Among the biggest losers in Thursday’s early trading are H&R Block (NYSE: HRB), The Gap (NYSE: GPS) and Kohl’s (NYSE: KSS).

Abandoning Ship at H&R Block

Last one out, turn off the lights. That’s the likely chatter among executives at tax-prep firm H&R Block (NYSE: HRB). The company’s chief financial officer left in late April (and has yet to be replaced), the company’s General Counsel resigned last week and on Wednesday evening the company’s Chief Executive Officer announced plans to depart. Investors are wondering if these folks know something that the rest of us don’t and they’re pushing shares down -8% on Thursday morning, briefly touching an eight-year low.

Perhaps change is a good thing. Sales in the all-important fiscal fourth quarter (ending in April) fell -5% while profits were roughly flat. You have to go back to 2004, when H&R Block earned $1.94 a share, to find the last truly impressive year. But maybe there’s little any management team can do, short of making major acquisitions. After all, an increasing number of consumers are handling their own tax needs through software, which carries much lower profit margins and is brutally price-competitive.

#-ad_banner-#Action to Take –> H&R Block’s lead director, Alan Bennett, will temporarily take the helm. In a previous stint in the corner office, he embarked on major cost-cutting but presented few growth initiatives. Until a new course can be charted, he’ll seek to keep buying back stock ($1.6 billion remains under the current buyback authorization) and perhaps boost the dividend, which currently yields close to 4%.

Shares are undeniably cheap, trading at less than 10 times trailing and projected profits. If $1 billion in stock were bought back, shares outstanding would fall from 327 million to around 250 million, boosting per share profits by about +20%. But until the company can come up with a plan to boost sales, shares are likely to tread water. The only real catalyst for shares is a possible bout of rumors that private equity (PE) firms may start sniffing around. H&R Block has precisely the size and cash flow characteristics that appeal to PE shops.

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When Headlines mislead

On the face of it, flat same-store sales for The Gap (NYSE: GPS) are understandable. After all, consumers remain cautious and few expect to see big gains right now. But those flat results just reported for June are being compared to June 2009, when same store-sales fell a massive -10%. In reality, sales were really lousy a year ago — and they’re still really lousy, which is why investors are greeting this flat sales report with a -7% drubbing in the stock.

It’s fair to ask if The Gap could fare well in a stronger economy. After all, annual sales have fallen every year since 2005, even as management has tried every trick in the book to boost sales. The only bright sport has been rising gross margins, which has enabled the retailer to squeeze out +10% annual operating profit growth in recent years. But you can only boost margins so much, and at some point, investors need to see real organic sales growth.

Action to Take –> As is the case with many other retailers, this sales report does nothing to inspire. In the absence of new growth ideas, management should be returning cash to shareholders in the form of buybacks and dividend boosts. But that’s unlikely to give much of a boost to the stock.

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Kohl’s High Bar

Investors may be getting a little carried away with retailer Kohl’s (NYSE: KSS). The company has been performing so well for so long that investors have come to expect consistent 100% sales execution. At a time when the consumer is on the ropes, investors still expected Kohl’s to boost same-store sales by about +6.5% in June. That fact that they “only” rose +5.9% counts as a real disappointment and shares are off -4% in Thursday trading,

Action to Take –> Ignore the noise. This is still a great retail story. As is the case with so many retailers, it trades for about 10 times next year’s profits. The key distinction: Kohl’s remains on a steady growth path while so many other retailers are seeing growth peter out. Shares have lost roughly -20% of their value in the last two months, and historically, that has always proven to be a great buying opportunity.