Aeropostale Dives and The Fresh Market Blooms in After-Hours Earnings

Stocks climbed again as today as momentum stocks swung higher, and an existing home sales report lifted the housing sector. As a result, the Dow Jones Industrial Average  (DJINDICES: ^DJI  ) finished up 10 points or 0.06%, while the S&P 500 and Nasdaq added on 0.2% and 0.6%, respectively.

Existing home sales in April rose slightly as the seasonally adjusted annual rate improved from 4.59 million in March to 4.65 million, the first gain in the metric this year. That mark was slightly below estimates at 4.66 million, but it was good enough to lift homebuilder stocks as optimism about the housing recovery seems to be building again after cooling off during the slow winter months. April's total was still down 6.8% from a year ago, and inventory rose to 5.9 months from five in March, which can dampen demand for new homes to be built. Elsewhere, initial unemployment claims rose last week from 298,000 to 326,000. That was ahead of estimates at 305,000, though the four-week moving average, sometimes a favored indicator, fell by 1,000 to 322,500. The number of continuing unemployment claims also continued to fall, dropping to 2,653,000, its lowest level since December 2007 and a sign that the job market is on the right track. 

Source: Fool Flickr.

Retail earnings reports continued to roll on as Aeropostale  (NYSE: ARO  ) plummeted yet again after delivering its quarterly update. The teen fashion retailer was trading down 15% after hours, sinking on abysmal sales and guidance. Its first-quarter actually beat the low bar set by analysts as the company posted a loss of $0.52 per share against estimates of a $0.72-loss, though sales fell 12.5% to $395.9 million, missing the consensus at $409.1 million. Same-store sales fell by a whopping 13%. CEO Thomas Johnson noted a "challenging macroeconomic environment" with low mall traffic and unseasonable weather, but a pattern's established here as Aeropostale and its teen-focused brethren American Eagle and Abercrombie & Fitch have gotten crushed in recent quarters as tastes shift to fast fashion brands like H&M and Forever 21. For the current quarter, Aeropostale projected a per-share loss of $0.61-$0.55, worse than estimates of $0.50. The guidance seemed to reflect the fact that the company's problems extend beyond the weather, and Johnson said management was working to "transform the brand." Still, considering the stock is down nearly 80% in the last year, I wouldn't jump in until results improve.

Moving in the other direction was The Fresh Market  (NASDAQ: TFM  ) , whose shares surged 12% after its earnings report came out after hours. The natural-foods grocer matched results on the bottom line with per-share earnings of $0.43, but revenue grew 17.6% to $431 million on a 2.5% increase in comparable sales, ahead of the consensus at $420 million. The company's stock had gotten banged up recently as competition intensifies in the organic space so investors seemed to give it a big reward for beating sales estimates. For the full year, management sees comps of 1.5% to 3.5%, and an EPS of $1.56-$1.66 against estimates of $1.58. While that's a promising sign, I'm wary of the natural grocer segment after Whole Foods stock fell off a cliff, and I'd like to see stronger comps for a chain expanding so quickly.

Will this stock be your next multibagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with amazing potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303%! You don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2969361, ~/Articles/ArticleHandler.aspx, 10/22/2014 5:59:45 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement