In the most recent fourth-quarter filings from US apparel brands and retailers, Destination Maternity and Perry Ellis saw their losses narrow, while New York & Co moved to a net profit. However, Iconix Brand Group cut its outlook after swinging to a loss, Finish Line saw its net profit plummet 90%, and Cherokee Global Brands posted a mixed performance.
Cherokee Global Brands
Global brand management business Cherokee Global Brands saw its net income amount to US$1.4m for the three months to 30 January, compared to $1.7m in the prior year period. This included legal and due diligence and business development costs of $400,000 or 5.5% of revenue for the quarter. Sales increased 4.1% to $7.8m from $7.5m last year, thanks to the contribution of Flip Flop Shops, which the company acquired in October 2015. For the full year, net income fell 14.3% to $8.4m. Revenues edged down 0.9% to $34.7m, primarily related to the closing of Target Canada and the transition from Tesco to Argos, in addition to the effect of foreign exchange rates on international royalties.
Perry Ellis International
US apparel business Perry Ellis narrowed its net loss during the fourth quarter, helped in part by improved margins. The company’s net loss amounted to $17.7m for the three months to 30 January, compared to a loss of $42.9m in the same period of the prior year. Revenue fell 1.5% to $214m from $218m, impacted by foreign exchange as well as the reduction of revenues associated with exited brands, including C&C California, as well as a migration of two non-core brands to licensed arrangements during fiscal 2017. Overall gross margin expanded 290 basis points to 37.2%. For the full year, the group’s net loss stood at $7.3m, compared to a loss of $37.2m a year earlier, and revenue edged up 1% to $900m.
Destination Maternity
Destination Maternity Corp saw its net loss narrow to US$3.1m during the 13 weeks to 30 January, compared to a loss of $17m in the prior year period. Sales fell 2.4% to $118.3m from $121.2m a year ago. Gross margin improved to 49.8% from 38.4% last year. For the full year, the group’s net loss narrowed to $4.5m from $10.1m, while sales were down 2.3% to $498.8m. Destination Maternity expects fiscal 2016 comparable sales to increase in the low, single digits and gross margin to improve 100 basis points.
Separately, the company revealed that Judd Tirnauer will step down as CFO in April to take a senior leadership role with a private specialty retailer.
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Iconix Brand Group
Brand management company Iconix Brand Group has lowered its earnings outlook for 2016 after swinging to a loss of US$12.9m for the three months to 31 December, compared to a net profit of $22.5m in the prior year period. Licensing revenue edged down 1% to $94.7m from $96m. For the full year, the company’s net loss stood at $188.9m, compared to a profit of $118.8m, and licensing revenue declined 3% to $379m. Iconix now expects 2016 earnings per share to range from $0.75-0.90, down from its earlier guidance of $1.08-1.23, while its licensing revenue is still forecast to be between $370m and $390m.
Finish Line
US athletic apparel and footwear retailer The Finish Line saw its net profit plummet 90% to US$4m for the 13 weeks to 27 February, compared to $40.4m in the prior year period. However, sales were up 5.2% to $580.3m from $551.3m, while comparable store sales increased 4.6%. Full-year net income declined 72.7% to $21.8m, while sales increased 3.8% to a record $1.89bn. For the fiscal year ending 25 February 2017, Finish Line expects comparable store sales to increase 3-5% range and earnings per share to be between $1.50 and $1.56.
FBR & Co analyst Susan Anderson said: “Results were better than expectations, reflecting some normalisation in the supply chain that negatively affected results in F3Q16,” and later added: “We continue to like Finish Line’s initiatives and its exposure to the growing running footwear market.”
Phoenix Footwear
US comfort shoe maker Phoenix Footwear posted a loss of US$296,000 for the three months to 2 January, compared to a net loss of $17,000 in the same period a year ago. Sales fell 9.7% to $5.1m from $5.7m, due to the company’s realignment of its distribution of Trotters products in a large national account, combined with shipments of an additional week in fiscal 2014. Gross margin slipped to 36% from 38%. The company’s full year net loss stood at $1m, compared to net earnings of $327,000 last year, while sales dropped 1.5% to $21.7m.
Oxford Industries
Oxford Industries has hailed 2015 as “a good year” for the company with net sales and earnings both growing by 5%. Earnings reached US$17.5m from $15.8m a year earlier, while sales amounted to $259.6m versus $249m in the comparable quarter of 2014. Adjusted gross margin narrowed to 55.9% from 56.2%. CEO Thomas Chubb said 2015 was “nothing less than a stellar year for Lilly Pulitzer”. For fiscal 2016, the company is forecasting net sales of $1.02bn to $1.04bn, and adjusted earnings per share of between $3.75 and $3.95.
