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Wholesale Apparel Stocks Beat Market in November

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The Dow Jones Industrial Average fell slightly in the five weeks ending November 30, bringing the year-to-date rise to 6.6%.Although retail stocks did worse, falling 1.5% in the period, the apparel wholesale and manufacturing index rose by 1.1%, bringing the year-to-date gain to about 15% for both apparel retail and apparel wholesale, more than twice the Dow’s year-to-date gain.

Stock Averages

Month

YTD

Dow

-0.5%

6.6%

Retail

-1.5%

15.0%

Whsale/Mfg

1.1%

14.9%

dec apparel stocks1Retail Gainers and Losers

   

Month/YTD

11/30/2012

YTD

Retail

Symbol

% Chg

Price

%Chg

Abercrombie

ANF

50.1

45.89

-6.0

Christopher & Banks

CBK

46.5

4.57

95.3

Coldwater Creek

CWTR

37.8

5.72

21.2

Express

EXPR

34.1

14.93

-25.1

Hot Topic

HOTT

17.7

10.0

51.0

         

Sears Holdings

SHLD

-33.0

42.01

32.2

JCPenney

JCP

-25.3

17.94

-49.0

Zumiez

ZUMZ

-18.3

20.68

-25.5

Childrens Place

PLCE

-16.8

48.61

-8.5

Kohl’s

KSS

-16.2

44.65

-9.5

Abercrombie & Fitch (ANF) was the top performing retail stock for the month, jumping 50% to $45.89 per share after reporting soaring overseas sales and a 40% surge in third quarter profits. Revenue jumped 8.7% to $1.17 billion. Earnings were $71.5 million, or $.87 per share, compared with $50.9 million or $.57 per share in the prior year period. Domestic sales were flat at $818.6 million, but overall gross margin grew by 240 basis points to 62.5%. The teen retailer reportedly had the best Thanksgiving Weekend sales results among clothing retailers, with the longest lines and greatest number of units per transaction, according to the National Retail Federation.

Christopher & Banks (CBK) gained 46.5% to $4.57 on news that the women’s specialty retailer turned its first quarterly profit in almost 3 years. Net income was $3.6 million, or $.10 per share, on sales of $117.3 million, a 2% increase over the same period last year. Last year, the company lost $13.7 million in the third quarter. The company has hired Luann Via as its new CEO.  Via was CEO of Payless Shoe Source from July 2008 to November 2012, prior to which she worked in leadership positions at Charming Shoppes and at Sears, Saks and Federated.

Coldwater Creek (CWTR) gained 37.8% to $5.72 after third-quarter comparable store sales improved 7.3% thanks to an improvement in business at its premium stores. The company sustained a smaller-than-expected net loss of $20.5 million, or $.67 per share. Revenue was flat at $188 million, and gross margin improved by 510 basis points, to 35.1% of net sales.  Co-founder Dennis Pence announced he will retire as CEO on December 31, to be replaced by Jill Brown Dean, current president and chief merchant. Pence will continue as Chairman until January 1, 2014.

Express (EXPR) gained 34.1% to $14.93 on news of strong Black Friday sales resulting in projected full-year earnings exceeding Wall Street expectations. This more than made up for the nearly halving of third quarter profit to $17.4 million, or $.20 per share, from $32.7 million, or $.37 per share, in the year-earlier period.

Hot Topic (HOTT) gained 17.7%, to $10.00. The teen retailer reported a 38% jump in third-quarter net income thanks to improving merchandising strategies. Revenue grew 2% to $179 million. Gains at the company’s Torrid division more than offset slower sales at flagship Hot Topic stores.

Sears Holding (SHLD) was the biggest retail loser last month, plunging 33% to $42.01. Despite new store openings and remodels at Sears Canada that have met with considerable success, total company results have been unimpressive. Third-quarter loss widened to $498 million, or $4.70 per share, compared to a year-earlier loss of $421 million, or $3.95 per share. Same-store sales at both Sears and Kmart continued to tumble, with total revenue down 5.8%, to $8.86 billion.

