Gordmans Stores Inc. (GMAN) posted earnings per share of 44 cents in the fourth quarter of fiscal 2010, ahead of the Zacks Consensus Estimate of 41 cents and above the year-earlier quarter performance of 40 cents. Earnings growth was mainly aided by improvements in comparable store sales and gross profit margins.
For fiscal 2010, Gordmans Stores earned 91 cents per share versus $1.02 in the prior year.
Total revenue for Gordmans Stores grew 9.3% year over year in the fourth quarter to $168.4 million. Net sales surged 13% year over year to $517.0 million during fiscal 2010. Quarterly comparable store sales increased 6.0% year over year while yearly comparable store sales increased 8.4%.
During the quarter, Gordmans Stores’ gross profit increased 11.6% year over year to $67.1 million. Gross margin expanded 80 basis points to 39.8%, driven by curtailed selling, general and administrative costs.
Financials
At quarter-end, Gordmans Stores had cash and cash equivalents of $29.4 million, compared to $16.6 million in the year-ago period. Long-term debt was $7.6 million versus $6.4 million at the end of fourth quarter 2009.
Outlook
Gordmans Stores anticipates net revenue between $119 million and $121 million and $563 and $571 million for first quarter and full fiscal 2011, respectively. Both estimates represent low single-digit comparable store sales growth.
Management expects earnings per share in the range of 34–36 cents for the first quarter and $1.30–$1.35 for full fiscal 2011.
Our Take
Gordmans Stores is a large pool of the latest brands, fashion and styles, operating 68 stores in 16 Midwestern and surrounding states in the U.S. We believe, going forward, the company’s merchandising, marketing and inventory management initiatives will further enhance its same-store sales results. The company is also in an expansion mode and plans to open six new stores, relocate one and enter two new markets. Hence, we remain optimistic on the company’s growth factor. In fact, a positive sentiment has been noticed among the analysts, following the earnings release. However, stiff competition in the industry remains a concern for the company.
Gordmans Stores currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. We are also maintaining our long-term “Neutral” recommendation on the stock. One of Gordmans Stores’ peers The TJX Companies Inc. (TJX) currently retains the Zacks #2 Rank, which translates into a short-term ‘Buy’ rating.
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