NEW YORK — Improved sales and fewer markdowns drove the top line and gross profit margins of specialty retailers reporting results this week.
On Wednesday, tween girls retailer Too Inc. posted earnings that soared 58.1 percent on an 18.7 percent sales gain in the first quarter, while Charming Shoppes Inc. had a 7 percent profit gain on a 22 percent sales rise. Zale Corp., in the midst of a Securities and Exchange Commission investigation of its accounting practices and with an acting chief executive officer, said sales jumped 2.2 percent with earnings aided by a retirement benefit settlement.
After the market closed, Limited Brands Inc. reported net income rose 49 percent on a 5.2 percent sales gain.
On Tuesday, plus-size retailer United Retail Group reported significant gross margin gains that pushed earnings up 92.8 percent on a 2.7 percent sales increase.
Zale said third-quarter net income climbed 15.9 percent to $16.8 million, or 35 cents a diluted share, from $14.5 million, or 28 cents, in the prior year’s quarter on total revenue that climbed to $526.9 million from $515.6 million. Results include charges and gains made from severance payouts and the settlement of “certain retirement benefits.” Excluding these line items, net income for the quarter was $11.6 million, or 24 cents.
Acting ceo Mary E. “Betsy” Burton said on a conference call that the company is “cooperating fully” with the SEC investigation. “We are reviewing the item they raised, which relates to the areas of extended service agreements, leases, accrued payroll and the timing of certain vendor payments,” Burton said. “We believe, based on our current knowledge, that our accounting was appropriate and complied with [generally accepted accounting principles].”
She added that Zale’s executive search “for a new ceo is going well. We have identified several excellent candidates and continue to have discussion with them.”
At Limited Brands, net income in the first quarter climbed to $98.7 million, or 25 cents, from $66.4 million, or 16 cents, last year on sales that jumped to $2.08 billion from $1.98 billion. Operating income rose 57 percent to $185.9 million from $118.5 million. Same-store sales for the quarter showed an increase of 5 percent.
Leslie H. Wexner, chairman and ceo, said in a statement that results were “driven by better than expected performance across all of our segments. In particular, Victoria’s Secret, which accounted for over half of the company’s total first-quarter sales, achieved outstanding results across all channels, including lingerie, beauty, direct and the new brand, Pink.”
The ceo said Victoria’s Secret total sales increased 10 percent, and operating income rose 21 percent. “Express comps increased 4 percent and the brand delivered substantially improved merchandise margins and operating income.”
United Retail Group said its first-quarter results were driven by “customer acceptance across a broad range of products.” The retailer’s net income climbed to $1.9 million, or 14 cents, from $1 million, or 8 cents, in the same period last year on sales that rose to $109.4 million from $106.5 million. Same-store sales gained 3 percent.
The retailer’s operating income soared to $3 million during the quarter, which compares with $900,000 in the prior year, while the gross margin rate increased to 25.98 percent from 24.12 percent.
Charming Shoppes’ net income was also bolstered by stronger gross margin. Earnings for its first quarter increased 7 percent to $32.1 million, or 24 cents, from $30 million, or 23 cents, last year on sales that went up to $734.9 million from $603.4 million. Consolidated comps rose 1 percent during the quarter.
At Too Inc., earnings in the first quarter rose to $11.7 million, or 35 cents, from $7.4 million, or 21 cents, in the prior year on sales that gained to $195.1 million from $164.4 million. Same-store sales showed a 10 percent boost.
The gross margin climbed to 37.8 percent during the quarter, which compares with 37.5 percent in the prior year, while the operating margin rose to 8.9 percent from 6.8 percent.