Holiday ad from Cato, one of the stores boasting an increase in its Q3 profits.

Quarterly Results: More Ups and Downs

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Holiday ad from Cato, one of the stores boasting an increase in its Q3 profits.

Holiday ad from Cato, one of the stores boasting an increase in its Q3 profits.

Good news from Ann Taylor, Stein Mart, Ross Stores, Cato and Dress Barn—all retailers that reported profit increases last week. For Bon-Ton and Stage Stores the news wasn’t as rosy: both reported quarterly losses.

Ann Taylor Q3 Profit Tops Estimates

New York–Ann Taylor Stores Corp. announced Friday better-than-expected results for the third quarter, reporting strong sales and improved profit. Both adjusted earnings per share and quarterly revenues significantly topped analysts’ expectations.

The company also projected total net sales for the fourth quarter, slightly below retail analysts’ forecast, and boosted its net sales forecast for the full-year 2010.

“We are extremely pleased with the company’s excellent performance for the third quarter of 2010, with earnings for the quarter more than doubling from the year-ago period. The significantly higher sales and near-record gross margin rate reflect another standout quarter at the Ann Taylor brand and improved results at the LOFT brand for the third quarter,” Kay Krill, president and ceo, said in a statement.

The company reported net income of $24.20 million or $0.41 per share for the third quarter, higher than $2.07 million or $0.03 per share in the prior-year quarter.

The results for the latest quarter include after-tax restructuring charges of $0.01 per share, while the year-ago quarter results included after-tax restructuring and asset impairment charges totaling $0.17 per share. Excluding the charges, adjusted net income for the quarter climbed to $24.5 million or $0.44 per share from year-ago quarter’s $12.0 million or $0.20 per share.

Cato More than Doubles Q3 Earnings

Charlotte–The Cato Corporation has more than doubled its third quarter profit thanks to higher sales and lower markdowns.

Cato reported third quarter net income of $6.7 million, or 23 cents per diluted share, compared to $3 million or 10 cents per diluted share for the same period last year.

Third quarter sales increased about 4% to $198 million. The company’s gross margin increased from 34.8% in last year’s third quarter to 36.5% this year, mostly due to lower markdowns. Comparable store sales increased 2%.

“Our inventory is in good shape as we begin the fourth quarter. However, we continue to believe some uncertainty exists in the economic outlook for the fourth quarter and we are maintaining our original guidance of earnings per diluted share in the range of $0.25 to $0.28 versus $0.25 last year.  For the year, earnings per diluted share are estimated to be in the range of $1.94 to $1.97 vs. $1.55 last year, an increase of 25% to 27%,” said John Cato, chairman, president and ceo.

Stein Mart Q3 Beats Forecast

Jacksonville, FL– Stein Mart Inc. reported higher third-quarter earnings last Friday and said it is taking steps to diversity its core customer base.

The retailer reported net income of $4.3 million, or 10 cents per diluted share, for the third quarter ended October 30, up from $3.2 million, or 7 cents a share, last year.

As previously reported, comparable store sales increased 0.3% for the quarter. Net sales were $267.9 million, a decrease of 0.9% from $270.2 million in 2009. Although the company has recorded seven consecutive quarterly profits, this was the first increase in comparable store sales since the fourth quarter 2006.

In a conference call with retail analysts, David Stovall, ceo, said Stein Mart is implementing strategies to increase sales further. One strategy is to broaden the company’s target customer base to include younger and “multicultural” shoppers, he said. Stein Mart currently targets women 45 and older.

“Our results reflect the benefits of drawing more customers to our stores and continuing expense control,” Stovall said. “We head into the holiday season well positioned to attract more customers with distinctive merchandise at great prices, a targeted marketing plan and a terrific shopping experience. Although the heavy promotional environment and a cautious shopper pose a challenge, we continue to be focused on gaining traction in sales growth.”

Dress Barn More Than Doubles Q1 Income

Suffern, NY–Better than expected results at its Maurices and Justice chains have helped Dress Barn Inc to more than double its third quarter earnings.

The retailer earned $48 million, or 60 cents per share, for the quarter. That compares with net income of $21.7 million, or 33 cents per share, in the same quarter last year. Adjusted for one-time items, the company earned 63 cents per share, compared with 38 cents per share in the prior year.

