Conn's, Vera Bradley, ANN, Gap and Stein Mart highlighted as Zacks Bull and
Bear of the Day
CHICAGO, July 2, 2013
CHICAGO, July 2, 2013 /PRNewswire/ --Zacks Equity Research highlights Conn's
(Nasdaq:CONN-Free Report) as the Bull of the Day and Vera Bradley
(Nasdaq:VRA-Free Report) as the Bear of the Day. In addition, Zacks Equity
Research provides analysis onthe ANN Inc. (NYSE:ANN-Free Report), Gap Inc.
(NYSE:GPS-Free Report) and Stein Mart Inc. (Nasdaq:SMRT-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
I last wrote about appliance, electronics, and furniture retailer Conn's
(Nasdaq:CONN-Free Report) as a Zacks #1 Rank Strong Buy in April after another
solid quarterly report confirmed the growth that the Street was still
If you've watched the 3-year decline of "big box" appliance and electronics
retailer Best Buy, you may have thought that this is a business model to stay
away from. I certainly thought so until I discovered Conn's, a family-built
retailer with over 55 stores in Texas, 6 in Louisiana, and newer footholds in
Oklahoma City, Albuquerque, and Tucson.
Conn's roots go back to 1890 where it started life as a plumbing company in
Beaumont, Texas. In 1934, Carroll Wayne Conn, Sr bought the company and within
a few years began selling refrigerators and gas ranges. He didn't become the
Sam Walton of appliances, but his legacy built a brand that Texans have come
to know and trust.
Bear of the Day:
Vera Bradley (Nasdaq:VRA-Free Report) is a designer, producer, and retailer of
accessories for women. Its products include handbags, accessories and travel
and leisure items.
The company's unique fashion-statement purses appeal to younger demographics
in a price range of $28 to $128. This design niche seemed very promising with
the company's IPO in October 2010 at $23. But after a quick peak above $50 in
the first half of 2011, it's been all down hill.
In its June 5 earnings report, the handbag maker cut forecasts and said its
CEO was leaving as inventories were bulging, soaring 41% from a year earlier.
The stock dropped over 10% the next day, bouncing off of $19.50 as investors
scooped up shares and prevented a new 52-week low, which was exactly one-year
ago today at $19.26.
"With wholesale revenues continuing to weaken and same-store sales flattening
out with just 85 stores, top-line growth continues to come into question,"
said an analyst from Sterne Agee.
The CEO switch did not impress analysts either with CEO Michael Ray's pending
departure coming just 5 months after CFO Jeff Blade left. But it was the
guidance which dampened sentiment the most.
The company announced they expect Q2 EPS of $0.31 to $0.33 on revenues of
$123-126 million vs. analyst consensus expectations of $0.39 on revenues of
VRA also lowered its FY14 guidance, seeing EPS of $1.74-1.78 on revenues of
$570-575 million. Analysts were looking for EPS of $1.81 on revenues of $591
ANN Downgraded to Strong Sell
Zacks Investment Research has downgraded ANN Inc. (NYSE:ANN-Free Report), the
New York.-based retailer of upscale women's clothing to a Zacks Rank #5
Why the Downgrade?
ANN has been witnessing downward estimate revisions after it reported
disappointing first-quarter fiscal 2013 results, which prompted management to
lower its fiscal 2013 outlook.
This apparel retailer, which targets women in the age group of 25 to 55 years,
declared its results on Jun 6, 2013, with earnings of 44 cents per share, down
24.1% from 58 cents in the prior-year quarter. The year-over-year fall in the
bottom line was primarily due to increase in promotional and markdown
activities as well as higher operating expenses.
ANN's net sales for the quarter grew 2.5% year over year to $574.5 million,
but fell short of the Zacks Consensus Estimate of $579.0 million. Comparable
store sales dropped 0.5% in the quarter.
Following weak quarterly results, ANN lowered its fiscal 2013 net sales
forecast to $2.54 billion from $2.565 billion projected earlier. Similarly,
gross margin is presently expected to be 54.5%, compared with 55.0% projected
Consequently, we are witnessing a revision in the Zacks Consensus Estimate.
The Zacks Consensus Estimate for the second quarter of fiscal 2013 fell by
3.0% and 4.4% over the last 7 and 30 days respectively, to 63 cents per share.
Additionally, over the past 7 days, the Zacks Consensus Estimate for fiscal
2013 and 2014 dropped by 1.0% and 1.6% to $2.14 and $2.49 per share,
Other Stocks to Consider
Not all stocks in the retail sector are performing as disappointingly as ANN.
Other stocks worth considering in the apparel retail industry include Gap Inc.
(NYSE:GPS-Free Report) and Stein Mart Inc. (Nasdaq:SMRT-Free Report), which
carry a Zacks Rank #2 (Buy).
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