by Alexandra Steigrad with contributions from Vicki M. Young
From WWD Issue 05/19/2011
Three specialty chains — Abercrombie & Fitch Co., Limited Brands Inc. and Chico’s FAS Inc. — reported improved bottom-line results Wednesday as higher sales were supported by improved gross margins.
Helped by strong international sales, Abercrombie registered net income of $25.1 million, or 28 cents a diluted share, for the three months ended April 30, versus a year-ago loss of $11.8 million, or 13 cents. Excluding special items, earnings per share were 27 cents, more than twice the 12-cent result expected by analysts polled by Yahoo Finance.
Net sales expanded 21.6 percent to $836.7 million from $687.8 million, helped by a 64 percent gain in international sales to $195.7 million. Comparable-store sales gained 10 percent and gross margin climbed to 65 percent of sales from 62.7 percent a year earlier. Shares gained 3.4 percent to close at $75.69 in Wednesday trading.
Jonathan Ramsden, chief financial officer, said on the company conference call that gross margin is expected to “erode” in the second quarter, with the firm’s strong “international mix” helping to limit the contraction. He said the firm would be helped by its ability to be nimble in the face of price increases and a continuing promotional environment. “We have a very specific plan of the promotions and the domestic business that we expect to execute, and we have some flexibility in that plan,” he said.
Although rating the stock a “hold,” Stifel Nicolaus analyst Richard Jaffe voiced a degree of skepticism, noting that “after two years of declining retail prices at domestic Abercrombie and Hollister stores, it is uncertain if the customer is willing to begin to pay up for these brands.” He was “hesitant to assume [the firm’s] perfect execution” given the “diminished appeal of the merchandise domestically” and other factors.
Reporting after the close of the markets, and before its Thursday morning earnings call, Limited Brands said net income jumped 46.8 percent to $165.2 million, or 50 cents a diluted share, against profits of $112.5 million, or 34 cents, in the 2010 quarter. Adjusted EPS was 40 cents, 1 cent better than the consensus estimate.
The operator of Victoria’s Secret and Bath & Body Works registered net sales of $2.22 billion, 14.8 percent better than the $1.93 billion reported for the year-ago quarter. Comps were up a robust 15 percent, and gross margin improved to 38 percent of sales from 35.9 percent in the 2010 period.
The company projected second-quarter adjusted EPS of between 38 cents and 43 cents, with the higher number corresponding to the current consensus estimate.
Chico’s reported a 29.7 percent gain in income for the quarter to $45.9 million, or 26 cents a diluted share, from $35.4 million, or 20 cents, in the year-ago period.
Total sales rose 11.5 percent to $537.2 million from $481.6 million, with comps up 7.7 percent.
Gross margin moved up to 59.1 percent of sales from 58.5 percent. Kent Kleeberger, chief operating officer, said the firm expects second-quarter gross margin to be up slightly, with markdown percentages lower.
Comparing the company’s turnaround to a hospital stay, David Dyer, Chico’s chairman, president and chief executive officer, said the company is “home at last, healthy again and ready for sustainable profitable growth.” He told analysts that over the next three or four years, the Chico’s brand has the potential for another 150 boutique and outlet stores and White House|Black Market for possibly more than 250, with the emphasis on front-line units. Chico’s currently has 593 boutique and 71 outlet stores, versus 351 boutiques and 24 outlets for White House|Black Market.
With sales coming in below analysts’ estimates, shares dropped 5.1 percent to $14.43.
Showing posts with label Chico's. Show all posts
Showing posts with label Chico's. Show all posts
Thursday, May 19, 2011
Friday, March 25, 2011
Talbots Swings to Loss, Accelerates Store Re-Imaging Plan
Wall Street Journal
By Karen Talley
Struggling women's retailer Talbots Inc. provided a ray of hope by reporting a fourth-quarter loss that was less-than-expected and saying it was confident enough in its store remodeling plan to step up its pace.
The company, which has lagged behind rivals Ann Inc. and Chico's FAS Inc. in achieving a turnaround from fashion mistakes and the recession, still has more work to do, Chief Executive Trudy Sullivan said.
"Weaker-than-anticipated customer response to our merchandise assortment and high levels of competitive promotional activity were key factors impacting our results" in the fourth quarter, Ms. Sullivan told analysts during a conference call.
