Why Christopher & Banks Earnings Could Stay in the Red

Christopher & Banks (NYSE: CBK  ) will release its quarterly report on Tuesday, and investors have been increasingly nervous lately about the women's retailer's prospects. Substantial growth in Christopher & Banks earnings remains elusive, and in a highly competitive industry, the company needs to figure out a viable strategic direction to get maintain consistent profitability.

To its credit, Christopher & Banks has already engineered a solid turnaround. The retailer has had success in narrowing its losses and in remaining independent after a hostile takeover attempt. Yet in the ever-changing women's retail industry, one quarter's success can give way to disappointment the next, forcing the company to keep working to sustain its upward momentum. Let's take an early look at what's been happening with Christopher & Banks over the past quarter and what we're likely to see in its report.

Stats on Christopher & Banks

Analyst EPS Estimate

($0.02)

Year-Ago EPS

($0.06)

Revenue Estimate

$105.37 million

Change From Year-Ago Revenue

1.9%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can Christopher & Banks earnings keep its good momentum this quarter?
Analysts have had mixed views on Christopher & Banks earnings in recent months. They've widened their July quarter loss projections by a penny per share, but they've increased their profit expectations for the full year by $0.02 per share. The stock, though, has lost ground, falling 14% since early June.

Christopher & Banks came into the quarter with strong momentum, posting solid results in its April quarter. Despite some of the headwinds that faced the retail industry generally, C&B posted an impressive 23% gain in same-store sales, posting overall revenue growth of 16% despite cutting its store count as part of its restructuring efforts. The company posted an unexpected profit for the quarter, reversing a year-ago loss and surpassing expectations.

Going forward, though, C&B will have tougher comparisons. In its guidance, the company said it's looking for same-store sales to grow 8% to 10% in the July quarter, adding on to similar positive comps in the year-ago quarter. It'll be hard for Christopher & Banks to sustain the pace of its recovery going forward without taking new extraordinary measures.

Moreover, competition continues to be tough in the industry. Chico's (NYSE: CHS  ) reported late last month that its net income fell 18% during the second quarter. Investors bid shares up because of positive comments that Chico's management made about prospects for the third quarter, but the disappointing second-quarter results point to the difficulty in the retail environment during the spring months. At the other end of the spectrum, Ann Taylor operator ANN (NYSE: ANN  ) posted record earnings per share, growing 21% year-over-year on a 9.3% increase in brand-comparable sales for its regular Ann Taylor retail channel that offset declines from its outlet channels.

In the Christopher & Banks earnings report, watch to see whether C&B's results more closely resembles ANN or Chico's. At a critical time for the women's retail industry, Christopher & Banks can't afford to let up in its recovery efforts and needs to follow through on its past successes.

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