YOUNKERS’ 4TH-QUARTER STRENGTH COULD FORCE CARSON’S BID HIGHER
Byline: Valerie Seckler
NEW YORK — With both sales and its stock price firming up in the fourth quarter, Younkers could force Carson Pirie Scott to raise its $17-a-share bid for the chain, financial analysts said Tuesday.
On Tuesday, Younkers reported same-store sales increased 8.6 percent in the fourth quarter. In addition, officials at Younkers, based in Des Moines, Iowa, said “they’re comfortable” with analysts’ earnings-per-share estimates of $1 for the fourth quarter ended Jan. 28, a 16 percent increase over earnings of 86 cents a year ago.
“Younkers had a weak first half, and I think Carson’s was anticipating a weak fourth quarter,” asserted Philip Abbenhaus, an analyst at Stifel, Nicolaus, St. Louis. “Now they’re going to have a very hard time doing the transaction at $17, based on the results and the fact the stock’s been trading around $18.” Carson’s made a $17 bid for Younkers in October.
Steven Kernkraut, an analyst who tracks the two regional chains for Bear Stearns, added: “This performance could only increase Younkers’ value and help its position.”
Younkers stock closed on the NASDAQ at 17 1/2 Tuesday, down 1/4, and has traded in a 52-week range of 20 1/2 and 12 1/4.
On Tuesday, Younkers’ reported fourth-quarter comparable-store sales totaled $201.9 million, up from $185.9 million.
Thomas Gould, Younkers chairman and chief executive officer, said, “We’re especially pleased with the turnaround in women’s apparel as our sales in this business were up more than 10 percent in the quarter.”
For the four weeks ended Jan. 28, Younkers reported same-store sales surged 21.6 percent to $27 million from $22.2 million. The business last month was spurred by overall apparel growth of more than 30 percent, the retailer noted.
The firm acknowledged the January comparisons benefited from weak results in 1993, when harsh weather drove down sales.
While citing the weak comparisons, Abbenhaus said, “The fact Younkers is going to earn $1.40 a share for 1994 casts a huge shadow of doubt on Carson’s ability to complete the transaction at $17.”
Although this year-end income would be less than the $1.43 Younkers earned in 1993, Abbenhaus said that after a weak performance in the first nine months, the retailer’s fourth quarter “may signal a return to sustainable earnings growth.”
— Fairchild News Service