TWO NEW RETAIL PROFIT WARNINGS
Byline: Jennifer Weitzman
NEW YORK — Hurt by weaker sales in an increasingly sluggish retail environment, Gadzooks and Factory 2-U Stores became the latest two retailers to warn about the second-quarter and full-year financial results.
Nonetheless, Nordstrom announced a 1.4 percent increase in June same-store sales, its first positive month since September 2000.
“We are pleased with the results of our June men’s and women’s half-yearly clearance events, particularly in light of the challenging retail environment,” Nordstrom president Blake Nordstrom said in a statement. “The women’s sale generated a stronger response than the men’s sale. Both events improved over last year.”
Dallas-based Gadzooks, which sells casual apparel and accessories aimed at teens, said that based on current business trends, it expects to report a loss ranging from 6 to 10 cents a share in the second quarter ended Aug. 4 against a profit of 17 cents in the year-ago period. Wall Street was expecting a profit of 12 cents. The firm also stated that it anticipates second-quarter sales of $73 million to $75 million, up from $64.2 million, while same-store sales are expected to fall 7 to 9 percent.
For June, the retailer said that its comps dropped 8.8 percent, and it expects a decline of 2 to 5 percent in July.
In addition, Gadzooks now expects its fall comps to range from flat to down 2 percent, compared to original company projections of a low-single-digit comp increase. This will drive profits down to 95 cents to $1.10 a share on sales of $322 million to $328 million, against earnings of $1.38 last year. Analysts on average were looking for Gadzooks to earn $1.43.
San Diego-based Factory 2-U, in announcing a 5.5 percent decline in June comps, said it expects second-quarter earnings of 3 to 5 cents a share, compared with consensus estimates of 19 cents. The company also expects negative second-quarter comps of 2 to 4 percent. The company expects to report lower yearly profits before a one-time charge in the range of $1.16 to $1.20 a share, compared to consensus estimates of $1.62.