G-III Apparel Group
G-III Apparel said it had a strong fiscal but was disappointed by the group’s wholesale and retail outerwear business, which was heavily impacted by a warm winter. Earnings in the fourth quarter dropped to US$7.96m from $22.2m a year earlier, while sales grew 3% to $527.4m thanks to strength in G.H. Bass retail. For fiscal 2017, the company is forecasting sales of around $2.56bn and net income of between $120m and $125m. CEO Morris Goldfarb, said: “Our organisation is energised by the opportunities in front of us and excited to take advantage of our opportunities in fiscal 2017.”
Destination XL Group
Big and tall men’s wear retailer Destination XL said its performance was consistent throughout 2015, on track with expectations, but that its fourth-quarter slowed due to a warm November. As a result, the company recorded a net loss of US$1.4m in the quarter, compared to earnings of $1.6m a year earlier. Gross margin also narrowed, to 45.8% from 47.9% as a result of a one-time payment to exit a lease agreement. Total sales, however, were up 3.8% to $124m thanks to a comparable sales increase of 3.1%.
Aeropostale
Teen apparel retailer Aeropostale has revealed it is exploring strategic options, which could include a sale or restructuring, after posting a wider fourth-quarter loss. The group’s net loss stood at US$21.7m during the three months to 30 January, compared to $13.5m in the same period a year ago. Sales declined 16.1% to $498m from $593.8m. The company’s full-year net loss narrowed to $136.9m from $206.5m, while sales dropped 18% to $1.51bn.
Conlumino analyst Håkon Helgesen noted: “As we have said before, Aeropostale is the weakest of the ‘three As’. Being the weakest player in a weak market is a very uncomfortable position and it is one that could yet lead to the eventual failure of the chain. The latest results do nothing to change this view: the jury is still out on whether Aero has a place in the market over the longer term.”
J Crew Group
US fashion retailer J Crew Group narrowed its fourth-quarter loss to US$$7m from $30.6m in the prior year period. Total revenues climbed 1% to $711m, boosted by a 26% increase at Madewell. J Crew branded sales, however, fell 3%. Gross margin dropped to 33.3% from 34.5%. Meanwhile, the company’s full-year net loss widened to $1.24bn from $657.8m last year, and total revenues fell 3% to $2.51bn.
Conlumino analyst Neil Saunders said: “In our view, what J Crew needs is a fresh take – and this is something it is hoping will be delivered by the spring collection, the first designed by its creative director Somsack Sikhmounmuong. Even if this is a hit it will be just the first of many steps that J Crew needs to take to rebuild itself into a successful lifestyle brand. The market is more competitive and crowded than ever and J Crew needs to do much more to stand out.”
New York & Co
Apparel retailer New York & Co moved to a profit of US$84,000 in the 13 weeks to 30 January, compared to a loss of $6.7m in the prior year period. Net sales climbed 1.5% to $271.3m from $267.4m, while comparable store sales increased 1.9%. Gross margin improved 10 basis points to 25.7% from 25.6% last year, thanks to reduced product costs and lower store occupancy costs and buying payroll. For the full year, the company’s net loss narrowed to $10.1m from $16.9m, whil sales rose 2.9% to $950.1m. New York & Co expects first-quarter earnings per share to range from $0.02-0.04, and sales and comparable store sales are forecast to increase by a low single-digit percentage.
Shoe Carnival
Footwear retailer Shoe Carnival reported a strong fourth-quarter performance. Net earnings reached US$4.2m for the three months to 30 January, up from $3m in the prior year period. Sales increased 2.7% to $233.7m from $227.6m, and comparable store sales rose 1.8%. Gross margin improved to 29.2% from 28.6% a year ago. For the full year, net earnings grew 12.7% to a record $28.8m, while sales were up 4.7% to $984m. The company expects fiscal 2016 net sales to range from $1-1.03bn, with a comparable store sales increase in the range of 1-3%. Earnings per share are forecast to be between $1.58 and $1.65.
Cato Corp
Value fashion retailer Cato Corp has warned 2016 could be a difficult year, despite posting profit and sales growth in the fourth quarter. Net income increased 28% to US$11.8m during the quarter from $9.2m last year. Sales rose 4% to $247.3m from $237.8m last year, and same store sales edged up 1%. Gross margin fell to 36.1% from 36.5%, primarily due to reduced merchandise margins and higher occupancy costs. Full-year net income increased 10% to a record $66.8m, while sales climbed 2% to $1bn. The company expects 2016 net income to range from $62.4-57.8m, down 7-13% from last year, and same store sales to be flat to down 2%.
Guess
US fashion business Guess reported declines in both net profit and revenues. Net earnings fell 11.4% to US$47.8m during the quarter from $53.9m last year. Revenues dropped 5.5% to $658.3m from $696.7m in the prior year. In the Americas, retail sales fell 3%, and wholesale sales were down 9%. Revenues in Europe decreased 5%, while Asia declined 18%. Licensing revenues were down 7%. Gross margin slipped to 36.5% from 37.4%. Full-year net earnings declined 13.4% to $81.9m, while revenue dropped 8.8% to $2.20bn. For the fiscal ending 28 January 2017, the company expects earnings per share to range from $0.65-0.85, and revenues to increase 6-8%.
