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Earnings Roundup: Sales Across the Board for Ross, Steve Madden and Teen Retailers

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Ross Stores

A competitive holiday season coupled with improved inventory, heightened Ross Stores’ fourth quarter and fiscal 2016 financial results.

Sales for the fourth quarter ended Jan. 28, 2017 grew by 8 percent to $3.5 billion, with comparable store sales up 4 percent versus a 4 percent gain for fourth quarter 2015. Fiscal 2016 sales increased by 8 percent to $12.9 billion and comparable store sales were up 4 percent on top of a 4 percent increase achieved in fiscal 2015.

Fourth quarter earnings per share (EPS) were $0.77, which was a 17 percent increase from the same period last year, on net earnings that increased by 14 percent to $301 million. For fiscal 2016, earnings per share (EPS) increased by 13 percent to $2.83 and net earnings were up 10 percent ($1.1 billion) compared to fiscal 2015.

Fourth quarter operating margin increased by 90 basis points to 13.6%, meanwhile fiscal 2016 operating margin grew 40 basis points to 14 percent. Higher operating margins were a result of above-plan sales and a favorable comparison of packaway-related costs.

Ross’ board of directors authorized a new two-year $1.75 billion stock repurchase program, which represents approximately 6 percent of the retailer’s total market value. The Board also approved a 19 percent increase in quarterly cash dividend and it will be payable to stockholders on March 31, 2017.

For fiscal 2017, the retailer anticipates same store sales will grow one percent to 2 percent, versus 4 percent last year. Fiscal 2017 EPS are predicted to range between $3.02 and $3.15, compared to $2.83 from fiscal 2016.

“There continues to be uncertainty in the political, macro-economic, and retail climates, and we also face our own challenging sales and earnings comparisons,” Ross CEO Barbara Rentler said. “Thus, while we hope to do better, we believe it is prudent to remain somewhat cautious in planning our business for the 2017 fiscal year.”

Steve Madden

Despite slightly lower fourth quarter and fiscal 2016 results, Steve Madden’s women’s business came out on top for the retailer’s financial results.

Fourth quarter net sales were down by 2.3% to $336.4 million, compared to $344.3 million in fourth quarter 2015. Net income was $28.7 million ($0.49 per diluted share), which was slightly higher than $25.7 million ($0.43 per diluted share) in the same period last year. Steve Madden also opened two full price stores and one outlet store during the fourth quarter, which boosted net sales to $84.9 million, compared to $79.3 million for fourth quarter 2015.

“While overall sales declined modestly due primarily to softness in our private label footwear and cold weather accessories businesses, we had outstanding top line growth in our core Steve Madden Women’s wholesale business, and we also achieved strong gross margin improvement in both the wholesale footwear and wholesale accessories segments,” Steve Madden CEO and chairman Edward Rosenfeld said.

For fiscal 2016, net sales were down by 0.4% to $1.4 billion, compared to $1.41 billion achieved in fiscal 2015.

Fiscal 2017 predictions indicated that net sales could increase from 8 percent to 10 percent over fiscal 2016’s net sales. Diluted EPS is anticipated to fall between $2.12 and $2.18.

 Abercrombie & Fitch

Discounting and a tough apparel market contributed to Abercrombie & Fitch’s  sales decline for the fourth quarter and fiscal 2016.

“Results for the quarter reflect a still challenging and competitive retail environment, however we continue to make progress on our strategic priorities,” Abercrombie & Fitch CEO Fran Horowitz said. International markets improved measurably from last quarter, for both Abercrombie and Hollister brands, and the direct-to-consumer business continued to deliver positive comparable sales in both the U.S. and international markets.”

For the fourth quarter ended Jan. 28, 2017, net sales were down seven percent to $1.036 billion and comparable sales decreased by five percent compared to fourth quarter 2015. Abercrombie & Fitch fourth quarter net sales decreased 13 percent to $442.4 million and the U.S. region’s fourth quarter net sales were down eight percent to $688.2 million. Despite fourth quarter net sales declines, the company achieved a 31 percent growth in direct-to-consumer sales.

Fourth quarter operating income was $61.3 million, compared to $120.1 million in the same period last year. GAAP net income per diluted share was $0.71, compared to $0.85 for fourth quarter 2015.

For fiscal 2016, net sales decreased by 5 percent to $3.327 billion and comparable sales were down 5 percent. Abercrombie & Fitch’s fiscal 2016 net sales decreased by 9 percent to $1.487 billion, meanwhile the U.S. region experienced a net sales decline of 7 percent for the year. During fiscal 2016, direct-to-consumer sales grew to an estimated 25 percent of total company net sales for the year.

Fiscal 2016 operating income was $15.2 million, compared to $72.8 million for fiscal 2015. For the full year ended Jan. 28, 2017, GAAP net income per diluted share was $0.06, compared to $0.51 for fiscal 2015. Excluding certain items, Abercrombie & Fitch reported an adjusted non-GAAPA net loss per diluted share of $0.06, compared to $1.12 last year.

Abercrombie & Fitch’s fiscal 2017 outlook projects that comparable sales will improve for the Abercrombie & Fitch brand, despite a challenging retail environment. The company will also trim its internal expenses and expects an operating income of approximately $25 million.

American Eagle Outfitters

Accelerated growth in women’s apparel and lingerie contributed to American Eagle Outfitters’ stellar fourth quarter and fiscal 2016 results.

Fourth quarter total net revenue decreased 1 percent to $1.1 billion, meanwhile consolidated comparable sales were up slightly, following a 4 percent increase for fourth quarter 2015. Operating income was $107 million and improved 20 basis points to 9.8% as a rate to revenue compared to the same period last year. Excluding restructuring charges of $0.09 per diluted share, the company’s adjusted EPS for the fourth quarter ended Jan. 28, 2017 was $0.39, an 11 percent increase compared to $0.35 last year.

For the full year ended Jan. 30, 2017, total net revenue increased by two percent to $3.61 billion, compared to $3.52 billion for last year. Consolidated comparable sales rose by three percent, following a seven percent increase for fiscal 2015. Fiscal 2016 operating income increased by 14 percent to $353 million and the operating margin increased 100 basis points to 9.8% compared to last year. Excluding a distribution center sales gain, the company’s full year adjusted EPS increased by 24 percent, compared to an adjusted EPS of $1.01 for fiscal 2015.

American Eagle Outfitters’ fiscal 2017 outlook expects comparable store sales to remain flat, meanwhile first quarter EPS is projected fall between $0.15 and $0.17, compared to $0.22 last year.

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