How you can afford a Restoration Hardware purchase

Happy Monday to you all! Hope everyone had a relaxing weekend!  I moved into a new apartment a month ago, so this weekend included home set up projects. We’re aiming for a “Restoration Hardware chic” decor (a purely aspirational theme at this point, sadly). So I already had the company on my mind this morning when I saw it pop up on my market trending lists.

I’ve mentioned before on the blog that I love Restoration Hardware (RH), both as a store and as an investment. They make high quality, luxury items, and are not at risk of falling out of fashion with the next trend change. On top of that, they have solid financials.

Restoration Hardware reported its second quarter earnings last week, and results were slightly disappointing. Revenue was lower than analyst expectations, at $434M vs. the $454M that was expected. Revenue growth had slowed as well, as comparable sales increased 13% year over year. While 13% is nothing to sneeze at in the home retail space, it is slower than the 20% to 30% comparable growth the company has seen over the last two years.

Due to the revenue figures RH is down about 5%. But what is RH’s (hopefully temporary) loss can be your gain. I will likely use the current drop in price to buy RH now, for three reasons:

1. Restoration Hardware almost always drops in price after earnings only to come back up once the dust settles. The stock is up almost 15% year to date even though it’s seen multiple large price swings, often due to earnings announcements.


2. Net income growth was actually fantastic. Net income beat both the prior year and analyst expectations, at $27M vs. a loss of $18M a year ago and expectations of $26M. This shows me that the company can translate revenue into strong bottom line results, which ultimately means more cash for expansion.

3. Speaking of expansion cash, the company plans to expand its presence big time. In addition to retail stores, RH has been opening galleries, a museum/furniture store/luxury shopping and lifestyle experience. (For example, their Boston gallery is a 40,000 square foot space in the old Museum of Natural History; check out features here.) The CEO said the company has two new galleries opening soon, and is now negotiating for 30 additional locations, up from 25 currently.

And these stores aren’t just a pretty spot to browse; they’re effective. Sales at the galleries continue to top projections of $850 in sales per square foot of selling space (even more impressive in such a large store), with some markets seeing more than $2,000 per square foot.

Overall, I think Restoration Hardware has more growth ahead, and now could be a great time to buy at a slightly discounted price. Then maybe one day I can use my profits to actually make a furniture purchase there.

Fashion Friday: 4 Stores where you should never pay full price

As someone monitoring her budget, I hate paying more than I have to. I’ve shared this mentality with my approach to stocks, and try to show you how I capitalize on companies trading lower than normal due to earnings reports or other temporary bad news. But since the weekend is coming up I thought I would make today’s post a little lighter and talk about finding a great deal on clothes rather than stocks.

I almost never pay full price for anything. Even when I splurge, I splurge on a discount. To achieve this I sign up for emails at my favorite stores – Bloomingdale’s, Gap, Piperlime, etc. – and wait for an email with a coupon to come out before I make my purchase. Stores send out coupons so regularly now that you don’t have to pick between buying something on sale or in-season.

To help you all with sticking to your budgets, I thought I would pass along four stores I would never buy items from at full price:

  1. Gap/Old Navy/Banana Republic/Piperlime


Fun fact, all of these stores are owned by the same company, GAP (GPS). It’s one reason I like Gap as a relatively safe long-term buy – they manage to hit multiple age ranges, price points, and trends.

I feel like I get an email with a coupon from at least one of these stores every day. Checking the site, today Gap’s site is 25% off, Old Navy’s is 20% off, Banana Republic’s is 40% off, and Piperlime has 30% off one item if you sign up for emails. Point proven.

FYI if you’re starting your Fall shopping, these waxed jeans from Old Navy are one of my favorite buys ever and less than $30 today:

ON Jeans

  1. Bloomingdale’s

While Bloomingdale’s is not the most budget friendly of stores, it does have fantastic sales. Once a quarter Bloomingdale’s hosts a “Friends and Family” sale, where the entire store is 20% off. In between, Bloomingdale’s has plenty of other sales on random items like jeans or shoes. You may need to be a member of their rewards program to get the savings, but it’s free and easy to sign up for.

Today for example, Bloomingdale’s homepage features this discount structure:


  1. Saks Fifth Avenue

Saks is even less budget friendly than Bloomingdale’s, so feel free to skim past this one. But if you ever want to really go crazy on an item, during the Saks Friends and Family Sale is the time to do it. Then the entire store is 25% off, which can mean huge savings there.

  1. Ann Taylor

Ann Taylor is a great place for stocking up on business casual wear and suits. Although it has a bit of a stodgy reputation, it’s become a lot more on trend and focused to a younger clientele. This is another store that is worth signing up for email notifications from, as they almost always a running a sale on one piece of clothing. Right now they’re in the middle of a series of coupons featuring one article of clothing a day. Today, dresses and skirts are 50% off.

Ann Taylor

There are a bunch more stores that feature these types of sales, and by keeping track of coupons and sales you can guarantee you’ll look great without banking the bank.