The Children’s Place
The Children’s Place posted a mixed performance, with profit falling, and sales improving. Net income amounted to US$17.5m for the 13-week period, compared to $17m in the same period a year ago. Sales increased 4% to $498.5m from $479.2m, and comparable retail sales were up 6.7%. Full-year net income climbed 1.8% to $57.9m, while sales fell 2.0% to $1.73m.
FBR & Co analyst Susan Anderson said: “We continue to believe that The Children’s Place has significant upside potential over the longer term, driven by catalysts such as omni-channel initiatives, international growth, wholesale expansion, systems implementation, and store rationalisation.”
DSW
Footwear and accessories retailer DSW saw its net income plummet 61.8% to US$11.8m for the three months to 31 January, compared to $30.8m in the prior year period. Sales increased 5% to $672m from $640.2m, with DSW sales rising 4.9%, and ABG up 7%. Full-year net income $136m, while sales increased 5% to $2.6bn. For the 12 months ending 28 January 2017, the company expects revenue growth of between 8% and 10%.
The Bon-Ton Stores
US department store retailer The Bon-Ton Stores saw its net profit decline 29.4% to US$50.6m during the three months to 30 January, from $71.7m in the same period of the prior year. Sales dropped 1.6% to $927.9m from $942.6m a year ago, while comparable store sales fell 1.9%. Gross margin declined 20 basis points to 34.8% as reductions in delivery expense were offset by higher transitional distribution costs at the group’s West Jefferson facility. For the full year, the company’s net loss widened to $57.1m from $7m the year before, and sales fell 1.4% to $2.72bn.
Conlumino analyst Carter Harrison said: “While we believe that Bon-Ton is moving in the right direction we do question whether the pace of change goes far enough, or is fast enough, to create a meaningful difference to finances.”
Black Diamond
Outdoor equipment and apparel business Black Diamond swung to a net loss of US$20.7m for the three months to 31 December, compared to a loss of $86,000 in the same period of the prior year. Sales fell 4% to $44.1m from $46m, hurt by the weakening of foreign currencies against the US dollar and lower product volume in Japan. Gross margin slipped to 33.5% from 35.1% the year before. The company’s full-year net loss amounted to $76m, compared to a net profit of $14m the year before, while sales dropped 2% to $155.3m. Black Diamond expects fiscal year 2016 sales to range from $145-150m, down from $155.3m in 2015, and gross margin to be between 32.5% and 33.5%, compared to 34.9% in 2015.
Citi Trends
US value fashion retailer Citi Trends posted profit and sales declines in its fourth quarter. Net income amounted to US$3.5m during the 13 weeks to 30 January, compared to $4.7m in the same period a year ago. The company attributed the 25.5% decline on an unusually low effective income tax rate in 2014’s fourth quarter due to a benefit from income tax credits. Sales fell 2.8% to $176.1m from $181.1m last year, while comparable store sales were down 5%. For the full year, net income jumped 72.2% to $15.5m, while sales climbed 1.9% to $683.8m.
The Buckle
The Buckle saw its net profit fall 9.7% during the quarter, weighed down by lower sales. Net income amounted to US$54.3m during the 13 weeks to 30 January from $60.1m in the prior year period. Sales fell 6.1% to $332m from $353.5m a year ago, and comparable stores sales declined 7.2%. Full-year net income declined 9.4% to $147.3m, while sales were down 2.9% to $1.12bn.
Genesco
US apparel and footwear retailer Genesco said it was disappointed with its lower than expected earnings, weighed down by gross margin pressure related to clear its inventory. Net earnings stood at $46.4m during the three months to 30 January, down 7.9% from $50.4m in the prior year period. Net sales increased 4.4% to $932m from $893m last year. For the full year, net income fell 1.4% to $96.3m, while sales grew 5.7% to $3bn.
Hibbett Sports
US retailer Hibbett Sports saw its net income decline 12.6% to US$17.4m for the 13 weeks to 30 January, compared to $19.9m in the same period the year before. Sales increased 2.7% to $245.7m from $239.3m a year ago, while comparable store sales edged down 0.6%. Gross margin slipped to 34.8% from 35.5% last year. Full-year profit fell 4.2% to $70.5m, while sales increased 3.2% to $943.1m. The company expects fiscal 2017 earnings per share to range from $2.90-3.04, and low single digit comparable store sales growth.
Zumiez
Action sportswear and footwear retailer Zumiez said it expects to move to a $0.07-0.11 loss per share in the first quarter after posting a 24.9% decline in fourth-quarter net profit. Net profit amounted to US$13.1m during the three months to 30 January, compared to $17.5m in the prior year period. This included charges of $1.2m for exit costs associated with the shutdown of the company’s fulfilment facility in Edwardsville, Kansas. Sales fell 6.2% to $242.4m from $258.6m. For the full year, net income declined 33.4% to $28.8m, while sales edged down 0.9% to $804.2m from $811.6m. First quarter net sales are expected to range from $172-175m.
