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).
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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 underestimating.
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 $136 million.
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 million.
Additional content:
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 (Strong Sell).
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 earlier.
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, respectively.
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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