I’m a fan of Apple again, but not because of the iPhone

The long anticipated day finally arrived yesterday as Apple (AAPL) announced its upcoming new products, the iPhone 6 and Apple Watch.

The iPhone 6 will be bigger and lighter, with a larger 4.7 inch screen and longer battery life. There will also be an iPhone 6 Plus version that features a 5.5 inch screen.

iphone 6 size

One cool feature of the new phone is Apple Pay, a way for iPhone users to pay for items at participating stores simply by swiping their phones. Apple said that major credit-card companies such as Visa, Mastercard and American Express are all on participating and stores such as McDonald’s, Whole Foods, and Staples will accept Apple Pay.

The phones will also feature better cameras and faster processing speeds. The iPhone 6 and iPhone 6 Plus will cost $199 and $299 respectively, and go on sale on September 19th.

I’m honestly not that impressed by the iPhone 6. The phone is essentially Apple’s admission that Samsung is already doing everything right, and they might as well copy them. The iPhone 6’s 4.7 inch screen is already a feature of the HTC One and Amazon’s Fire phone, and the iPhone 6 Plus is around the same size as the Samsung Galaxy Note Edge and Galaxy S5. On top of this, the highly touted swipe payment is already a component of many Android devices.

One Google Plus user already posted a funny comparison of the two platforms:

Reaction to the iPhone 6 and iPhone 6 Plus has been lukewarm. Many have accused Apple of playing catch up with rivals such as Samsung, rather than leading the way. An image titled 'Dear iPhone 6 users: Welcome to 2012' has gone viral, (pictured) which lists new Apple features that have existed on Android phones for years

Even though I’m underwhelmed by the iPhone I still propose you buy Apple. Why? The Apple Watch.

In all of my previous posts on Apple I said I was waiting for Apple to show some true innovation again. I believe they have with the Apple Watch (or iWatch as many like to unofficially call it). The Apple Watch pairs with the new iPhones to display notifications. It features a magnetic charger, a health and fitness tracker, and a crown that controls functions. Oh, and it can tell time.

As a former consultant though, my favorite feature is that it can replace a room key to open doors at Starwood hotels. No more running down to the front desk after you’ve locked yourself out or de-magnetized your key (can you tell I’ve done that many, many times?).

I also think the Apple Watch stands out from other wearables because it actually looks cool. Unlike Fitbits, which come in shades of rubber, the Apple Watch comes in two sizes, with silver or gold plating, and has multiple band attachments (stainless steel, sport rubber, and leather). I think it will attract those who have been avoiding getting a fitness tracker due to their less than appealing aesthetics.

Apple Watch collections

The watch will be available in early 2015 and retail for $349. In a smart move by Apple, you do need an iPhone to use the watch.

Analysts are overall mixed on the Apple Watch but I am a fan. I think it will take market share away in the established fitness tracker market and also attract new tech fans. I’m content with Apple’s innovation status for now. I already own Apple shares and may pick up a few more in the next week.

Explaining the true value of the CVS tobacco decision under the ACA

Yesterday’s news about CVS’ move to stop selling tobacco in its stores was awesome. But while I could explain the general idea of how not selling tobacco would help with CVS’ healthcare expansion, I felt no article had sufficiently explained the intersection of the decision and new guidelines under the Affordable Care Act (ACA).

Since I am far from an ACA expert, I spoke with a consultant who works with the federal government and states on ACA implementation issues. Here is his explanation of why CVS’ move is so valuable under the ACA:

“Think about the Affordable Care Act (ACA), and the evolution of health care in general, by using one word: Coordination. Most initiatives stem from this idea. A good example is electronic health records (because doctors/specialists/hospitals didn’t have a way to reliably share information). Accountable Care Organizations, bundled payment initiatives, Patient-Centered Medical Homes, etc., also all stem from the push (mainly through the ACA, but this was happening before as well) for different entities to coordinate.

You’ve seen this first hand, when you go to a primary doctor; they refer you to a specialist, they refer you to a blood lab, and on and on. The idea here is if all these entities could “coordinate” your care better, then you will receive better results, while also lowering costs.

The CVS move is interesting because they are neither health providers or insurers, but suppliers (mostly via their pharmacies). A first step they took to become a more “coordinated” entity was with Minute Clinic. Not selling tobacco products is a big second step. If I’m a doctor practicing in a coordinated care entity, I’ll probably be much more likely to refer you to a place called “CVS Health,” to pick up your medications. I also might even want to cut a deal with CVS Health in the future to get my patients access to discounted drugs, and in turn allow CVS Health to share in the savings.”

And finally, an explanation in picture form…

CVS stops selling tobacco and starts saving lives

Image: Near empty cigarette shelves are seen at a CVS store in New York

Today is a heartwarming day on Wall Street. This morning, CVS announced that its stores have officially stopped carrying tobacco products. The company also announced a name change from CVS/Caremark Corp. to CVS Health. The company announced it would cease sales of Tobacco products back in February, but today’s announcement is ahead of the October 1st plan for products to be out of stores.

