As earnings season comes to a close, its time for retail companies to report. Its been a tumultuous couple weeks thanks to earnings and it will be interesting to see how the markets react to the companies reporting next week.
For apparel stocks, there are few factors more important than inventory – are they selling their products or aren’t they? So to search for potential winners, we screened the apparel industry with firms yet to report earnings. Then, we took that list and ran it through a screen to see which companies are witnessing encouraging inventory trends.
To be specific, we screened for those stocks with encouraging sales trends and higher growth in revenue than inventory year-over-year, as well as inventory comprising a smaller portion of current assets over the same time period.
To understand why these trends are positive, think why the opposite trends would be negative. If a company sees higher growth in inventory than revenue, it may indicate that the company is having trouble selling its inventory, and that would be especially bad for a company who bases their business on selling its inventory.
Don’t forget how quickly clothes can go out of fashion.
Business Section: Investing Ideas
This is an important trend for retail companies. If you can’t sell the product quick enough so that it’s mostly gone before the next products gets in, you’re in trouble. All of these firms listed below have succeeded in moving their inventory, and in stylish fashion. The question is, will this earnings season show continuity?
Here’s the list, do you think these companies will post positive earnings? We will certainly see.
Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:
1. American Eagle Outfitters, Inc. (AEO, Earnings, Analysts, Financials): Operates as an apparel and accessories retailer in the United States and Canada. Market cap at $3.98B, most recent closing price at $20.57. Revenue grew by 17.97% during the most recent quarter ($719.09M vs. $609.56M y/y). Inventory grew by 13.6% during the same time period ($376.69M vs. $331.59M y/y). Inventory, as a percentage of current assets, decreased from 30.09% to 29.9% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30). Earnings due 8/20.
2. Bebe Stores, Inc. (BEBE, Earnings, Analysts, Financials): Engages in the design, development, and production of women’s apparel and accessories. Market cap at $494.23M, most recent closing price at $5.88. Revenue grew by 10.54% during the most recent quarter ($121.03M vs. $109.49M y/y). Inventory grew by 0.53% during the same time period ($34.23M vs. $34.05M y/y). Inventory, as a percentage of current assets, decreased from 14.22% to 13.62% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-04-02). Earnings due 8/23.
3. Cato Corp. (CATO, Earnings, Analysts, Financials): Operates as a specialty retailer of fashion apparel and accessories in the southeastern United States. Market cap at $805.2M, most recent closing price at $27.65. Revenue grew by 0.61% during the most recent quarter ($275.34M vs. $273.66M y/y). Inventory grew by -3.54% during the same time period ($120.75M vs. $125.18M y/y). Inventory, as a percentage of current assets, decreased from 28.48% to 26.09% during the most recent quarter (comparing 3 months ending 2012-04-28 to 3 months ending 2011-04-30). Earnings due 8/13.
4. Foot Locker, Inc. (FL, Earnings, Analysts, Financials): Operates as a retailer of athletic footwear and apparel. Market cap at $4.97B, most recent closing price at $32.86. Revenue grew by 8.68% during the most recent quarter ($1,578M vs. $1,452M y/y). Inventory grew by -1.12% during the same time period ($1,146M vs. $1,159M y/y). Inventory, as a percentage of current assets, decreased from 54.16% to 50.91% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30). Earnings due 8/13.
5. Pacific Sunwear of California Inc. (PSUN, Earnings, Analysts, Financials): Operates as a retailer rooted in the action sports, fashion, and music influences of the California lifestyle. Market cap at $145.56M, most recent closing price at $2.16. Revenue grew by 1.13% during the most recent quarter ($173.82M vs. $171.88M y/y). Inventory grew by -10.33% during the same time period ($103.87M vs. $115.84M y/y). Inventory, as a percentage of current assets, decreased from 72.73% to 68.72% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30). Earnings due 8/20.
6. Ross Stores Inc. (ROST, Earnings, Analysts, Financials): Operates off-price retail apparel and home accessories stores under the Ross Dress for Less and dd’s DISCOUNTS brand names in the United States. Market cap at $14.91B, most recent closing price at $66.10. Revenue grew by 13.61% during the most recent quarter ($2,356.84M vs. $2,074.58M y/y). Inventory grew by -3.24% during the same time period ($1,134.7M vs. $1,172.72M y/y). Inventory, as a percentage of current assets, decreased from 58.72% to 55.11% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30). Earnings due 8/16.
7. Zumiez, Inc. (ZUMZ, Earnings, Analysts, Financials): Zumiez Inc., founded in 1978, is a mall-based specialty retailer providing sports-related apparel, footwear, equipment, and accessories. Market cap at $1.13B, most recent closing price at $32.46. Revenue grew by 22.72% during the most recent quarter ($129.9M vs. $105.85M y/y). Inventory grew by 11.54% during the same time period ($70.44M vs. $63.15M y/y). Inventory, as a percentage of current assets, decreased from 29.55% to 26.7% during the most recent quarter (comparing 13 weeks ending 2012-04-28 to 13 weeks ending 2011-04-30). Earnings due 8/30.
(Written by Ryan Horch)
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Dig Deeper: Access Company Snapshots, Charts, Filings
- American Eagle Outfitters, Inc. (AEO, Chart, Download SEC Filings)
- Bebe Stores, Inc. (BEBE, Chart, Download SEC Filings)
- Cato Corp. (CATO, Chart, Download SEC Filings)
- Foot Locker, Inc. (FL, Chart, Download SEC Filings)
- Pacific Sunwear of California Inc. (PSUN, Chart, Download SEC Filings)
- Ross Stores Inc. (ROST, Chart, Download SEC Filings)
- Zumiez, Inc. (ZUMZ, Chart, Download SEC Filings)
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