Hardlines Retailing
A Hard Look at Hardlines
The Owner’s Manual
A PRIMER ON HARDLINES. The intention of this report is to provide a broad
summary of the unique nature of the hardlines sector, the similarities and critical
differences between the five subsectors that we follow, and the key factors to
consider when examining these stocks.
COMPANY SNAPSHOTS. We provide a snapshot of each company, including the
reasons to invest and investment risks, in addition to our models. Our coverage
universe is divided into five distinct subsectors: consumer electronics, home
furnishings, home improvement, office superstores, and pet superstore retailers.
RANKING OUR PREFERENCES. In identifying our preferences among the five
groups from a stock perspective, we believe the sectors rank in the following order:
home improvement, office superstores, pet superstores, consumer electronics, and,
finally, home furnishings. We currently rate Home Depot, Lowe’s, and Staples
Outperform, while Best Buy is our only Underperform-rated stock.
THERE’S MORE INSIDE. This report includes historical and estimated industry
growth and market share metrics, in addition to a summary of key macroeconomic
correlations.
Table of Contents Page
A Hard Look at Hardlines .........................................................................................................................................5
Company Profiles ....................................................................................................................................................23
Best Buy Co., Inc. .............................................................................................................................................25
Circuit City Stores Inc. .....................................................................................................................................31
RadioShack Corp. .............................................................................................................................................37
Bed Bath & Beyond..........................................................................................................................................43
Williams-Sonoma .............................................................................................................................................49
Home Depot......................................................................................................................................................55
Lowe’s Companies, Inc. ...................................................................................................................................61
Office Depot......................................................................................................................................................67
OfficeMax.........................................................................................................................................................73
Staples Inc.........................................................................................................................................................79
PetSmart Inc......................................................................................................................................................85