Stifel analyst Richard Jaffe said: “We believe that Zumiez is a well-run business with a corporate culture that is engaging for the consumer and effective in generating earnings growth. However, given the recent volatility in the business and little visibility for improvement in the near term, at the current stock price, we believe much of the good news is in the stock, therefore the reward potential is limited and risk, given the fashion content, remains significant.”
Stein Mart
Off-price fashion retailer Stein Mart saw its fourth-quarter net profit plummet 48.8%, weighed down by higher markdowns during the holiday season. Net income amounted to US$6.3m during the period, down from $12.3m last year. Sales, however, climbed 1.8% to $394.1m from $387m a year ago. For the full year, net income fell to $23.7m from $26.9m last year, while sales increased 3.2% to $1.36bn from $1.32bn.
Christopher & Banks
Women’s wear retailer Christopher & Banks swung to a net loss of US$46.6m during its fourth-quarter, compared to a net income of $32.2m in the prior year period. Sales fell 3.5% to $94.6m from $98m. Gross margin, however, improved to 30.9% from 29.1% last year. For the full year, the company’s net loss amounted to $49.1m, compared to a net income of $47.1m the year before. Sales declined 8.3% to $383.8m.
Dollar General
Dollar General posted delivered a strong performance in its fourth-quarter and full-year, helped by sales growth. Net income reached US$376m for the 13 weeks to 29 January, compared to $355m in the same period a year ago. Total sales rose 7% to $5.29m from $4.94m last year, with the apparel segment growing 3.3% to $270.5m. Gross margin improved 12 basis points to 31.8%, helped by lower transportation costs and an improved rate of inventory shrinkage. Full-year net income grew 9.3% to $1.17, while sales increased 7.7% to $20.4bn. The company plans to open around 900 new stores and relocate or remodel 875 stores in fiscal 2016.
Tailored Brands
Tailored Brands, formerly Men’s Wearhouse, widened its net loss in its fourth quarter to US$1.06bn, from a loss of $35.9m in the prior year period. Net sales fell 11.1% to $825m, with retail sales down 11.3% to $767.9m and corporate apparel sales dropping 7.5% to $57.8m. However, gross margin increased 26 basis points to 37.7%. For the full year, the group’s net loss steepened to $1.03bn from a loss of $400,000 a year before, while net sales increased 7.5% to $3.50bn.
The company also revealed it will close 250 stores under a store rationalisation programme, and embarked on an extensive profit improvement programme that it says will reduce expenses by $50m in 2016.
Express
US apparel retailer Express beat expectations during its fourth quarter, and issued a positive outlook. Net income reached US$56.1m for the 13 weeks to 30 January, up from $41.8m in the same period of the prior year. Net sales increased 5% to $765.6m from $725.8m last year. E-commerce sales rose 8% to $156.3m. Stifel analyst Richard Jaffe attributed the strong performance to an on trend merchandise assortment “fuelled by management’s success in chasing strong selling merchandise, inventory discipline and restrained use of promotions”.
For the full year, net income jumped 70.5% to $116.5m, while sales were up 8.5% to $2.35bn. The company said it expects fiscal 2016 net income to range from $118-130m and low single digit comparable sales growth.
Dick’s Sporting Goods
US apparel retailer Dick’s Sporting Goods said it delivered a fourth-quarter in line with its guidance, despite the challenging conditions from unseasonably warm weather. Earnings amounted to US$129m from $155.5m a year earlier, while gross margin narrowed to 30% from 32%. Sales climbed to $2.24bn from $2.16bn in the comparable period last year. Same store sales, however, dropped 2.5% compared to guidance of negative 2% to positive 1%. For the full year, the company reported an earnings decline of 4% to $330.4m, while sales were up 6.7% to $7.3bn, reflecting the opening of new stores and partially offset by a same store sales drop of 0.2%.
Urban Outfitters
US lifestyle retailer Urban Outfitters saw earnings decline for both its fourth-quarter and year end earnings on the back of flat sales and store impairment charges. For the three months to the end of January, earnings dropped to US$72.9m from $80.3m in the year ago period. Gross margin declined 12 basis points due to delivery and fulfillment centre expense, higher store occupancy costs and the negative impact of foreign currency. Net sales remained flat at $1.01bn, while comparable sales, including the comparable direct-to-consumer channel, decreased 2%. Comparable sales increased 2% at Free People, but dropped 2% at the Anthropologie Group and 3% at Urban Outfitters. For the full year, earnings fell to $224.5m from $232.4m, while sales edged up 3.6% to $3.44bn.
Stifel analyst, Richard Jaffe, noted: “Apparel sales underperformed in the quarter driven by a lack of consumer acceptance of new fashion trends. We don’t believe this weakness was a result of the consumer cutting back on her spending due to macro-economic concerns as it appears the consumer was willing to buy if the merchandise was compelling, hence strong home and beauty sales sector-wide.”
