Earnings Reports: Neiman Marcus, Ann Taylor, Aeropostale, Zumiez

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Neiman Marcus Q2 Profits Surge

Dallas–Neiman Marcus Inc. reported today a five-fold increase in second quarter profit as holiday shoppers purchased more full-price luxury merchandise.

The company, which operates 43 Neiman Marcus stores, Bergdorf Goodman and 30 Last Call outlet stores, said today that profit rose to $21 million in the three months ended Jan. 29, compared with $4 million in the year ago period. Gross margin widened to 32.3% from 30.9%. Operating income increased 33% to $89.2 million from $67.1 million a year ago.

Sales in the quarter increased 6.4% to $1.17 billion from $1.10 billion last year and same-store sales rose 6%. Sales in Neiman’s specialty retail segment, the biggest top-line contributor, rose 6.3% as earnings jumped 28%. The direct-marketing segment, which includes Web and catalog sales, saw revenue jumped 6.3% as profit dropped 11%. Interest expense dropped 6.4%. Reflecting a continuing shift to online shopping, catalog sales increased only 0.9% to $32.2 million.

The company ended the period with long-term debt of $2.88 billion, down 3.1% from a year earlier. Neiman Marcus was taken private in 2005 by TPG and Warburg Pincus but the company’s public debt requires it to report quarterly results.


Ann Taylor Q4 Beats Forecast, Raises 2011 Forecast

New York— Ann Taylor Stores saw its stock rise this morning as the women’s specialty retailer reported its fourth quarter earnings beat estimates and issued guidance above expectations.

Ann Taylor posted earnings per share of 19 cents on a 10% revenue increase to $515.5 million. Analysts’ average estimates were for a profit of 17 cents a share on revenue of $515.1 million. Comparable store sales rose 11% in the quarter.

Heading into its first quarter, the company, which plans to change its name to ANN Inc., forecast comparable store sales to increase in the mid to high single digits with sales hitting $510. Analysts’ average estimate expected $488 million in first quarter revenue.

Full Year Forecast Exceed Estimates

For its full year 2011, the company also said its 2011 gross margin should come in at 56%, above 2010′s record 55.8% with projected sales of $2.175 billion. Analysts’ average estimates call for $2.12 billion in 2011 sales.

By division, Ann Taylor brand sales fell 4.5% while Loft brand sales rose 3%. Gross margin fell to 51.7% from 52.5%. Total inventory per square foot, excluding e-commerce, rose 14% at the end the year.

The company is accelerating its share repurchase program, too.  Ann Taylor bought back 4.2 million shares last year for about $100 million and already has bought back $100 million worth this year. Moreover, its board has authorized an additional $200 million buyback, Kay Krill, ceo, said.

“Today, our company is far more than a traditional ‘store-based’ retailer. We have two distinct brands–Ann Taylor and LOFT–each of which operates across three channels and enables us to reach our client whether she is making her purchases at our stores, online or at our factory outlet locations,” Krill said.


 Aeropostale Q4 Profit Dips Despite Sales Growth

New York–Aeropostale Inc. reported Thursday a 13% drop in its fourth-quarter earnings, noting that costs increases and although sales grew, they were weaker than expected.

Net earnings for the three months ended Jan. 29 were $83.8 million, or 95 cents per share, down from $96.6 million, or 99 cents per share, for the same period a year earlier. Excluding a higher-than-expected tax rate that the company said reduced earnings by 3 cents per share, earnings were 98 cents per share. Although the earnings were a penny higher than analysts’ average estimates, they were below the company’s own expectations.

Revenue rose 5% to $839.3 million, slightly above analysts’ average estimate for $837.2 million. However, comparable store sales fell 3%.

“The teen retail environment was highly promotional and we believe that we did not execute to our full potential,” said Thomas P. Johnson, ceo, citing weak merchandise assortments. “Moving into 2011, we recognize our opportunities and are more determined than ever to show the power of the Aeropostale brand.”

For fiscal 2010, Aeropostale’s net income was $231.3 million, or $2.49 per share, up from $229.5 million, or $2.27 per share. Revenue was $2.4 billion, up nearly 8% from $2.23 billion. Comparable store sales edged up1%.

Johnson said rising prices could hurt earnings this year, too. The teen retailer said it plans to spend $70 million this year to open 30 Aeropostale stores and 20 P.S. from Aeropostale stores as well as remodel about 50 stores and invest in information technology.

Earlier this week, Aeropostale said it would expand in Southeast Asia after inking a licensing agreement with Montreal Pte Ltd, a joint venture between Apparel Group LLC and Jay Gee Melwani Group. The first store is scheduled to open in Singapore later this year, and around 25 stores across Singapore, Malaysia and Indonesia are planned over the next five years.


Zumiez Q4 Profit Disappoints, Forecasts Q1 Loss

Everett, WA—Although Zumiez has been consistently outperforming rivals, the specialty retailer reported Thursday its fourth quarter profit barely exceeded expectations and that it expects a first quarter loss.

For the fourth quarter ended Jan. 29, Zumiez earned $15 million, or 49 cents a share, compared with $8.8 million, or 29 cents a share, a year ago. Sales rose 18% to $156.2 million, as its skateboarding and snowboarding inspired merchandise saw increased demand. Analysts’ average estimates expected earnings of 48 cents per share on revenue of $155.68 million. Gross margin climbed to 39% from 36.3%.

“We are very pleased with the strength of our fiscal and fourth quarter 2010 sales, up over 17%, and the significant increase in earnings for both the year and the quarter,” commented Rick Brooks, ceo. Comparable store sales increased 13% compared to a 1.7% decrease in the prior year period.

But for its first quarter, Zumiez expects a loss of 3 cents a share to breakeven on revenue between $100 million and $102 million with same store sales increasing in the mid to high single digits. Analysts’ average estimates are for a profit of one penny a share on revenue of $101.4 million.

“The cost pressures are real and it appears they are here to stay, at least for the foreseeable future,” Brooks told analysts on a conference. He added that the company might pass on the higher costs by raising prices of some of its merchandise.

“We, like every other retailer, are trying to figure out whether or not that is going to work based upon what the consumer’s reaction to those prices,” he added.