Gordmans Stores Inc.
) posted earnings per share of 21 cents in the third quarter of
fiscal 2012, ahead of the Zacks Consensus Estimate of 19 cents.
However, quarterly result lagged the year-ago quarter's earnings
of 25 cents per share. Lower comparable store sales combined with
higher expenses led to the fall in net income.
Behind the Headline Numbers
Net sales for Gordmans Stores grew 8.7% year over year in the
third quarter to $143.1 million, supported by nine new store
openings over the last three quarters that broadened the
company's store base by 12%. Revenues beat the Zacks Consensus
estimate of $143.0 million by a narrow margin.
Quarterly comparable store sales (comps) declined 1.4% year over
year affected by low and mid single-digit decreases in home
fashions and accessories, partly compensated by the
outperformance in the apparel segment.
During the quarter, Gordmans Stores' gross margin dipped 10 basis
points (bps) to 44.9%, due to higher mark-downs. Selling, general
and administrative costs, as a percentage of total revenue, were
up 90 bps year over year on increased pre-opening expenses
related to new stores and investments to upgrade the information
At quarter end, Gordmans Stores had cash and cash equivalents of
$32.2 million and total non-current liabilities of $26.2 million.
The company opened two new stores and ventured into four new
markets -- Salt Lake City and Ogden in Utah; Boise in Idaho; and
Indianapolis in Indiana during the third quarter of 2012.
For the fourth quarter of 2012, management expects net sales in
the range of $213--$215 million and earnings per share in the
range of 58--61 cents.
For fiscal 2012, Gordmans Stores has lowered its top-line
expectation to the range of $618--$620 million from $624--$628
million guided earlier. In the prior quarter, Gordmans had
slashed its revenue guidance to the range of $624--$628 million
from $629--$634 million. Guidance for earnings per share was also
trimmed from the range of $1.46--$1.51 to $1.39--$1.42.
Gordmans Stores houses a large pool of the latest brands and
fashion. The company is in an expansion mode in new as well as
existing markets. The company is also focusing on various sales
driven initiatives like launching a loyalty program to ensure
However, sluggish comps growth and successive declines in revenue
guidance indicating a poor business environment remain causes of
concern. Management has also curtailed the earnings estimate this
time. Even an extra additional operating week in fiscal 2012
compared with the previous year fails to trigger the company's
business for the year.
Gordmans Stores, which competes with
Dollar Tree Inc.
), currently has a Zacks #5 Rank, which translates into a
short-term 'Strong Sell' rating. We are also maintaining our
long-term "Underperform" recommendation on the stock.
DOLLAR TREE INC (DLTR): Free Stock Analysis
GORDMANS STORES (GMAN): Free Stock Analysis
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