7 Home Improvements That Don't Actually Add Value to Your House

Each day this market distinguishes itself by its ludicrous behavior. Today the buyers went nuts for fixer uppers and punished the consistent companies as if they hadn't a clue about how to run their businesses. Oh and heaven forbid there's no consistency at all? Then it's Katie bar the door as was the case with GE (GE) when CEO John Flannery spoke at a conference today and said that the recovery for the once giant industrial is not yet at hand, something that could put the already-halved dividend in jeopardy. The issue here: no one said it was a quick fix. But what people did believe is that we were farther along in the repair than when Flannery started in August of last year where his "this is not going to be a quick fix," comment would have been more apropos. To be fair to Flannery, who in heck would have known exactly what a mess GE was given how there was so much rosy talk about the company even a few months before he took over? We know now that the company's previous CEO put a very good face on a very bad situation. (Oh my, what a diplomat I have become.)

Now when I say "they went nuts" for the companies that have made what amounts to a quick fix, I am not kidding around. Not one, not two, but three formerly challenged companies reported star quality numbers today and were rewarded with gains that are usually reserved for takeovers: Tiffany (TIF), with a stock that rallied 20%, Ralph Lauren (RL), which saw its shares rise 18%, and Lowe's (LOW) with a stock that jumped 10%.

Meanwhile consistent companies like Costco (COST) and Home Depot (HD), both far superior in terms of long-term execution, saw their stocks decline for no other reason, I believe, than that their stocks were a source of funds to buy the fixer uppers. In Home Depot's case, it's a literal translation: many a clever hedge fund came into Lowe's quarter owning Home Depot and shorting Lowe's given how many times Lowe's has disappointed. Sure enough, other than a couple of lines, notably appliances, it disappointed again. However, Lowe's has a new CEO, Marvin Ellison late of JC Penney (JCP), but more important, from Home Depot, and he's known to understand what it takes to improve hard goods execution even though he failed to bring about a change at a company known for its apparel and make-up.

Each day is a new day with a new theme in this market. So suffice it to say that Home Depot's stock is now the MUCH better buy. I say that because tomorrow will, no doubt, have a new theme appended to it. Lowe's is now in lala land as investors have tired of those humdrum companies with amazing performance and would rather take their chances with a different situation.



Now let's talk about the staggering gains in Tiffany and Ralph Lauren. As is often the case, these are stories about changes in execution that are pretty extraordinary even as the gains seem a little overdone. Less than a year ago, October 2 to be precise, Tiffany appointed Alessandro Bogliolo, former CEO of Diesel and before that 16 years at uber luxury chain, Bulgari -- a place I always try to rush by with my wife given that the prices are by far the highest of any chain in the Short Hills Mall.

Well, talk about the right guy with the right skills for the job. Almost overnight, he has turned around what was once the stodgiest and least up to date luxury retailer. The numbers -- $1.14 when the street was looking for 83 cents and 7 percent comparable store sales versus 2.6% -- are stellar but they only tell a fraction of the story.

The changes are palpable. It's been ages since Tiffany refreshed its line, something that has to be done at even the most storied of retailers. So Bogliolo introduced Paper Flowers, a new jewelry collection that's staggeringly beautiful. I say that because it is what we gave my wife's daughter for graduation this weekend. We happened to have been at a fundraiser four weeks ago and my wife asked the female CEO sitting next to her if she had any ideas for a present. The CEO said how about Tiffany's. When Lisa balked because of the boring, played out nature of the place, the CEO said that there's a total refresh. One look at the website -- go there right now -- and you will know what I mean. Oh, and you know why else I am sending you to the website? Because before Bogliolo, Tiffany had a pathetic omnichannel. Go to the search bar, type in PAPER FLOWERS, and ask yourself, is that Tiffany?



The firm's got a bunch of slogans that resonate in a broader fashion, like "Believe in Love," which Bogliolo cites as a reason for a double-digit growth in engagement jewelry sales. Sales were strong all over the place but New York and China deserve big shout outs. Bogliolo doled out credit -- doesn't cost you anything to do so -- and was incredibly self-effacing talking about how the whole segment did well in retail. But he's the real deal.

Speaking of real deal, Patrice Jean Louis Louvet, the new CEO of Ralph Lauren put on a commanding performance, with earnings of 90 cents a share when the street was looking for 83 and comparable store sales of minus one when minus 2.3% was expected. (Told you these are fixer-uppers.)

Louvet kept the four-part message to his team simple: first, he wanted to elevate the brand to improve the quality of sales distribution and product; second, evolve product marketing and the shopping experience; third, expand the digital and international presence of the brand and fourth, drive productivity.

I go over those buzzwords because these are precisely what the venerable brand needed. Ralph's style and taste are as impeccable as ever, but the place just wasn't run well under the previous CEOs. Louvet started by closing 25% of the department store points of distribution and 31 directly operated stores. That was brilliant because Lauren's stuff was just plain too available. He refreshed 80 of the chain's top department stores with new fixtures, lighting, and a lighter aesthetic, changes that brought instantly better performance than the control stores that had stayed the same.

Louvet's created excitement where there had been none. For example, he's doing some limited edition stuff, including Snow Beach which sold out within hours, causing a ripple of buzz where there hadn't been enough. He also embraced digital, a weaker point of distribution for the company, which is a critical piece of the global growth strategy, and something that helped produce a 25% growth in Mainland China. Finally, he's speeding up the time to market of new designs, which, while still slow at nine months, will soon be down to six months and then three months, which will put it on par with a lot of the fashion-forward European retailers.

I know these changes sound boring but they point out that the issue was NEVER the style of clothing. Ralph's clothes are both as fresh and as timeless as ever. It's the execution that's been missing, something that this new CEO has changed.

It's tough to watch the consistent companies' stocks languish. It's also difficult to watch some of the stories that are already turning, like Target (TGT), see their stocks falter. Target's sin? It wants to grow its on-line business faster, something Wall Street has wanted. To do so it has to spend, and Wall Street hates that. You can't please these pencil pushers.

To me, though, today does say, keep your eyes open to change, because, boy oh boy, has it ever been rewarded. Or, to put it another way, instead of being so blown away by the new Tiffany designs, I should have been blown away by how the stock hadn't kept up with the changes. That's a tremendous lesson for all who seek to profit in the stock market from their own experiences.

Now, let's dive into the topic at hand: 7 home improvements that don't actually add value to your house.

1. Adding a Swimming Pool: In colder climates or areas where pools aren't common, adding a swimming pool may decrease a home's marketability and value because of perceived downsides, such as increased maintenance costs and liability. In contrast, in warmer regions, a pool could be a desirable feature that adds value to a home (Houselogic, 2023).
2. Converting a Garage into a Bedroom: In some regions, buyers may prefer homes with a garage, as it provides valuable storage and parking space. Converting a garage into a bedroom or other living space might be less desirable, as it reduces the home's usable square footage for storage and parking (Zillow, 2024).
3. Adding a Walk-in Closet: While walk-in closets can be convenient, they can also hurt a home's value by reducing the number of bedrooms, a crucial factor in home valuation. In some areas, buyers may prefer homes