Skull and Bones for the Jewelry Market?

Who would've guessed that skulls, of all things, would be in fashion.

According to management remarks in the latest quarterly earnings conference call for Claire's Stores (NYSE: CLE  ) , this is exactly what the jewelry and accessories market is witnessing. Those hoping for a revival in Goth attire (was it ever alive?), will be disappointed -- the skulls being worn are the "cutesy" variety like those found in Pirates of the Caribbean. Unfortunately, there may not be enough dancing with the dead to resurrect the company's full-year results.

First-quarter sales were up marginally, by 3% compared with the same period a year ago. Claire's in North America and in the international market each increased comparable same-store sales in the low-single digits. Management pointed out that fashion trends in both markets are moving "in sync." In total, comps were up 3% year over year.

International sales were 28% of net revenues, down from 29% in the year-ago period. This doesn't reflect lower volume, but rather the negative effects of dollar exchange rates. Sales in Europe appear to be holding steady, save one country in particular, France. The social and political unrest in this country is hurting apparel retailers in this market.

During the call, management indicated that customers responded well to its spring merchandise lineup. In particular, jewelry is doing "extremely well," though management indicated that there is a change in jewelry styles under way. More specifically, the amount of layering is toned down from what they have seen in the past. Also, the jewelry items selected by consumers this year are less bold than last year's styles. Beyond jewelry, accessories (especially handbags) are also seeing greater attention from customers. Finally, celebrity lines are going strong, drawing shoppers into the stores. Celebrity branded sales are roughly 6% of net sales, up from year-ago levels.

Apparently this wasn't enough, since a late Easter negatively affected comps, bringing down overall results below management's expectations. Going forward, a rebound in the North American and European markets is not expected for the remainder of the year. As a result, the company is now projecting that earnings for the year will come in between $1.90 to $1.95 per share, as gross margins remain relatively flat and comps increase 3% to 4%.

Claire's Stores appears to be right on top of consumers' fashion tastes, but this will not be enough to spur substantial growth in the year ahead. This weakness provides ample time for prospective investors to make a sound decision, but it also should give one caution before diving in.

Slip into related Foolishness:

New York & Co. is aMotley Fool Hidden Gemsrecommendation.

Fool contributor Jeremy MacNealy has no financial interest in any company mentioned.

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.

Compare Brokers

Fool Disclosure

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: 513720, ~/Articles/ArticleHandler.aspx, 10/23/2016 8:27:30 PM

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...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
CHS $11.96 Up +0.07 +0.59%
Chico's FAS CAPS Rating: **
NWY $2.26 Down -0.01 -0.44%
New York and Compa… CAPS Rating: **
TLB.DL $0.00 Down +0.00 +0.00%
The Talbots, Inc. CAPS Rating: *