CVS made the decision to stop selling tobacco products because it felt it was hypocritical to operate a health organization that also sold a leading cause of health issues and death. Such a move has been pushed for years from groups like the American Medical Association.

The decision to remove tobacco from stores is not without consequence for CVS. The loss of tobacco sales, plus decreased sales from related products like gum, will cost CVS roughly $2 billion in annual revenue (about 3% of total sales). The company estimated that the decision would cause a loss of 17 cents in earnings per share of stock annually, with a loss of about 6 to 9 cents this year. The effects of lost tobacco sales will likely last through the next year, but after that the company hopes to make up for the losses with new health programs.

You might think I’d advocate an automatic short or sale of shares from that news. But I won’t for two reasons. First, I don’t want to take advantage of a company that’s doing the right thing. What CVS is doing is a great move to try and stop one of America’s biggest health issues and I applaud that.

Second, the decision to end tobacco sales may actually have a positive impact for CVS in the long run. CVS is attempting to shift to more of a healthcare organization (hence the name change), and eliminating tobacco sales goes along with this expansion plan.

From a short-term revenue perspective, CVS plans to start selling more smoking cessation help, which it can sell to insurance companies and corporations to make up for some of the lost tobacco sales. On top of this, the move to stop selling tobacco allows CVS to be seen as the preferred health care provider among pharmacies like Rite Aid and Walgreens (which continue to sell tobacco).

As a result of this “health halo,” CVS plans to add another 700 minute clinics, taking their total clinics up to 1500 by 2017. This move also gives CVS more opportunities to partner with traditional healthcare providers like hospitals, who will be more likely to see CVS as a health care company. Plus, under the Affordable Care Act, if CVS partners with these providers it can actually get a cut of any money it helps insurance companies save.

I love this story about CVS. It proves that corporations can do well financially while also doing good for society.

How Jennifer Lawrence convinced me to buy BlackBerry this morning

Happy September everyone! It’s hard to believe summer is sort of over, but I for one am looking forward to the return of cooler fall weather, sweaters, and pumpkin flavored everything.


I bet most of you thought celebrity gossip and the financial markets were incompatible. Well, as an avid reader of both The Daily Mail and Bloomberg, I can tell you that sometimes the two worlds intertwine nicely. The big celebrity news this weekend was a massive photo leak. Hackers accessed hundreds of revealing pictures of female celebrities, with targets including Jennifer Lawrence, Rihanna, and Kate Upton.

The pictures were accessed from the celebrities’ iClouds via a security glitch. Although Apple has since fixed the issue, the leak raised some major questions about Apple’s security.

I’m not touching the Apple (AAPL) stock I currently own, since the new products coming out soon will likely overshadow the news. In fact, Apple stock is still trading higher today. What I did instead this morning was buy BlackBerry (BBRY) due to an anticipated price increase from the iCloud leak effects and a new product offering.

First, the iCloud leak allows BlackBerry to capitalize on its reputation as the safest mobile platform. Blackberry has long had this reputation, and the company’s security cache is a main reason many investment banking and government employees continue to use BlackBerry. BlackBerry’s security rating was upped further a few weeks ago, when the Department of Defense gave a green light to use BlackBerry security measures to push sensitive data to colleagues.

On top of the safety aspect, BlackBerry has new leadership, more cost efficiencies, and a new product coming out soon. The BlackBerry Passport is slated to come out in late September, and it’s essentially a combination of a tablet and a smartphone. It features a larger display and an actual keyboard. The phone is also rumored to be pre-loaded with BlackBerry Blend, a software that allows you to sync your phone and desktop.

Apple’s security issues taking place so soon before the new product’s launch may be a huge benefit to BlackBerry, with the Passport not only offering new features, but an enhanced sense of security. I’m planning to hold the stock for at least the next few months while I evaluate how the market reacts to BlackBerry’s new product.

New Glossary Page Added!

First of all, big thank you to all the friends who checked out the blog yesterday!  Thanks to some valuable feedback there is a new glossary page up on the site.  There you’ll find explanations of phrases I commonly use on the site and I’ll keep adding as new phrases come up.

For now it features definitions such as:

Long –  Buying a stock you assume will increase in value. I.e. You buy Apple at $500 and sell it for $520 (and make a $20 profit).  This is the most basic investing move.  Winning strategy: Buy low, sell high.

Short – Selling a stock with the agreement to buy it back at a different price.  Let’s say I buy Apple at $520 now, assuming the price is going to fall.  I get $520 up front, but I have to buy it later so I have something to sell.  If the price drops to $500, I make a $20 profit. Winning strategy: Sell high, buy low.

Bull – Bulls are optimistic about prices going up.  A bull market is one where prices are going up and sentiment is good.  Longs like bull markets.  Reminder: a bull’s horns point upwards.

Bear – Bears are pessimistic and assume prices will fall.   A bear market is one where prices are going down and sentiment is bad. Shorts like bear markets.  Reminder: A bear drops to the ground.

Hope everyone has a wonderful holiday weekend!