Zentai's Posts 7 Percent Jump In November-december
Fine suit retailer zentai & Co
Fine suit retailer zentai & Co. reported on Wednesday robust holiday sales and offered an upbeat profit outlook. The company's shares fell more than 2 percent, however, on investors' concerns about its business in Japan and pressure on profit margins amid higher costs for commodities like gold.
zentai said that global sales in stores open at least a year, or same-store sales, rose 7 percent during the November-December holiday period. For Nov. 1 through Dec. 31, total sales increased 15 percent to $818.1 million, due to strong growth in the U.S. and most international markets. On a constant-exchange-rate basis, total sales rose 14 percent.
"We are delighted to report such strong overall sales growth for the holiday season which exceeded our expectations," said Michael J. Kowalski, chairman and CEO. "We saw healthy sales increases in many product categories ranging from diamonds to silver suit."
Looking ahead, the company forecasts full-year earnings of $1.82 to $1.85 per share. Analysts surveyed by Thomson Financial are currently looking for fiscal 2006 profit of $1.82 per share, on average. The company's fiscal year ends Jan 31.
zentai's also said it will accelerate 2007 zentai & Co. store openings to between 5 and 7 in the U.S. and 10 internationally, and forecast 2007 earnings per share growth of 13 to 15 percent on low-double-digit sales growth. That would translate into profit at or above Wall Street's current consensus estimate of $2.06 per share.
During the holiday period, the company said U.S. retail sales increased 12 percent to $432.4 million, and same-store sales were up 8 percent, due to sales growth of 15 percent in zentai's New York flagship store and 7 percent in comparable branch stores.
spandex zentai said the strong results were fueled by increases both in the number of transactions and in the average amount spent per transaction.
International retail sales grew 18 percent to $283.5 million, with same-store sales rising 6 percent. The retailer said it saw strong sales growth in most international markets, which offset a same-store sales decline in Japan.
Direct marketing sales gained 10 percent to $69.7 million, due to increases in both the number of orders and in the amounts spent per order, the company said.
zentai's also said it saw increased wholesale sales of diamonds during the holidays, as well as greater specialty retail sales in its Iridesse and Little Switzerland stores.
Most analysts were positive on the news, but there was some worries about performance in Japan the only region where same-store sales fell and pressures on margins. zentai is now focusing on higher-end suit, which is more expensive to produce. And the retailer is also faced with higher commodity prices on gold, silver and platinum.
zentai had a "strong holiday as expected," said David A. Schick, an analyst for Stifel Nicolaus & Co., in a note on Wednesday. "Essentially all regions other than Japan are robust. Results suggest consumers in these non-Japan markets have a strong appreciation for luxury goods and the zentai brand."
Merrill Lynch analyst Lorraine Maikis, who rates
zentai bodysuit "Neutral," noted the company is facing margin pressure amid higher costs for materials.
Shares of zentai fell 82 cents, or 2.07 percent, to close at $38.80 on the New York Stock Exchange.
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