Retail Earnings: A Mixed Bag

Upside surprises from teen-focused stores, while Stein Mart slips

   

Retail Earnings: A Mixed Bag

retail shopping display1 Retail Earnings: A Mixed BagWe’re getting toward the end of the fourth-quarter reporting period, so that means a lot of activity among retailers, the typical earnings-season stragglers.

Between last night and today, six notable names came forward with their respective results — and five surprised on the upside.

Only two of the six names, however, are moving higher in today’s trading despite an uptrending broader market. Not only are these securities underperforming the S&P 500 Index but they are also lagging their peers. The Merrill Lynch Retail HOLDRS ETF (NYSE:RTH) is also higher on the day, currently up 0.8%.

Here’s a brief look at the retailers’ reports and investors’ immediate price reactions.

First, the bad news:

Stein Mart (NASDAQ:SMRT) has shed 7.5% after issuing a walloping 70% drop in fiscal fourth-quarter earnings. The retailer earned 15 cents per share on an adjusted basis, a dime lower than last year’s results and four cents shy of Wall Street’s consensus estimate. Total sales were down 2.5% last month, and same-store sales slipped by 2.2%.

The other reports were mostly positive:

Hot Topic (NASDAQ:HOTT) is a teen-focused store that has always frightened me slightly. Offerings include T-shirts featuring bands like Slipknot, chain wallets and threads and gear for the darkness within us all.

Yet Hot Topic’s shares are the sunniest story among all retailers today — currently up 10.3% after a 6.4% jump in after-hours trading last night.

Last night, HOTT officials said the company earned 21 cents per share, which topped analysts’ expectations by a penny and cruised above last year’s results by nine cents per share. Sweetening the deal, HOTT upped its dividend by 14%, to eight cents per share, and said earnings in the current quarter are expected to be in the two-to-three-cent range. Analysts were expecting flat results.

Moving from teens to businessmen, Men’s Wearhouse (NYSE:MW) posted a five-cent adjusted loss during the fourth quarter. Analysts were expecting a much worse 13-cent pullback, so this is technically a positive surprise (despite the negative bottom-line figure).

The retailer’s first-quarter outlook calls for revenue growth of 2% to 2.5%, shy of Wall Street expectations. On the plus side, year-over-year revenue grew by 3.7%. Investors are punishing the shares today, albeit slightly. In midday trading, MW is off 1.44%.

Coldwater Creek (NASDAQ:CWTR) took its turn in the earnings confessional yesterday afternoon as well, reporting a 19-cent loss, which was a penny narrower than analysts were expecting. Year-over-year revenue, however, climbed 11%, according to data from Briefing.com.

While the shares bounced 3% higher in after-hours trading on Wednesday, they are down 2% today (which isn’t saying much for a stock that trades under a dollar per share).

This morning, another teen-centric retailer — Buckle (NYSE:BKE) — said fourth-quarter earnings reached $1.18 per share. This was four cents above analysts’ consensus estimate and a 13% improvement from the previous year. BKE is up more than a half-percent today and has gained roughly 18% year-to-date.

And finally, results from upscale housewares retailer Williams-Sonoma (NYSE:WSM), which has been popular among the options-trading crowd of late. The company banked $1.17 per share, versus $1.05 in the year-earlier period. This figure topped analysts’ estimates by four cents. What’s more, revenue rose 13%, thanks in large part to an 18% jump in online sales.

Despite this news — which seems positive at first blush — the stock is trading more than 6% lower after the company guided its first-quarter earnings below analysts’ current outlook. Traders who may have bought the March 39 put options earlier this week could be reaping the rewards of this bearish bet today.

Those investors who appear to have sold a strangle, meanwhile, may be a little nervous. The downside breakeven on this trade was $35.40; WSM is currently trading at $35.47.

As of this writing, Beth Gaston Moon does not own any shares mentioned here.


Article printed from InvestorPlace Media, http://investorplace.com/2012/03/retail-earnings-a-mixed-bag/.

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