The bulls made a valiant effort to end the trading week on a bullish foot, and that’s just what they did. Although the effort was ugly and at times in question, the S&P 500 finished the session at 2,438.30, up 0.16% from Thursday’s last trade.
That small gain would have been a relative victory compared to the hit Bed Bath & Beyond Inc. (NASDAQ:BBBY), Home Depot Inc (NYSE:HD) and SYSCO Corporation (NYSE:SYY) shareholders suffered on Friday though.
These three names were among the worst of the worst, albeit for good reason.
SYSCO Corporation (SYY)
Food-distribution giant Sysco was sucker-punched on Friday following reports that a new competitor — a potentially fierce competitor — was looking to get into the industry. That is, e-commerce player Amazon.com, Inc. (NASDAQ:AMZN) is eyeing an entry into the food distribution market, according to a report from JPMorgan.
It’s not as outlandish as it might have seemed several days ago, before Amazon announced it would be acquiring specialty grocer Whole Foods Market, Inc. (NASDAQ:WFM). While Amazon sells and delivers groceries and staples on a limited basis, the Whole Foods purchase was a big step into the brick-and-mortar aspect of the business. Already waist deep into the food game, adding wholesale offerings to its menu is another progressive step in Amazon’s aim.
Amazon has yet to confirm or deny JPMorgan’s report, but SYY shareholders weren’t taking any chances. The stock fell 5.4% on Friday, with investors fearing the fight that may be in the company’s future.
Home Depot Inc (HD)
In what has to be the strangest pieces of news on Friday, as well as one of the court system’s saddest wastes of time for the year, a lawsuit has been filed against home improvement retailers Home Depot and Lowe’s Companies, Inc. (NYSE:LOW) because their 2 x 4 boards aren’t actually two inches tall and four inches wide.
As has been the industry norm for decades now, those boards’ dimensions are only 1.5 inches by 3.5 inches. The measurements commonly cited by lumber years are based on the dimensions of the wood immediately after it’s cut by the logger, but before it’s kiln-dried. As the moisture leaves the wood, it shrinks by about 25%.
Though this is understood by almost anyone who’s ever worked with lumber, Yevgeniy Turin of the McGuire Law says consumers are being misled when they look at the labels in Home Depot and Lowe’s lumber departments … even though a closer look at that label does indeed clarify that the wood’s actual dimensions aren’t two 2 inches by 4 inches.
HD ended the day down 2.7%, with LOW shares falling 2.9% on the possibility the suit might actually get traction.
Bed Bath & Beyond Inc. (BBBY)
Finally, Bed Bath & Beyond shares fell 12.1% on Friday. At least in some regards, again blame Amazon. The retailer’s fiscal first-quarter numbers weren’t just bad … they were bad enough to prod CEO Steven Temares into talking about store closures.
For the quarter ending in May, Bed Bath & Beyond earned 53 cents per share on revenue of $2.74 billion. Problem is, analysts were looking for sales of $2.79 billion and a profit of 66 cents per share of BBBY. Never even mind the fact that earnings were down by a third on a year-over-year basis.
In response to the deteriorating market largely thanks to online-shopping alternatives, Temares mentioned the company may choose to close between 80 and 100 underperforming stores with leases on the verge of expiring.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.