There was little expected from Talbots coming into Thursday's report after the company reduced its fiscal fourth-quarter earnings estimate in January on worse-than-expected preliminary sales figures. Talbots' ability to beat its expectations sent shares up 25% to $5.98 in recent trading.
Talbots has been working hard to make its merchandise look more contemporary and to broaden its appeal from being thought of just as a venue for more mature women. The retailer is doing this without a merchandising chief or a leader for its stores, spots the company is working on filling after departures. Efforts under Ms. Sullivan, who joined the company in 2007 after being president of Liz Claiborne Inc., include using a broader array of models in catalogues, including actress Julianne Moore, and doing more to appeal to plus-size women.
The retailer is also trying to give its stores a more modern feel. Talbots this year plans to renovate about 70 stores, up from earlier plans for 50, and open 20 upscale outlets. Talbots said it plans to step up its previously announced store closure plan, shuttering roughly 90 to 100 stores and consolidating or shrinking 15 to 20 stores over two years, at an estimated cost of $18 million, with a majority expected to be completed in 2011. The company also expects to open 20 upscale outlets in 2011.
"While the merchandise offerings have shown improvement from prior years, I feel the transformation has been too radical for the core customer and that the company has not yet succeeded in attracting enough younger consumers to offset the loss of sales to the core group," said Margaret Whitfield, retail analyst at Sterne Agee.
The company said sales trends and customer traffic in the current quarter have improved from the fourth quarter, but top-line sales are down about 4% over the previous year despite increased promotions.
Talbots reported a loss of $2.8 million, four cents a share, for the quarter ended Jan. 29, compared with a profit of $4.1 million, or seven cents a share, a year earlier. Excluding a net gain of $6.8 million for special items, the adjusted loss widened to 14 cents a share from 13 cents a share. The company had expected a loss from continuing operations of 15 cents to 19 cents a share.
Sales dropped 7.4% to $292.6 million, as same-store sales slipped 7.3%. Analysts polled by Thomson Reuters forecast sales of $295 million.
By Karen Talley
Struggling women's retailer Talbots Inc. provided a ray of hope by reporting a fourth-quarter loss that was less-than-expected and saying it was confident enough in its store remodeling plan to step up its pace.
The company, which has lagged behind rivals Ann Inc. and Chico's FAS Inc. in achieving a turnaround from fashion mistakes and the recession, still has more work to do, Chief Executive Trudy Sullivan said.
There was little expected from Talbots coming into Thursday's report after the company reduced its fiscal fourth-quarter earnings estimate in January on worse-than-expected preliminary sales figures. Talbots' ability to beat its expectations sent shares up 25% to $5.98 in recent trading.
Talbots has been working hard to make its merchandise look more contemporary and to broaden its appeal from being thought of just as a venue for more mature women. The retailer is doing this without a merchandising chief or a leader for its stores, spots the company is working on filling after departures. Efforts under Ms. Sullivan, who joined the company in 2007 after being president of Liz Claiborne Inc., include using a broader array of models in catalogues, including actress Julianne Moore, and doing more to appeal to plus-size women.
The retailer is also trying to give its stores a more modern feel. Talbots this year plans to renovate about 70 stores, up from earlier plans for 50, and open 20 upscale outlets. Talbots said it plans to step up its previously announced store closure plan, shuttering roughly 90 to 100 stores and consolidating or shrinking 15 to 20 stores over two years, at an estimated cost of $18 million, with a majority expected to be completed in 2011. The company also expects to open 20 upscale outlets in 2011.
"While the merchandise offerings have shown improvement from prior years, I feel the transformation has been too radical for the core customer and that the company has not yet succeeded in attracting enough younger consumers to offset the loss of sales to the core group," said Margaret Whitfield, retail analyst at Sterne Agee.
The company said sales trends and customer traffic in the current quarter have improved from the fourth quarter, but top-line sales are down about 4% over the previous year despite increased promotions.
Talbots reported a loss of $2.8 million, four cents a share, for the quarter ended Jan. 29, compared with a profit of $4.1 million, or seven cents a share, a year earlier. Excluding a net gain of $6.8 million for special items, the adjusted loss widened to 14 cents a share from 13 cents a share. The company had expected a loss from continuing operations of 15 cents to 19 cents a share.
Sales dropped 7.4% to $292.6 million, as same-store sales slipped 7.3%. Analysts polled by Thomson Reuters forecast sales of $295 million.
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