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HR STOCK INDEX: February Markets Recover from January’s Slump

Despite ups and downs in housing-related stocks due to severe winter weather patterns across much of the country, the Hardware Retailing Stock Index handily recovered from January’s downturn, adding 69.25 points, or 5.72 percent, to close at 1280.65, outperforming all other indices during the same period.

Advancing issues dominated declining issues at a 15-to-2 count. In early February, the Labor Department employment survey showed strong gains in construction and manufacturing. The unemployment rate fell to 6.6 percent in January from 6.7 percent in December, its lowest since October 2008. The Conference Board said its index of leading economic indicators moved upward at a modest pace in January, pointing to an expanding economy in the first half of 2014. And in late February, although home prices fell, the Commerce Department said sales of new homes jumped 9.6 percent in January at the fastest rate in more than five years.

Although weather contributed to choppy economic reports, Wall Street started climbing in early February, and the S&P 500 posted a couple of record closes at the end of February. The Commerce Department downwardly revised growth in 2013’s fourth quarter, to 2.4 percent, from the previously announced 3.2 percent. The Conference Board’s consumer confidence index slipped to 78.1 in February, below the 80.1 reading expected by economists polled by FactSet and less than the 80.7 in January.

“I think 70 percent, 80 percent, of the weakness we saw in January and February was weather-related and we will pick up strength in the spring thaw,” says Bob Doll, chief equity strategist at Nuveen Asset Management.

Lumber Liquidators (LL) made up for January’s tumble as its stock skyrocketed 18.29 points, or 20.55 percent. LL beat estimates in the fourth quarter by earning $20.8 million compared to last year’s $13.8 million. Analysts polled by Thomson Reuters expected earnings of $0.72 per share and revenue of $255.8 million. Same-store sales were up 15.6 percent in the quarter. LL closed at 107.28 and was the top dollar gainer.

Shares of Bluelinx Holdings (BXC) fell 0.13 points, or 8.18 percent, despite narrowing its loss for its fiscal fourth quarter. For the period ended Jan. 4, BXC reported a net loss of $2.5 million versus a loss of $11.4 million in the year-ago quarter. Revenue was up 10.4 percent, to $486.3 million. BXC closed at 1.46 and was the top percentage loser.

Sears (SHLD) also did an about-face from January’s share-price drop as it narrowed its fourth-quarter loss. For the quarter ended Feb. 1, SHLD posted a loss of $358 million versus a loss of $489 million a year ago. Revenue was down 14 percent, to $10.59 billion. Sears says the improvements were the result of cutting expenses and inventory. The company says it intends to raise $1 billion in cash this year by selling some assets, including its Lands’ End segment. SHLD gained 8.38 points, or 23.04 percent, and was the top percentage gainer. Sears closed at 44.75.

The Hardware Retailing Stock Index is a customized index which reports the stock activity of the leading home improvement retailers, manufacturers and builders influencing the industry. It is published monthly in Hardware Retailing magazine and on hardwareretailing.com. Use these quantitative metrics for a benchmark to compare your business’s operational performance. Please anticipate a two-month lag time for data reporting and collection. 

The Hardware Retailing Stock Index includes the following tickers: BLDR, BZH, BXC, HD, LOW, LL, MAS, MHO, NWL, PHM, SMG, SHLD, SHW, SWK, TSCO, VAL and WDFC.

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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