Department and apparel stores continued to report disappointing first-quarter results Thursday, although Ross Stores Inc. followed its larger off-price rival, The TJX Cos. Inc., into the earnings winner’s circle.
While The Bon-Ton Stores Inc., Stein Mart Inc., Aéropostale Inc. and The Buckle Inc. all failed to meet analysts’ consensus estimates for first-quarter profitability, Ross, reporting after the close of the markets, easily surpassed them, although not without issuing second-quarter guidance that fell short of Wall Street’s expected results.
Dublin, Calif.-based Ross saw earnings in the quarter ended May 2 rise 15.7 percent to $282.2 million, or $1.37 a diluted share, from $243.9 million, or $1.15, a year ago.
The consensus among analysts was for earnings per share of $1.28.
Sales were up 9.6 percent, to $2.94 billion from $2.68 billion, while same-store sales advanced 5 percent. The consensus estimate for sales was $2.89 billion.
Yet Ross took a characteristically cautious tone in its guidance for the second quarter, projecting comps to increase between 2 and 3 percent and EPS to land between $1.19 and $1.24, a range below the current $1.26 estimate of analysts.
Barbara Rentler, chief executive officer, said Ross’ results benefited from “a combination of higher merchandise margin, strong expense controls and the…favorable timing of packaway-related costs.”
Encumbered by top-line sales pressure throughout the quarter and a sharp slowdown in traffic in April, Bon-Ton’s net loss in the quarter expanded to $34.1 million, or $1.74 a diluted share, from a loss of $31.5 million, or $1.63, in the comparable 2014 period. Bon-Ton was expected to lose 18 cents loss a share, or $1.56.
Sales inched up 0.6 percent, to $610.9 million from $607.5 million, with small and medium-size stores outpacing larger locations, largely due to an intensification of marketing for small stores and an effort to better local assortments.
Same-store sales increased 0.8 percent and e-commerce, while less robust than in recent periods, grew at a double-digit clip.
“Overall, we believe that the strategies we have in place will yield improved results as we move through fiscal 2015,” said Kathryn Bufano, president and ceo of the York, Pa.-based department store group. She noted that moderate sportswear, activewear and men’s furnishings performed well, while the company was affected, like its competitors, by unseasonal weather and the overhang from the West Coast port slowdown.
Stein Mart was unable to translate a sales increase into an improvement in profit in its first quarter.
Net income dropped 3.6 percent to $13.6 million, or 29 cents a diluted share, from $14.1 million, or 31 cents, in the prior year. Adjusted EPS was 31 cents, 3 cents below consensus levels.
Sales exceeded Wall Street’s expectations of $348 million as revenue was up 7.5 percent to $353.5 million from $328.9 million a year ago, and comparable sales rose 4.8 percent, with Stein Mart’s e-commerce operations adding 80 basis points to that figure.
Gross margin slipped to 30.7 percent of sales from 31.7 percent a year ago. “Our inventories are in great shape,” said Jay Stein, ceo of the Jacksonville, Fla.-based apparel/off-price hybrid. “As planned our gross profit rate will improve as the year proceeds and our expenses will continue to leverage against our higher sales.”
The hard-pressed teen sector found little cause for optimism in Thursday’s results, which included an earnings decline at The Buckle Inc. and a smaller-than-expected fall in losses at Aéropostale Inc.
Kearney, Neb.-based Buckle fell short of estimates as net income declined 10 percent to $33.6 million, or 70 cents a share, from $37.3 million, or 78 cents. The consensus estimate was for flat EPS.
Sales slipped 0.1 percent, to $271.3 million from $271.7 million, as same-store sales dropped 2.2 percent and gross margin contracted to 41.9 percent of sales from 43.1 percent.
And after the markets closed, Aéropostale reported a reduction in its net loss, although by less than analysts had expected. In the quarter, the net loss was $45.3 million, or 57 cents, versus a loss of $76.8 million, or 98 cents in the 2014 quarter. Sales fell 19.5 percent, to $318.6 million from $395.9 million, while comps fell 11 percent. The consensus estimates was for an adjusted loss of 55 cents a share on sales of $325 million.
The New York-based teen retailer projected a second-quarter loss of between 52 and 60 cents, excluding impairment and other charges, deeper than the 37-cent loss expected by analysts.
“The back-to-school period represents the time when all of the disciplines and strategies we have instituted over the last nine months should come to fruition,” said Julian Geiger, ceo.
That hardly calmed investors, who sent shares down 18.9 percent to $2.10, in after-hours trading.
Ross shares climbed 0.4 percent to $102 after market, while during regular trading hours, Bon-Ton shares were off 7.1 percent to $6.14, Stein Mart shares fell 3.8 percent to $11.15 and Buckle saw its stock decline 2.3 percent to $43.10.