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Red-Hot HRM Index Leaves National Markets in the Dust

The Hardware Retailing Magazine Index soared in August, jumping 124.69 points, or 10.24 percent, closing at 1342.35, easily a record, and the highest index reading since December, 2013. Only Sears ended the month in negative terrain. The Commerce Department reported that home construction rose 15.7 percent in July, the best pace in eight months. Applications to build new homes were also strong. The National Association of Realtors said that pending home sales increased by 3.3 percent in July, the strongest rate since August 2013; economists polled by Reuters expected a 0.5 percent improvement. Homebuilders in general rallied following a strong homebuilder sentiment index that bested analysts’ expectations. The National Association of Home Builders/Wells Fargo Housing Market index improved to 55 in August, up from a July reading of 53; economists were expecting an index of 53. The gain in the sentiment index was the third consecutive improvement.

Wall Street started August in beaten-down territory over tensions in Iraq and the escalation of troubles between Ukraine and Russia. The Labor Department reported that productivity rose 2.5 percent at a seasonally adjusted rate in the second quarter, following a 4.5 percent tumble in the first quarter. The Conference Board’s index of leading indicators, a gauge of future economic health, rose 0.9 percent in July, the strongest gain since March and the sixth straight increase. “We reached and closed above the 2,000 milestone this week and that gets the mental obstacle out of the way,” said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey. “Economic numbers have been positive for the most part, people are drawing comfort from these numbers, using them as a justification for optimism.”

Home Depot was the monster gainer this month, up 12.65 points, or 15.65 percent. For the quarter ended August 3, HD reported net income of $2.05 billion, or $1.52 per share. This compares to net income of $1.8 billion, or $1.24 per share earned in the year-ago quarter. Revenue gained 6 percent, to $23.81 billion. The results easily bested analysts’ expectations of $1.44 per share and revenue of $23.57. Same-store sales rose 5.8 percent. HD closed at 93.50, and was the top dollar gainer.

Sears fell 3.35 points, or 8.78 percent, and ended at 34.80. For the period ended August 2, SHLD lost $573 million, or $5.39 per share, more than doubling the loss of $194 million, or $1.83 per share a year ago. Revenue dropped 10 percent, to $8 billion; however, online and multi-channel sales improved 18 percent. The results marked the company’s 9th consecutive quarterly loss.

Beazer Homes, which reported earnings in July, was boosted by a ratings upgrade. Citigroup analysts upped BZH to “neutral” from “sell.” BZH was also stoked by insider buying: Beazer CEO Allan Merrill bought 10,000 shares, as did Director Brian Beazer. Two other principals bought lesser amounts of stock. BZH rose 3.50 points, or 22.80 percent, and closed at 18.85. Beazer was the top percentage gainer.

About Margot Crabtree

Margot Crabtree is president of Trade Trends, Inc., a financial data services provider. She has been offering market analysis with customized regional and industry stock indices and financial commentaries since 1999.

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