Joe's Jeans (NASDAQ:JOEZ) will release its quarterly report next Monday, and the tiny company is hoping to return to its profit-making ways after posting a loss in its fiscal first quarter. But, with a major transaction having taken place in the industry, Joe's will have to work hard in order to maintain its competitive position in high-end retail.

Joe's has had great success in attracting buyers for its premium jeans, with shoppers willingly paying up for its products. But, as other retailers clue in and seek to capitalize on the space, can Joe's fend off much larger competition? Let's take an early look at what's been happening with Joe's Jeans over the past quarter, and what we're likely to see in its quarterly report.

Stats on Joe's Jeans

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$32.47 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Joe's Jeans earnings turn around this quarter?
Analysts have been pessimistic about Joe's earnings prospects over the past few months. Although they've held steady on their May-quarter estimates, they've cut their full-year fiscal 2013 calls by two-thirds. The stock has also fallen back substantially, with shares down 14% since early April.

Most of the decline in Joe's share price came immediately after its April earnings report, in which the company reported a surprising loss. Even though the company saw sales increase 13%, and operating income rise 30%, the company took a substantial one-time charge related to contingent consideration buyout expenses. That charge relates to money that the company pays to founder Joe Dahan in lieu of the portion of the profits Joe's Jeans earns above certain tiered amounts through 2017. By fixing the amount owed, investors will earn more of the reward -- and bear more of the risk -- of the company's earnings experience than it would have under the previous agreement. Nevertheless, investors weren't pleased with the results, and sent shares down about 20% within a week after the announcement.

But Joe's Jeans isn't letting poor past performance stop it. The retailer is turning to plans to increase its domestic store count and expand internationally, with a targeted approach that chooses certain high-potential cities for growth. That has some analysts looking favorably on the stock, with one analyst upgrading Joe's Jeans early last month with expectations that moving away from its wholesale business, and toward reaping more full-price retail sales, should help boost profitability.

The big change for Joe's Jeans, though, will come from the private-equity buyout of rival True Religion (NASDAQ:TRLG). With private equity firm TowerBrook finding True Religion's loyal customer following and established brand to be valuable assets, Joe's needs to plan for heightened competition as TowerBrook seeks to make the most of its investment. Moreover, with True Religion's situation in flux, The Buckle (NYSE:BKE), which has also tried to capitalize on the high-end jeans business, has a new chance to try to capture some of True Religion's customers during the transition. Yet, Buckle's weak performance during its most recent quarter shows that the door might still be open for smaller competitors like Joe's Jeans to make its own play for True Religion customers.

In its earnings report, watch for Joe's Jeans to comment on how lower-cost jeans offerings at Macy's are faring. Originally announced early last year, the move is a dangerous one for Joe's, as it has the potential to water down its premium reputation. At the same time, by opening a new audience for the company, it could also attract sales for its full-priced lines. If that's happening, then it'll be clear that Joe's Jeans has the potential to produce substantial growth in the future.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends The Buckle. The Motley Fool owns shares of The Buckle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.