Bombay Watches Stock Drop 30 Percent in April

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The Bombay Company Inc. saw its stock price drop almost 30 percent last month as the Fort Worth, TX, company posted declines in revenue and same-store sales.

The multichannel marketer of home accessories, wall decor and furniture said April 6 that revenue for the five weeks ended April 2 fell 9 percent to $46.4 million from $50.8 million the year before, as same-store sales for stores open more than one year declined 12 percent. During the nine weeks ended April 2, total revenue dropped 6 percent to $81.3 million from $86.2 million last year while same-store sales fell 10 percent on a year-to-date basis.

The stock traded at $5.31 on March 29 but was down to $3.75 by April 26.

"The month was adversely affected by the very early Easter, which shifted from April into March," chairman/CEO James D. Carreker said in the April 6 release.

In recent months, analysts have lowered their rating for Bombay and other home furnishings retailers as they take a wait-and-see approach.

"We lowered our rating Dec. 2 from outperform to market perform," said Laura Champine, home products analyst with investment bank Morgan Keegan, Memphis, TN. "So far that has been the right move, to wait for good news. They are clearly having problems with building sales traction, and some of that is the sector that they are in. Most of the home furnishing retailers that I follow are not having a good time of it."

Bombay is learning to operate as an off-mall retailer, Champine said, as the company is in the process of moving into lifestyle centers off-mall.

"They had been centered in downtown upscale malls," she said. "The strategy has been to ... be next to the Restoration Hardwares and Pier 1s of the world and out of the mall where they were between a Baby Gap and a Sears. The rest of the furnishings companies have moved, and they are just trying to join the rest. They should show substantial savings from these off-mall locations."

Champine also said the company is amid a management change in its merchandising group.

"They have a new head merchant who is rolling out his new products throughout this year," she said. "There have been a lot of changes in their buying group, and they have been highly promotional over the last year as they have sought to clear inventory."

Champine also noted a major store reset scheduled for July 9.

"I think it will generate customer excitement as they get new product in the store," she said. "They need to fill out some holes in the assortments. Their accessories had gotten eccentric. I think they were throwing darts with their prior merchant and hoping something stuck. The new merchant came on board in the middle of last year, but it was too late to affect Christmas."

The new merchant is "leaning toward the darker veneer pieces they are known for," she said. Looking ahead, Champine said "it would be tough for them not to have a better Christmas than they did last year."

In other news, Sportsman's Guide Inc. was adjusted for a 3-for-2 split. Also, PC Mall Inc. was adjusted for a spin-off. The adjustment factor was 0.39645.


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