Thursday’s second-quarter results posted by specialty chains for the period ended July 31 were mixed, and a few noted weakness in some women’s categories.
Value destination Aéropostale Inc. said Thursday that income jumped 13 percent, but the teen retailer offered third-quarter guidance that fell below Wall Street’s projections.
The New York-based firm said income increased to $43.6 million, or 46 cents a diluted share, from $38.6 million, or 38 cents, a year earlier. Sales rose 9.2 percent to $494.7 million, from $453 million. Same-store sales increased 4 percent in the quarter.
On a conference call to Wall Street analysts, co-chief executive officer Mindy Meads said she was “not pleased with the sales and margin performance in the latter half of the period,” and that the firm is “clearly operating in a tougher and more competitive retail environment.”
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Aéropostale anticipates third-quarter diluted EPS between 61 cents to 63 cents, below analysts’ consensus estimate of 72 cents a share. The company’s estimate includes a 4-cent charge in connection with Julian Geiger’s pension. He retired as ceo in January, but remains as chairman.
At Buckle Inc., once one of retail’s high flyers, slumping demand and an unwillingness to heavily mark down inventory led to a 17 percent decline in second-quarter profits as well as the teen retailer’s first quarter of negative comparable-store sales in four years.
Income for the second quarter fell to $20.7 million, or 44 cents a diluted share, compared with income of $25 million, or 54 cents, in the year-ago quarter. Sales slid 2.2 percent to $188.6 million from $192.9 million. Comps, which hadn’t hit negative territory since the third quarter of 2006, declined 7.3 percent.
A “slight increase in the sale of marked down merchandise” and an increase in loyalty card redemptions drove gross margins down to 40 percent of sales compared with 42.7 percent a year earlier, the company said.
Dennis Nelson, president and ceo, attributed the comps decline to macroeconomic issues, but Sterne Agee analyst Margaret Whitfield said The Buckle is at a “disadvantage” because it is “not offering promotions to build traffic in contrast to its peers.”
“Denim is the main focus for promotion, currently industrywide, which is a large category for Buckle at about 40 percent of sales,” Whitfield said. “Buckle’s sales trends of late have mirrored the industry with weak denim sales and soft women’s business relative to men’s.”
Fashion missteps and deep discounting widened New York & Company Inc.’s net loss to $88.5 million, or $1.49 a diluted share, versus a loss of $4.8 million, or 8 cents, last year. Excluding non-operating charges, the company said its loss from continuing operations totaled $29.3 million, or 49 cents a diluted share. Sales fell 1.8 percent to $243.3 million from $247.8 million, hurt by softness in T-shirts, dresses and shorts. Comps fell 1.8 percent as aggressive price cuts to clear out excess inventory pressured gross margin, which slumped to 8.2 percent of sales, from 22.6 percent a year ago.
The Wet Seal Inc. saw second-quarter profits drop 48 percent to $1.6 million, or 2 cents a diluted share, from $3.1 million, or 3 cents, in the year-ago period. Both quarters included noncash impairment charges, while the prior year also included a $1.2 million benefit from a change in estimated breakage for unredeemed gift cards and certificates and store credits. Sales fell 3.5 percent to $131.5 million from $136.4 million, while consolidated comps fell 4.3 percent.
Ed Thomas, Wet Seal’s ceo, said a “very competitive promotional environment and volatile consumer spending patterns presented challenges” to the Wet Seal and Arden B. divisions in the quarter.
At Zumiez Inc., the action sports apparel retailer swung to the black in the second quarter, posting income of $114,000, or zero cents, from a loss of $3.1 million, or 10 cents, a year ago. Sales rose 14.7 percent to $97.7 million from $85.2 million as comps gained 9.3 percent versus the 18.8 percent decline last year.
Despite tight inventory control, Cato Corp. posted a 3.8 percent dip in second-quarter income to $16 million, or 54 cents a diluted share, from $16.7 million, or 56 cents, a year ago. Revenues rose 2.8 percent to $234.7 million from $228.3 million.
