When everyone expects you to fail, even failure can be a success of sorts.

That appears to be the case with discount clothier Goody's Family Clothing (NASDAQ:GDYS) this morning. The company reported earnings that somehow managed to fall short of analysts' already bleak estimates. Investors were looking for a $0.14-per-share loss; Goody's gave them a $0.16 loss. Yet the company's stock shot up by as much as 5% on the news. So, what gives?

In this case, I'm afraid you'll have to ask some other Fool. I've studied the company's earnings release and don't see a ray of sunshine anywhere. Nope, not even the CEO's optimistic musing "that fiscal 2005 will be profitable." Hey, I'm optimistic that this weekend will be sunny and in the mid-70s, perfect barbecue weather -- but that doesn't mean it's going to happen.

Such executive murmurs of sweet nothings aside, there's very little to like in Goody's Q2 2005 earnings numbers. Plenty to hate, though. For example:

  • Quarterly sales are down 1% vs. Q2 2004.

  • Sales for the first half of fiscal 2005 are down 2% vs. H1 2004.

  • Despite the sales declines, the company's cost of goods sold increased in both periods.

  • Last year, Goody's reported net profits for both Q1 and H1. This year, it reported losses: $5.4 million for the second quarter; $7.2 million year to date.

  • Accounts receivable grew 69% over the past year.

  • Long-term debt increased by $12.2 million.

Sound pretty grim? It is.

How did Goody's get itself into this pickle? Find out in:

Fool contributor Rich Smith does not own shares in Goody's.