Burlington Stores
US fashion retailer Burlington Stores posted sales and profit growth in its fourth quarter and full year. Net income reached $98.8m for the 13 weeks to 30 January, up 4.1% from $94.9m in the same period a year ago. Net sales increased 3.7% to $1.54bn from $1.49bn last year, and comparable store sales climbed 0.1% Gross margin declined 120 basis points to 41%. For the full year, net income jumped 128.2% to $150.5m. Sales grew 5.9% to $5.10bn. The company expects fiscal 2016 sales to increase 6.5-7.5% and adjusted net income per share of $2.62 to $2.72.
Stage Stores
US department store retailer Stage Stores saw its net profit more than halve during the fourth quarter to US$21m from $43.7m in the same period a year ago. The company said its performance was weighed down by low oil prices, the devalued peso and record warm temperatures. Sales fell 4.2% to $502.6m from $524.9m a year ago. Gross margin dropped to 28% from 32.6%. For the full year, net income plummeted 87.7% to $3.8m, while sales fell 2% to $1.6bn. Fiscal 2016 sales are expected to range from $1.53-1.56bn, and earnings per share to be between $0.40 and $0.60.
American Eagle Outfitters
US apparel retailer American Eagle Outfitters said initiatives to strengthen its merchandise and improve operational execution fuelled strong results in 2015. Net income reached US$81.7m for the 13 weeks to 30 January, compared to $61.6m in the prior year period. Revenue increased 3% to $1.11bn from $1.07bn last year, while comparable sales were up 4%. Gross margin remained flat at 35.1%. For the full year, net income jumped 171% to $218.1m, while revenue increased 7% to $3.52bn. The company expects first-quarter EPS to range from $0.17-0.19.
FBR & Co analyst Susan Anderson said: “In 2016, we expect AEO to continue to be a winner in the teen space, driven by product innovation/execution, omni-channel initiatives (seamless inventory, endless aisle), international growth/profit improvement, and continued aerie growth.”
Weyco Group
Footwear business Weyco Group posted a double-digit decline in fourth-quarter net profit, weighed down by the appreciation of the US dollar against the Canadian and Australian currencies. For the three months to 31 December, net earnings declined 16.8% to US$7.1m from $8.5m in the same period in the prior year. Sales fell 8.3% to $87.4 from $95.3 last year. Sales in the North American wholesale segment were down 8.7% to $67.5m, while the North American retail segment saw sales dropped 1.3% to $7.4m. For the full year, net earnings fell 8.4% to $18.2m and sales remained flat at $320.6m.
Abercrombie & Fitch
Teen apparel retailer Abercrombie & Fitch posted a 32.7% hike in fourth-quarter net profit. Net income reached US$58.9m for the 13 weeks to 30 January, compared to $44.4m in the same period of the prior year. Sales edged down 1% to $1.11bn from $1.12bn, while comparable sales for the fourth quarter increased 1%. By brand, sales dropped 3% to $509.4m for Abercrombie, but increased 2% to $603.6m for Hollister. Gross margin dropped to 60.8% from 60.9%. For the full year, net income declined 25.6% to $38.6m, while sales were down 6% to $3.52bn.
Ross Stores
Off-price fashion chain Ross Stores reported better-than-expected results for the fourth quarter. For the three months to 30 January, net earnings reached $264m, up 6.3% from $248.5m. Sales grew 7% to $3.25bn from $3.03bn last year, while comparable store sales rose 4%. For the full year, net earnings grew 10.4% to $1.02bn, while sales increased 8.1% to $11.04bn. The company expects fiscal 2016 same store sales to increase 1-2%, and earnings per share to grow 3-8% to be between $2.59 and $2.71.
Conlumino analyst Neil Saunders described the retailer’s guidance as “conservative” given its success over the holiday period. He added: “We believe that Ross is being somewhat pessimistic and should be capable of adding sales at a faster pace. A failure to do so will be somewhat disappointing, especially in view of the fact that the market and consumer demand trends remain firmly in the company’s favour.”
Kate Spade & Co
Apparel and accessories business Kate Spade & Co posted a mixed fourth-quarter, as sales rose while net profit plummeted. Net income amounted to $61.5m for the three months to 2 January, compared to $126.5m in the same period last year. However, net sales increased 7.6% to $429m from $398.6m. Gross margin improved to 60.2% from 57.8%. Kate Spade North America saw sales increase 13.6% to $371m, while Kate Spade International sales declined 13.3% to $52m and Adelington Design Group sales slumped 52.8% to $6m. During the full year, net income plummeted to $17.1m from $159.2m, while sales rose 9.1% to $1.24bn.
Conlumino analyst Håkon Helgesen said: “With sales now building nicely it is clear that management’s strategy of creating a clear and compelling lifestyle brand is paying dividends. In our view Kate Spade has a brand clarity and uniqueness that is now lacking in brands such as Coach and Michael Kors. This gives it the ability to pull in customer traffic and sell through at a higher price point, without having to resort to discounting to shift stock.”
