), Zacks Rank #5 (Strong Sell), is a women's apparel retailer
which recently reported disappointing profits. The company
posted earnings per share of $0.33 in the quarter ending July
against a Zacks Consensus Estimate of $0.35. The company
also provided weak guidance for FY Q3 (October) and the Zacks
Consensus estimate for Q3 tumbled $0.10 to $.20 in the wake of
the report. Estimates have also declined for FY 2014 and FY
2015 by $0.18 and $0.25 to $1.12 and $1.33 respectively over the
past thirty days. The stock gapped sharply lower after its
The graphic shows the loss of profit momentum. It
suggests profits need to turn higher to bring in signficant
Sales below plan:
Francesca's reported below plan sales and gross margin
pressure. Weak traffic and poor sales in the gift category
weighed on results. Same store sales have contracted
three straight quarters and operating margins have declined
compared to a year ago four straight quarters. The CEO
indicated that there were improved traffic trends in late August,
but no clear direction had emerged. The statements provide
caution on the outlook. The dim view has compressed the
forward price to earnings ratio from over 30.0 to 15.5.
Women's apparel is a competitive space and being reflected
in the multiple.
The company did announce a $100 mln repurchase program which
suggests management is constructive on future operations.
Those who want exposure to the apparel industry may want to
focus on companies which have a stronger outlook for
earnings. Citi Trends (
) is a Zacks Rank #1 (Strong Buy) which sells urban fashion in
the South and Southeast. Its FY 2014 and FY 2015 EPS
estimates have risen $.04 to $.00 and $.03 to $0.34 respectively
over the past thirty days. The stock has traded in a steady
uptrend reflecting the positive view on business
A second choice may rest in Destination Maternity (
) - a Zacks Rank #2 (Buy). EPS estimates are flat for this name
over the past 30 days, but the profit outlook for the next two
fiscal years has stepped higher in recent months. The stock
is knocking at the door of its 52-week high at $31.44 and
movement over this level could spark some momentum buyers.
FRANCESCAS HLDG (FRAN): Free Stock Analysis
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