March 6, 2013
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Maidenform (NYSE: MFB ) were looking worn today, falling as much as 12% after a disappointing quarterly report.
So what: Sales for the bra and underwear maker grew 8.5% in the fourth quarter to $135.1 million, while adjusted earnings per share clocked in at $0.22. Earnings matched analyst estimates, while revenue came in slightly ahead, but guidance surprised investors. EPS for 2012 dropped from $1.73 to $1.41, and CEO Maurice Reznik said 2013 would be "a transition year with steps to invest in our iconic brand and prune underperforming businesses." For 2013, the company expects sales between $575 million and $595 million, and EPS of $1.20 to $1.30. For the current quarter, management expects a per-share loss of $0.05 to $0.10. Both earnings figures were well below estimates.
Now what: The expected first-quarter EPS loss and decline for the full year is concerning, but management seems to recognize that changes need to be made in order to grow sales again. At the updated 2013 guidance, the stock is trading at a reasonable P/E of 13. Maidenform is a 91-year-old company with a well-known brand and strong partner relationships. I'd give management a chance to restructure before ditching shares.
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