Revenue increased 77% to $713.3 million as it began including sales from Justice. Comparable store sales grew 4%. Retail analysts’ average estimates for the quarter were for earnings at 62 cents per share on sales of $702.7 million.

“Our strong first quarter results were largely driven by the inclusion of the Justice business,” explained David Jaffe, president and ceo. “Our financial performance was led by better than expected results at both Maurices and Justice while our Dressbarn stores were somewhat below plan. We are focused on maximizing our productivity in each concept through effective inventory management and assortment planning.”

“As we look forward to the holiday and spring seasons, we are encouraged that our positioning will enable us to continue to capture increased sales,” Jaffe added.

Bargain Hunters Boost Ross Stores Q3

Pleasanton, CA–Ross Stores Inc. earned $121.4 million in the third quarter ended October 30 as shoppers continued to seek bargains during the down economy, the retailers reported Friday. A year ago in the same quarter, Ross earned $105.1 million in the same quarter.

Sales ticked up to $1.9 billion in the quarter, compared with sales of $1.7 billion a year earlier.

Earnings were $1.02 per diluted share, up from earnings of 84 cents a share a year ago. Ross had about 5.6 million fewer shares outstanding and the company bought back 5.4 million of its shares in the nine months ended October 30, spending $287 million.

Michael Balmuth, vice chairman and ceo, said that although Ross has outperformed its earnings forecasts all year, it is still cautious about the fourth quarter. Comparable stores sales are expected to be flat or even down 1% in the fourth quarter. A year ago, when sales were really booming, same store sales rose 10% in the fourth quarter.

The company forecast fourth quarter earning to reach about $1.15 to $1.20 per share.

Lower Sales Widen Bon-Ton Q3 Earnings

York, PA–The Bon-Ton Stores Inc. has widened its third quarter loss after booking lower revenues.

The parent company of Boston Store, Elder-Beerman, Herberger’s and Younkers stores, said its fiscal third-quarter loss deepened to $6.27 million, or 36 cents a share, from $4.15 million, or 24 cents, a year earlier. Revenue fell less than 1% for the three months ended October 30, to $716.9 million from $722.6 million. Same-stores sales decreased 0.3% in the quarter.

“We believe we are well-positioned for the holiday season and expect to benefit in the fourth quarter from the arrival of more seasonable weather,” said Bud Bergren, president and ceo. “We are confident we have the right merchandise assortment and a strong marketing program that will effectively convey our quality and value message.”

More emphasis on private brands and e-commerce are two of the biggest growth areas for holiday, Tony Buccina, vice chairman, said in a conference call with retail analysts. The company is stepping up marketing efforts for its private brands such as Relativity, Victor by Victor Alfaro with direct mail to consumers.

The company confirmed its full-year 2010 forecast for income of 80 cents to $1.35 a share. “We are reiterating our fiscal 2010 guidance as we were able to deliver quality sales in the third quarter by offering strong assortments and carefully managing our inventory levels, resulting in a 60 basis-point increase in our gross margin rate in the quarter and a 9% reduction in clearance inventory at period end,” noted Bergren.

Stage Stores narrows Q3 loss

Houston–Stage Stores Inc has narrowed its third-quarter loss as sales edged up 2.1%.

The company lost $6.9 million, or 18 cents per share, compared with a loss of $7.3 million, or 19 cents per share, a year earlier. Revenue rose 2% to $331.9 million from $324.9 million. Analysts’ average estimates expected a loss of 18 cents per share on $335.5 million in revenue.

“The third quarter marked the fourth consecutive quarter in which we achieved improved bottom-line results versus the prior year,” stated Andy Hall, president. “Our results for the quarter keep us on track to meet our fiscal 2010 objectives of growth in sales, operating margin and EPS.”

Stage expects fourth-quarter profit between 78 cents and 81 cents per share on sales between $448 million and $457 million. Comparable store sales are expected to increase 1 to 3% fourth quarter. For the full year, the company forecast a profit of 91 cents to 94 cents per share on sales of $1.47 billion. Analysts’ average estimates expect profit of 92 cents per share on revenue of $1.46 billion for the year.

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