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5 Dumbest Things on Wall Street This Week

Stocks in this article: GIS SCSS GT JCP JPM


4. Select Gets Shellacked

Sorry Shelly, but your shareholders will rest much easier putting their savings under one of your mattresses than in your stock.

Shares of Select Comfort (SCSS) fell out of bed Monday, tumbling over 19% after CEO Shelly Ibach told the Street that the mattress-maker's fourth-quarter earnings will come in below the low end of its prior forecast due to slow Christmas sales. Select Comfort previously told analysts it would earn between 18 cents and 26 cents per share. Wall Street's consensus estimate fell right in the middle of that very, very wide range at 22 cents.

"The sales slowdown following the Thanksgiving holiday reflected a tepid retail holiday shopping season. We expect this challenging environment to continue in 2014 and are planning accordingly," said Ibach. Select Comfort will officially report quarterly results on Feb. 5.

"Planning"? Don't sell us short Shelly. We learned long ago to stop listening to your plans.

Back in October, for example, you blamed your company's Q3 earnings shortfall and 25% drop in stock price on sluggish demand due to a challenging "macro-economic environment." Oh sure, like the government shutdown was keeping people from buying mattresses. Give us a break. Everybody knew the real reason for your failure was Select's massively expensive and messy marketing campaign.

In fact, if memory serves, that October blowup was the reason you widened your Q4 earnings guidance range in the first place. Now it is barely three months later and you can't even hit the low end!

October's cliff-dive was actually one of many in 2013. Select Comfort's shares got massacred last March following its announcement that it was experiencing "below-plan" sales. (Once again, so much for planning Shel!) And Select's stock got shellacked by 20% last January after the company issued downbeat 2013 guidance due to higher marketing expenses and lagging sales.

Here's our 2014 plan for Ibach's shareholders: If you are seeking comfort then select another stock.

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