Home / Markets / Industries / Retail
Tuesday, November 25, 2008
Zale, American Eagle, Chico's FAS Profits Sag
Kathryn Elizabeth Tuggle
FOXBusiness
More bad news from the retail sector hit today, as Chico’s FAS (CHS), American Eagle (AEO), and Zale’s (ZLC) all posted earnings far below totals for last year. The three retailers all operate out of malls, and are affected by declining mall traffic and consumers’ desire to pinch pennies for more essential items like food, housing, and gasoline.
Chico’s FAS, the Fort Myers, Fla.-based retailer of casual women’s clothing and accessories, reported third quarter earnings of just 1 penny per share, or $2 million. This is approximately twelve times lower than Chico’s last year’s earnings of 13 cents a share, or $24 million.
Sales at Chico’s, which makes clothing generally geared towards women 35 and older, totaled $394 million, a drop of 5.2% year over year.
In a company statement, Chico’s Chief Executive Scott Edmonds said that lower sales and fewer transactions were responsible for a greater-than expected amount of markdowns.
Chico’s also owns the dress clothing retailer, “White House|Black Market.” The company operates over 1,000 retail stores in the U.S. and its territories.
At American Eagle Outfitters, the Pittsburgh, Pa.-based retailer of young adult clothing, third-quarter profits dropped 57% year over year as mall traffic decreased.
The company, which offers apparel geared towards teens aged 15 to 25, had income of $42.6 million, or 21 cents per share for the quarter, down from $99.4 million, or 45 cents from a year prior.
Sales at American Eagle stores, including the 987 stores operated in the U.S. and the 39 “Aerie” stores that sell undergarments, fell 7% as women’s clothing purchases slowed.
American Eagle hopes to attract more teens to stores this holiday seasons with promotions like, “buy one, get one 50 percent off,” of tops and jeans.
At Zale Corporation, the Irving, Texas-based fine jewelry retailer, larger-than expected losses were posted due to consumers cutting back on luxury spending. Zale’s losses totaled $1.43 per share, or $45.3 million, while Thomson Reuters analysts predicted a loss of 95 cents per share.
Last year, the company, which operates 1,396 stores in the U.S., and also operates under the names “Gordon's Jewelers,” “Peoples Jewellers,” and “Mappins Jewellers,” posted losses of $28.4 million, or 58 cents per share. This year marks the second year of declining profits for the company, which has announced plans to close 105 stores and cut 200 jobs to save money.
Zale’s also operates 739 Kiosks in malls called “Piercing Pagoda” and “Plumb Gold.”
FOX Translator
No data currently available.
No data currently available.
Some mutual funds want you to pay for the privilege of them (or your investment adviser) taking your money to invest. It's called a load, and it works like a cover charge to get into a nightclub. Luckily, there are such things as no-load funds. As the name implies, shares of these funds are sold without a fee paid to a broker or investment advisor.
The entire amount you invest in no-load funds goes to work for your returns. On the other hand, with load funds, right off the bat you're charged commission (not to mention other fees incurred over the life of the investment). Let's say, for example, you invest $25,000 into a load fund that charges a 5% commission. This costs you $1,250 off the top, bringing your actual investment down to only $23,750.
The often-cited horse race analogy argues against investing in load funds. Here's the logic behind it: Would you place a bet on a horse that had to start a race 200 yards behind the others? Well, maybe you would if you got a tip from a sketchy, trench coat-clad man in a dark alley. However, under most circumstances, it's not smart to put your money on that handicapped horse.
But some argue that at times that man in the trench coat (aka your broker) knows more about the horses than you do, and has a better shot at picking a winner. Also, sometimes these fees are unavoidable because some funds are available only through investment advisers.
Cost-benefit analysis can help determine when a load fund is worth it (in other words, when it will score you a load) and when it is better to "do it yourself" and avoid the fees. Load-fund fees range depending on share class and can cover a variety of costs, such as paper work and fund management.
