Tuesday, August 21, 2007

Sector Snap: Women's Apparel Retailers


Shares of women's apparel retailers were mixed on Thursday, as some companies offered cautiously positive outlooks despite generally lackluster July same-store sales.

Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones. Same-store sales fell 2.1 percent overall at apparel stores, according to a poll by Thomson Financial. Analysts had been expecting an 0.5 percent drop.

Consumers have been pressured by a sagging home market and widening credit crunch, putting a damper on discretionary spending. In addition, schools are starting later in two key states, Florida and Texas, which might have hurt back-to-school sales.

"Overall, not a great month," said Banc of America analyst Dana E. Cohen in a note to investors. "We think specialty results were likely a little worse than expected due in part to the impact from back-to-school shifts, at least for some companies."

Gap Inc. said July same-store sales fell 7 percent, worse than the 4.9 percent analysts expected, hurt mainly by an 18 percent drop at Old Navy. However, the company offered second-quarter earnings guidance ahead of analyst expectations.

AnnTaylor Stores Corp. said same-store sales fell 5 percent, a bigger drop than the 3.4 percent analysts were expecting. The company said lower customer traffic and lower demand for products at its LOFT store hurt results. However, the company reiterated its yearly guidance and said it expects a "good" fall season.

Not all companies issued positive forecasts, however. Talbots Inc. said same-store sales fell 4.8 percent in the second quarter and said it expects a loss for the period.

Chico's FAS Inc. said July same-store sales fell 6.7 percent, while analysts expected a 4.6 percent decline.

New York & Co. lowered 2nd-quarter guidance although same-store sales rose 4.7 percent. The company said sales of higher-margin accessories declined while apparel sales remained consistent with last year, causing the company to expect lower earnings.

Gap shares rose 49 cents, or 3.1 percent, to $16.22 during midday trading. The stock has traded between $15.63 and $21.39 over the past year.

AnnTaylor shares rose 36 cents to $30.02 and Talbots shares fell 47 cents to $24.50.

Chico's FAS shares fell 47 cents, or 2.3 percent, to $19.52. The stock has traded between $17.26 and $27.94 over the past year.

New York & Co. shares fell 73 cents, or 7.9 percent, to $8.48, after earlier trading to a new low of $8.30 per share. The stock had traded as high as $16.20 during the past 52 weeks.