All hail the mighty mall rat. That's particularly true if you're a youth/teen-oriented retailer like Aeropostale
Sales growth at this mall-based retailer of faux jewelry and accessories was on the order of only 5% this quarter (and up 6% on a comparable-store basis), but the company continues to make progress with its margins. As the company built upon better gross margins (up 1.4 points) through to the operating margin line, operating income grew more than 21%, and per-share income from continuing operations (excluding special tax expense) climbed 27%.
Claire's also generated more of that lovely cash in this fiscal year. While I'm still disappointed that the company doesn't provide a cash flow statement, information on the call lets you calculate that the company produced about $170 million in free cash flow for 2005 -- a nice lift from last year's $136 million, and up about 12% compounded over the last three years -- and that's including the spending on growth projects.
What Claire's will do with all that cash has been a hot topic, and management did give a little insight. At the bottom line, they're hanging on to most of it, as they're looking to use the cash to explore new concepts, franchising opportunities, and other operational improvements. That may disappoint those hoping for a bigger payout, but if management can continue to generate these high levels of return on invested capital on this cash hoard, that'll simply produce all the more cash to distribute later.
While there's competition -- Zale's
For more Foolishness on the teen scene:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).