Dollar Tree
US discount retailer Dollar Tree saw its net income reach $229m for the three months to 30 January, up 10.8% from $206.6m in the same period a year ago. Sales jumped 116.7% to $5.37bn from $2.48bn. Gross margin fell to 30.8% from 37.1%, weighed down by the impact of the overall lower-margin product mix for the Family Dollar business, $15.9m for Family Dollar related to the amortisation of the stepped up inventory basis, and $11.5m of planned markdowns associated with re-bannering Deals stores. However, for the full year net income declined 52.9% to $282.4m, while sales jumped 80.2% to $15.50bn.
Crocs
US shoe maker Crocs saw its net loss widen to US$70.2m during the three months to 31 December, compared to a loss of $53.1m in the same period of the prior year. Revenues edged up 1.1% to $208.7m from $206.5m. The company said results were impacted by higher clearance sales. For the full year, net loss steepened to $83.2m from $4.9m, while revenues fell 9% to $1.09bn from $1.20bn a year ago. Crocs expects first-quarter revenue to be between $260m and $270m, compared to $262.2m last year.
Foot Locker
US speciality athletic retailer Foot Locker said it delivered an “outstanding” financial performance in 2015 across all channels and geographies as it revealed earnings of US$158m for the quarter. This compared to earnings of $146m in the year ago period. Total sales grew 5% to $2bn, while comparable stores sales were up 7.9%. CEO Richard Johnson, said: “We began the year by introducing a revised strategic framework and priorities, as well as elevated long-term financial objectives. I could not be more proud of the progress the team has made developing leadership positions in so many areas of our business.”
FBR & Co analyst, Susan Anderson, noted: “While we continue to expect good assortment/store execution in a growing basketball and running footwear market, we expect Foot Locker’s 2016 outlook to be conservative, reflecting a competitive retail environment and the potential for foreign exchange headwinds.”
JC Penney
US department store retailer JC Penney saw its fourth-quarter loss widen sales and margin improvement. Net loss stood at US$131m for the three months to 30 January, compared to a loss of $35m in the same period a year ago. Sales increased 2.6% to $4bn from $3.9bn last year, and comparable store sales grew 4.1%. Gross margin rose 30 basis points to 34.1%, thanks to improvements in the company’s clearance and promotional selling margins.
For the full year, net loss narrowed to $513m from $717m in the prior year. Sales were up 3% to $12.6bn, and comparable store sales rose 4.5%. The company expects 2016 sales to increase 3-4%, gross margin to improve 40-60 basis points, and EBITDA to be $1bn.
Håkon Helgesen, retail analyst at Conlumino, noted: “The fiscal year just ended has been one of progress for JC Penney. It is navigating the retail landscape in a much more effective way than many of its rivals and we believe that it will continue to do so in the upcoming fiscal year. That said, the company still has a lot of work to do before it emerges as a modern and profitable operator.”
Kohl’s
Department store retailer Kohl’s has revealed it will close 18 underperforming stores this year after reporting a 20% decline in fourth-quarter net profit, hurt by a higher level of promotional activity which undermined margin. Net income amounted to US$296m for the three months to 30 January, compared to $369m in the same period a year ago. Sales edged up 0.8% to $6.39bn from $6.34bn last year, with comparable store sales climbing 0.4%. The store closures, which represent less than 1% of total sales, are expected to save the company $45-55m. The company also plans to pilot a new smaller format Kohl’s store, add two extra Off-Aisle pilot stores, and open 12 Fila outlet stores, which will mark the group’s first entry into the outlet space.
Conlumino analyst Carter Harrison said: “While Kohl’s fourth quarter growth came in a little below what the company had anticipated, in our view the final outcome is not bad when set against the context of a very challenging external environment.”
Harrison added: “As painful as it is to close stores, we applaud Kohl’s for taking action that is necessary in order to compete more effectively in a more complex and challenging retail environment. It is especially encouraging that such a move is only one part of a wider package of measures, many of which involve more positive steps to reinvigorate the company.”
Carter’s
Children’s wear retailer Carter’s recorded profit gains for both the fourth quarter and full year. Net profit increased 5.8% to $72.6m for the 13 weeks to 2 January, compared to $68.6m in the same period last year. Sales edged down 0.3% to $867m from $869.2m last year, weighed down by declines in the company’s domestic wholesale segments and changes in foreign currency exchange rates. Carter’s retail sales increased or 2.9%, while the brand’s wholesale sales fell 5.8%. Oshkosh sales rose 5%, but its wholesale sales declined 21.1%. For the full year, net profit grew 22.2% to $237.8m, and sales were up 4.1% to $3bn.
FBR & Co analyst Susan Anderson said: “We continue to view Carter’s as one of the highest-quality names in specialty retail/apparel with substantial 2016/longer-term tailwinds, and we would be buyers today on conservative guidance setting up for a beat/raise year with multiple margin drivers (cotton, yuan, direct sourcing, DC, OshKosh improvement).
