Chicago, IL – March 20, 2013 – Zacks Equity Research highlights Cabela's (CAB) as the Bull of the Day and JoS. A. Bank Clothiers, Inc. (JOSB) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Lululemon Athletica Inc. (LULU), New York & Co. (NWY) and Ascena Retail Group Inc. (ASNA).
Full analysis of all these stocks is available at http://at.zacks.com/?id=2678.
Here is a synopsis of all five stocks:
Bull of the Day:
Cabela's (CAB) surprised Wall Street recently when it announced first quarter EPS guidance that blew away the Zacks Consensus Estimate as growth remained strong across most of its product categories. This Zacks Rank #2 (Buy) is expected to post another year of double digit earnings growth in 2013.
Cabela's is more than just a retailer that sells hunting, fishing, and camping merchandise. It only has 35 stores in the U.S. and Canada but customers have been known to drive vast distances to go to a store.
The larger legacy stores are built like large log cabins and have unique features such as in-house restaurants, some which serve wild boar, trophy animal mounts displayed on indoor mountains and big aquariums filled with fish.
You don't just go to Cabela's to shop. You go there for the experience. When a new store opens, it's a big event. It's not unusual to see 10,000 to 15,000 people show up at a grand opening.
Cabela's ecommerce and catalog business has been struggling in recent years but the last two quarters has seen a turnaround. While half of the recent direct sales growth came from ammunition sales, women's and children's apparel also saw strong sales so it's not ALL guns and ammunition.
Bear of the Day:
What happens when the promotions you've run for years stop working? JoS. A. Bank Clothiers, Inc. (JOSB) warned in January that fiscal 2012 net income would be 20% less than the year before and blamed, in part, poor promotions. Fiscal 2013 estimates have been cut which has pushed the stock to a Zacks Rank #5 (Strong Sell).
JoS. A. Bank is best known for its infamous "Buy 1 suit get 7 suits free" promotion which leave you asking "how DOES it make money off of that?" The men's retailer has run catchy promotions for years but now it seems to be catching up with the company.
On Jan 25, in an earnings warning, the company said its holiday promotions didn't work as well. It stated, "historically, we have had strength with these types of items, but our customers (specifically at our stores) didn't respond as well to our promotional offers as they had in the past."
After awhile, the consumer seems to become immune to the discounts. 30% off used to be good and then stores had to use 40% off. Recently it seems only 50% will make them open their wallets. When a retailer has to keep upping the ante with greater and greater discounts, it's not a good sign.
Latest Posts on the Zacks Analyst Blog:
Product Recall to Hurt Lululemon’s 1Q
Shares of the Canada-based yoga-wear retailer Lululemon Athletica Inc. (LULU) shares dropped after the company announced that it will fail to meet the sales forecast in the first quarter of fiscal 2013 due to a product recall. The stock has fallen nearly $8 per share since last week.
Lululemon revealed that owing to some quality issues in materials used, it is pulling back its black Luon pants and crops from its stores and website. The company noticed that the products, which were shipped to its stores on Mar 1 and thereafter, had some wardrobe malfunction.
Lululemon, which is known for its quality standards, has therefore announced that the customers, who have purchased Luon products either from its stores or online after Mar 1, may get a replace or full refund. Luon products account for approximately 17% of all women’s bottoms available at the company’s outlets.
Management stated that the product recall would significantly hurt its sales in the first-quarter fiscal 2013 financial results. Consequently, Lululemon lowered its sales forecast for the quarter. The company now expects its comparable-store sales (comps) to increase between 5% and 8%, down from previous projection of 11%.
As a result, Lululemon also lowered its sales forecast range to $333–$343 million from its earlier projected range of $350–$355 million. However, the company is yet to determine the impact of this product recall on its first-quarter and fiscal 2013 bottom line.
Lululemon, which competes with New York & Co. (NWY) and Ascena Retail Group Inc. (ASNA), is scheduled to report its fourth-quarter and fiscal 2012 financial results on Mar 21. On the back of high-single-digit sales growth expectation at comparable stores, the company anticipates its revenue for the fourth quarter to be at the higher-end of previously-guided range of $475–$480 million.
On these assumptions, Lululemon expects to post earnings of 74 cents per share in the to-be-reported quarter, which is in line with the Zacks Consensus Estimate.
Get the full analysis of all these stocks by going to http://at.zacks.com/?id=2649.
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Read the analyst report on CAB
Read the analyst report on JOSB
Read the analyst report on LULU
Read the analyst report on NWY
Read the analyst report on ASNA
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