JCPenney (JCP) was the second biggest retail loser, dropping 25.3% to $17.94. The stock has lost almost half of its value so far this year. In the third quarter, comparable stores plummeted 26.1%, more than the 17.9% expected by Wall Street. Total sales fell 26.6% to $2.93 billion. Traffic was down 12%. However, the quarterly loss narrowed slightly, to $123 million, or $.56 per share, compared to $143 million, or $.67, last year. Over the past year Penney’s cash on hand has fallen by 50% to $525 million. Moody’s cut its long-term ratings for the company, citing a predicted drop in fourth-quarter profitability.

Zumiez (ZUMZ) fell18.3% to $20.68, placing it among the biggest losers for the second straight month. Third quarter net income fell to $12.7 million, or $.40 per share, from $14.1 million, or $.45 per share a year earlier, due to slower-than-expected sales trends in Europe and modest comps for back-to-school. Zacks maintained its “hold” rating on the stock. Fourth quarter revenues are expected to be in the range of $220 million, while comps are likely to decline by 3-4%.   

Children’s Place (PLCE) lost 16.8% to $48.61 after the children’s apparel and accessory retailer cut its full-year profit forecast due to increased post-Sandy promotional activity to clear fall inventory. Although third-quarter net income rose to $35 million, or $1.44 per share, from $33.7 million, or $1.33 per share, a year earlier, the company now expects fourth-quarter profit of between $1.01 and $1.06, well below the $1.24 previously expected by analysts.  Store representing one-third of company sales were affected by the storm. CFO Steve Baginski is leaving the company to pursue other interests, and will be replaced by former Talbots CFO Michael Scarpa. Prior to Talbots, Scarpa was at Liz Claiborne for 25 years.

Kohls (KSS) dipped 16.2% to $44.65 after third-quarter earnings came in weaker than expected, at $215 million, or $.91 per share, compared with $211 million or $.80 a year earlier. Sales were $4.4 billion, up from $4.38 billion last year. The national chain department store retailer announced that fiscal 2012 earnings per share would be in the range of $2.00 to $2.08, below the consensus of $2.16, on total sales growth of 7-% and an increase in comps of 3-4%. November comps fell 5.6%, more than expected.

Wholesale Gainers and Losers

   

Month/YTD

11/30/2012

YTD

Wholesale

Symbol

% Chg

Price

%Chg

Deckers Outdoor DECK

33.7

38.29

-49.3

Brown Shoe BWS

20.7

19.05

114.0

Skechers SKX

17.2

19.46

60.6

Culp Inc. CFI

12.7

14.24

67.1

Fifth & Pacific FNP

9.7

12.05

39.6

         
Delta Apparel DLA

-4.2

14.51

-24.0

Genesco GCO

-3.4

55.33

-10.4

Wacoal WACLY

-3.4

54.19

-17.4

Michael Kors KORS

-2.8

53.15

119.6

Carter’s CRI

-1.9

53.04

33.2

Deckers Outdoor (DECK) rose 33.7% in the month to $38.29, after hitting a 52-week low of $28.81 November, as investors continue to express concerns over the sales momentum of UGG boots. The share price has falledn 49% year-to-date.

Brown Shoe (BWS) jumped 20.7% to $19.05, after it expressed confidence in its ability to avoid promotions during the holiday season. In the third quarter, revenue rose by 3% to $732 million, and adjusted earnings per share were $.60, well above estimates of $.46. The company raised its 2012 earnings per share estimate to $1.08 from $.92. The retailer, which owns the Sam Edelman brand, operates Famous Footwear and Naturalizer stores, and sells Nike, Skechers and Dr. Scholl’s products.

Genesco (GCO) lost 3.4% to $55.33. Although third-quarter revenue increased 8% to $664.5 million, beating Wall Street’s $660 million estimate, and net income climbed 57% on strong sales, blowing past investor expectations, the final quarter of the year has gotten off to a slow start, which threatens to impact annual results. However, there have been encouraging sales trends at its Journeys division, where comps increased 8% in the third quarter.

Michael Kors (KORS) declined 2.8% to $53.15, despite a tripling of second-quarter income and an increase in full-year profit forecasts. Total revenue in the second quarter soared 74% to $532.9 million, with comps up a staggering 45.2%. In Europe, sales surged 97%. Net income jumped to $97.8 million, or $.49 per share, up from $31.6 million, or $.22 per share, a year earlier. The company expects a profit of $.37 to $.39 per share, versus Wall Street expectations of $.39.

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