Aeropostale Posts A Sharp Increase In Q2 Profit
Guess , a fashion concept whose related companies include Zentai
, Gap , and Polo Ralph Lauren , posted fourth-quarter results Wednesday after the bell. Adjusted income went up well over 40% to 96 cents per diluted share. According to Earnings, Wall Street believed 81 cents per share would be the bottom-line number.
Total net sales increased 14%. Same-store sales were up 5.3% . Net cash from operating activities over the last twelve months experienced significant expansion.
The quarter looked very good for Guess. You can't complain about that earnings beat, certainly. Operating margins were superb, and revenue growth was strong.
Management is making the most of the company's portfolio of fashion. The team seems
latex Shortsready to invest in the business to ensure that brand equity continues to be competitive and able to cut through the fickle nature of the consumer. It's pretty difficult to cultivate any sort of loyalty when it comes to apparel , but I like that the comments in the release indicate an acceptance of the importance of marketing. I don't think execs spend enough time on marketing in many cases.
Net sales increased 20%. Not bad, am I right? Wait, check this out. Earnings per share came in at 57 cents, compared to the 31 cents reported in the year-ago quarter. According to Reuters, that was a penny ahead of expectations. But that penny beat on the bottom line isn't what impresses me the most. It's the strong per-share profit expansion that I find compelling.
Oh, and are you ready for an awesome same-store sales reading for a change? Some retailers are having problems in this area, but not Aeropostale. Comps increased 12%. Double-digit comps during such a tumultuous financial time period? I'll take them!
Now, Aeropostale's stock was up 0.5% during yesterday's after-hours session. Come on, shareholders deserved better than that! I've seen retailers in worse situations rally on horrible data. Reuters mentioned that the top line came in slightly under expectations, and that this might have been the reason behind the lackluster response from Wall Street traders. Uh, I thought the sales were actually quite good myself. But, whatever, you know?
I think the fundamentals with this company are stellar , but I do concede a powerful underlying risk to the story: can management keep the momentum going? Nothing comes easy, especially creating shareholder value by exploiting the fashion sensibilities of the fickle teenage mall demographic.
Nevertheless, Aeropostale is one of the better mall retailers out there, and it could be a buy. Take a look at it, especially over the next few sessions. If it sells off by any chance, I'd say it should be considered. This was definitely one of the more enjoyable earnings reports I've read in the last month or so.
Disclosure: I don't own any company mentioned; positions can change without notice.
Fundamentally, Guess is impressive. As for the stock, it's obviously more expensive at the 52-week high than it was at the 52-week low, but I don't believe the company is done yet. The board increased the dividend by 28%, showing confidence in the future. Take a look at Guess on the inevitable pullbacks.
Disclosure: I don't own any company mentioned; positions can change without notice.
by: ada
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