NEW YORK — Gadzooks Inc. lowered its second-quarter earnings and sales estimates as July sales fell below expectations.
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The Dallas-based specialty retailer reported Tuesday that July sales are trending significantly lower than the company had forecast, with month-to-date comparable-store sales for July down approximately 9 percent. As a result, Gadzooks now expects total July sales to be in the range of $23.5 million to $24.2 million, and from $76.1 million to $76.8 million for the second quarter.
With the lower sales, the company now projects second-quarter earnings per share of breakeven to a 4-cent loss, substantially lower than the Wall Street estimate of 7 cents. As of May 8, Gadzooks had forecast second-quarter EPS of 8 cents.
On a day when retail shares were moving lower anyway, Gadzooks lost 18.2 percent of its value, ending the day at $9.04, down $2.01, in Nasdaq trading.
“We had anticipated that comparable-store sales for the second quarter would increase a low-single-digit percentage, but despite entering fiscal July with a low-single-digit quarter-to-date comparable-store sales increase, current month sales trends have been significantly lower than expectations, prompting us to lower second-quarter projections,” said chief executive officer Jerry Szczepanski in a statement.
Gadzooks attributed the lower sales, in part, to Florida’s decision not to hold a sales tax holiday this year and a change in Texas law that moved back the date of the start of the public school year compared with last year.