SPECIALTY STORES SHINE, BUT JEWELERS TARNISHED

Byline: Jennifer Weitzman

NEW YORK — While apparel specialty chains delivered some surprising holiday sales numbers Wednesday, Reed Jewelers became the latest member of that sector to share a disquieting view of the jewelry business.
Chico’s FAS defied the predictions of the worst Christmas selling season in years, posting a 34.2 percent same-store sales increase in December to go with a year of stellar sales results.
Sales for the last five weeks of the year rose 65.2 percent to $28.8 million from $17.4 million.
In addition, the Fort Myers, Fla.-based company said that it was confident it could meet a fourth-quarter internal per-share-earnings goal of 25 to 28 cents, above 18 cents in the year-ago period and in line with Wall Street expectations.
“The 34.2 percent same-store sales [increase] for the month helped to offset the impact of the pressure on our gross margins, thus allowing us to remain confident that we will be able to meet our internal per-share-earnings goal,” chairman and chief executive Marvin Gralnick said.
The company’s shares closed up $7.31 to $28, a 35.4 percent increase.
Jennifer Black with Wells Fargo Van Kasper raised her rating on Chico’s to “strong buy” from “accumulate.” “The company has emerged as one of a small and select group of retailers to excel in an otherwise rough holiday retail environment,” Black said in research notes.
She said the company’s same-store growth was led by a 41 percent comp in the third week of December, when the new Resort catalog was mailed, and 65 percent comps in the fourth and fifth weeks.
At American Eagle Outfitters, comps for U.S. stores increased 11.8 percent versus 16.9 percent for December 1999. Total sales for the five weeks at year’s end raced ahead 45.1 percent to $231.8 million while year-to-date sales inched close to the $1 billion milestone, finishing up 25.6 percent to $992.6 million. U.S. comps are up 5.8 percent year-to-date. Total sales include $30 million from the Thrifty’s/Bluenotes operation acquired at the end of October.
J. Jill Group did what few other retailers have done this holiday season: revised estimates upward. The company said it expects fourth-quarter sales to jump 40 percent, to a range of $87 million to $89 million from $61.2 million reported in the year-ago period, exceeding previous targets.
Gordon R. Cooke, president and chief executive, said: “The results were achieved without resorting to significant price reductions, which bodes very well for our fourth-quarter margins and bottom-line performance.”
As a result, shares of the Quincy, Mass.-based women’s apparel retailer targeting the 35- to 50-year-old customer reached a new 52-week high, closing up $3 to $19.13, an 18.6 percent increase. It last set a new record Nov. 7, closing at $18.81
The company’s multichannel merchandising model includes its core catalog and Web site as well as 22 J. Jill specialty stores.
Boosted by strong customer traffic and sales the week before and after Christmas, Hot Topic, a specialty retailer of music-inspired apparel, announced its same-store sales rose 8.1 percent and net sales increased 37 percent, to $48.8 million from $35.6 million.
Betsy McLaughlin, president and chief executive, said the company’s promotions were low and on plan and that sales were strong in all major merchandise categories. Additionally, in what should prove a positive sign for January, she noted pre-Christmas gift certificate sales (recognized as revenue upon redemption) were up 51 percent from last year.
Shares closed up $2.50 to $18.69, a 15.4 percent increase.
Too Inc. said that based on sales results for the nine-week holiday period ended Dec. 30, it expects to report a decline of 2 to 3 percent in fourth-quarter comp-store sales.
Still, the Columbus, Ohio-based retailer of “tween” apparel said it expects fourth-quarter profits to match or exceed the analysts’ consensus estimate of 64 cents per share, despite slower holiday sales. The company posted earnings of 55 cents a share in the year-ago quarter.
On that news, shares of Too jumped $2.31 to $15.44, a 17.6 percent rise.
But the jewelry market continues to provide not even a glitter of good news. Reed Jewelers said same-store sales fell 8.9 percent and net sales fell 5 percent, to $31 million from $32.6 million.
That word followed disappointing reports from two other jewelry retailers. Finlay Enterprises reported its fourth-quarter earnings would come in short of Wall Street estimates. At the same time, Zale Corp., North America’s largest specialty jewelry retailer, said that it expects weak holiday sales to cause its second-quarter profits to fall below forecasts. The firm stated that it expects comp-store sales to drop between 3 to 4 percent in November and December.

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