Chico’s
Chico’s has expressed disappointment at a fall in fourth-quarter sales, but said it was pleased its “responsiveness and disciplined inventory management” in the promotional environment resulted in improved margins. Net losses narrowed to US$21.1m from $31.8m a year earlier, while gross margin increased by 80 basis points to 50.8%. Sales, however, fell 4.5% to $303.8m from $656.9m, primarily due to a 3.2% decrease in comparable sales and a decline in Boston Proper sales. CEO Shelley Broader, said: “Our business generated significant cash flow during the fiscal year, which in combination with our healthy balance sheet, allowed us to return $334m to our shareholders in the form of dividends and share repurchases.”
Sears Holdings Corp
Sears has widened net losses in its fourth-quarter as it struggled through the holiday period. Losses amounted to US$580m from $159m a year earlier, while gross margin narrowed to 21.8% from 24.4% in the year ago period. Revenues dropped to $7.3bn compared to $8.1bn the prior year fourth quarter. Comparable store sales were down 7.1%. CEO Edward Lampert pointed to a warm winter that drove down sales for seasonal goods and fierce competition with other retailers.
Neil Saunders, CEO at Conlumino, noted: “While the pace of sales decline moderated during Sears’ final quarter, this is nonetheless a very gloomy set of numbers given that it comes off the back of an incredibly weak comparative in the prior year. Indeed, on a two-year basis total sales have decline by almost a third. Moreover, on the comparable sales front, there is worryingly little evidence to suggest a material improvement in either the performance of Sears or Kmart.”
L Brands
US fashion retailer L Brands published record results for the quarter, with earnings up 13% to $636m from $564.8m a year earlier. Net sales grew 8% to $4.39bn, while comparable store sales increased 6%. CEO Leslie Wexner said the results were driven by “tremendous focus and execution” across the business. For the full year, the company expects EPS of between $3.90 and $4.10, and a mid-single digit increase in February comparable store sales, above expectations for a low-single digit increase.
FBR&Co analyst Susan Anderson, noted: “We believe the conservative guidance sets the stage for the beat and raise story to continue to play out. We continue to regard L Brands as high-quality retailer with significant long-term potential but believe that valuation adequately reflects its execution/earnings growth trajectory and look for a more attractive entry point.”
Steve Madden
US footwear and accessories specialist Steve Madden issued a caution for the year ahead but said it was confident of long-term earnings growth. For the quarter, net income reached US$25.7m from $21m a year earlier, while gross margin expanded 180 basis points to 36.1%. Net sales were up 0.5% to $344.3m from $342.6m. Retail sales increased to $79.3m from $72.8m, while same store sales increased 6.1%.
Target Corp
US retail group Target has moved to a profit in its fourth-quarter thanks to a gain from the sale of its pharmacy and clinic businesses and lower overhead expenses. Earnings amounted to US$1.43bn from a loss of $2.64bn a year earlier. Sales edged down to $21.63bn from $21.75bn, while comparable sales grew 1.9% driven by traffic growth of 1.3%. Digital channel sales increased 34%, contributing 1.3 percentage points to comparable sales growth.
TJX Companies
Off-price retailer The TJX Companies saw its fourth-quarter and full-year profit increase, thanks to better than expected sales and gross margin expansion. Net income reached US$666m for 13 weeks to 30 January, up 6% from $648.2m in the same period of the prior year. Sales increased 8% to $9bn from $8.30bn last year, while comparable store sales rose 6% year-on-year. Gross margin edged up 0.5 percentage points to 28.7%. For the full year, profit rose 2.8% to $2.28bn, sales increased 6% to $30.9bn, and comparable store sales were up 5%.
For fiscal 2017, the company expects earnings per share to range from $3.29-3.38, representing a 1% decline to a 2% increase year-on-year. For the first quarter, EPS is forecast to be between $0.68 and $0.70. Although the guidance is below consensus, Stifel analyst Richard Jaffe said: “Given the company’s strong momentum and our positive outlook for the off-price sector, we believe management’s guidance is likely a case of under promise, over deliver.”
Macy’s Inc
Macy’s said it experienced a challenging 2015 but that sales trend improved in January as the weather turned colder in northern climate zones. Earnings fell to US$543m from $793m a year earlier as a result of $87m in charges related to merchandising and marketing restructuring, store and field adjustments, store closings and asset impairments. Gross margin narrowed to 37.4% from 40.3%, while sales fell to $8.87bn from $9.36bn. For fiscal 2016, the company expects total sales to be down by around 2%, reflecting 40 stores closed in 2015, and earnings per diluted share of
Wolverine Worldwide
Wolverine Worldwide said it finished the year with both revenue and earnings in line with its expectations for the quarter thanks to its “diversified brand portfolio and disciplined operational execution”. Earnings edged up to US$11.6m from $10.7m a year earlier, while gross margin narrowed to 36.2% from 37.1%. Sales dropped to $751.2m from $808.9m but was in line with guidance. The company said it expects the global retail environment to remain challenging in 2016, with the current domestic retail channel inventory overhang and the slowdown in China potentially impacting key markets.
