $350 million in sales.

For the full fiscal year, At Home is expecting adjusted earnings of $0.67 to $0.74 per share on revenue of $1.39 billion. Analysts had been expecting $1.03 per share of earnings on sales of $1.4 billion.

Now what

Bird said that the company, in response to its weather problems, took "swift markdown actions," sacrificing near-term margins so it could head into the fall selling season in a clean inventory position. At Home could use a fresh start, with its shares now down 74% over the past year amid macro concerns about the health of the retail economy and specific questions about its debt burden.

At Home did get a boost in April when the company was mentioned as a potential takeover candidate. But absent some external catalyst, it appears the stock could be mired in the doldrums for the next few quarters at least.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.