Dillard’s
US department store retailer Dillard’s saw earnings and sales fall in what it described as a “difficult” fourth-quarter. The company worked hard to control inventory in an unusually competitive environment, but sales fell to US$2.07bn from $2.14bn a year earlier. Comparable sales were down 2%, with juniors’ and children’s apparel and shoes a particularly weak category in the quarter. Earnings dropped to $84m from $130.5m a year earlier, despite an after tax gain of $2m on the sale of a store location, while higher markdowns hit gross margin.
Nordstrom
This year will be one of “treading water” for Nordstrom, according to one analyst after the US department store retailer posted a 29.4% decline in fourth-quarter net profit. Net earnings amounted to US$180m for the three months to 30 January, compared to $255m in the same period of the prior year. Sales increased 5.2% to $4.1bn from $3.94bn, and comparable sales edged up 1%. Online sales grew 11% year-on-year.
Gross margin fell 184 basis points to 34.8%, primarily due to increased markdowns from lower than planned sales and in response to an elevated promotional environment during the holiday season.
For the full year, net earnings fell 16.7% to $600m, while sales grew 7.5% to $14.1bn.
The company said it has made adjustments to its operating plan, which included a reduction in expenses and capital investments. For fiscal 2016, it expects net sales to grow 3.5-5.5%, comparable sales to be flat to rise 2%, and adjusted earnings per share to be between $3.10 and $3.35.
Conlumino analyst Carter Harrison described the results as “lacklustre”, adding: “As disappointing as the numbers may be, in the context of the wider market they are not a total disaster.”
Harrison later added: “With the expense of expansion and continued pressure on margins this does not bode well for profits and earnings. While these may, at best, increase modestly, we believe that 2016 will be a year of treading water for Nordstrom as it continues to build its business in what has become a much more challenging retail environment.”
Levi Strauss & Co
Denim giant Levi Strauss & Co moved to a profit in its fourth-quarter and grew full-year earnings, despite what it says was a challenging year with currency headwinds, the negative impact on tourism, and challenging retail dynamics globally. Fourth-quarter earnings amounted to US$101m from a loss of $6m a year earlier, thanks to lower restructuring charges and lower interest expense. Gross margin grew to 51.2% from 49%, primarily due to lower negotiated product costs, streamlined supply chain operations, price increases and direct-to-consumer sales growth. However, currency translation unfavourably impacted net revenues, which fell 7.9% to $1.28bn. For the full year, earnings reached $209m from $106m a year earlier, while sales dropped to $4.49bn from $4.75bn.
Columbia Sportswear Co
Columbia Sportswear grew both sales and earnings in its fourth-quarter and full-year after what it said was “another outstanding year” for the company with record sales and earnings. Net income in the quarter increased 14% to US$63.4m, while sales were up 3% to $699.4m. For the full year, sales grew 11% to $225.6m, while earnings were up 27% to $174.3m. The company said its Columbia, Sorel, and prAna brands each generated double-digit constant-currency sales growth, concentrated in North America. In Europe, the Columbia brand achieved mid-20% constant-currency growth and began reclaiming share in key markets. For fiscal 2016, the company is forecasting mid-single-digit net sales growth, and net income of between $179m and $186m, or around $2.55-2.65 per diluted share.
FBR & Co analyst Susan Anderson believes the guidance will “prove conservative set up nicely for a continuation of the beat-and-raise story, driven by strong sales and gross margin”.
Rocky Brands
US apparel and footwear company Rocky Brands said it was disappointed with its finish to 2015; its fourth-quarter challenged by tough comparisons combined with warm temperatures and weak retail store traffic that pressured demand across all categories. Earnings dropped to US$1.4m from $4.5m a year earlier, while gross margin narrowed to 33.9% from 35%, driven primarily by the higher percentage of military sales which carry lower gross margins than wholesale and retail. Sales fell 17.3% to $65.3m, with declines recorded in each segment except military. For the full year, earnings dropped 32.6% to $6.6m, while sales were down 5.9% to $269.3m. Despite the declines, Rocky Brands said it is “cautiously optimistic” it can re-accelerate top and bottom line growth in 2016.
Skechers USA
US footwear business Skechers USA booked record sales in its fourth-quarter with growth recorded across all key product lines for men, women and kids. Net earnings were up 34.2% to US$29.4m from $21.9m a year earlier. Gross margin widened slightly to 45.6% from 45.2% a year ago, impacted by negative foreign currency translations. Net sales grew 26.8% to $722.7m, while double-digit increases were recorded in the group’s international wholesale and company-owned retail stores businesses. Single-digit gains were recorded in its domestic wholesale business. International sales grew to 41% of total sales in the quarter. For the full year, earnings reached $231.9m from $138.8m a year earlier, while gross margin edged up slightly to 45.2% from 45.1%. Net sales grew to a record $3.15bn from $2.38bn in the prior year.
