If price gyrations are any indication, the market has had some trouble this past year coming to grips with Goody's Family Clothing's (NASDAQ:GDYS) proper valuation -- the difference between the stock price's 52-week high and low represents a clean double, signaling a lot of changing opinions throughout the year. Judging by the company's mixed third-quarter earnings report -- announced yesterday in commendable detail -- that market uncertainty seems likely to continue, albeit perhaps with an upward undercurrent.
The company reported a net loss of $0.02 per share, soundly beating analysts' predictions of losses from $0.03 to $0.09 per share. Total sales also inched up 1.4% to $285 million -- the low end of analysts' estimates -- while sales of the promising Duck Head brand increased again and made up just under 10% of total sales for the quarter. Finally, management repurchased $1.8 million of the company's stock and issued a round of dividends during the quarter.
However, comparable store sales decreased 2.7%, most likely because 240 of the company's stores are located in the Southeast and were hurt by the September hurricanes. Lots of companies have blamed their underperformance on hurricanes -- from Zale (NYSE:ZALE) and Bob Evans (NASDAQ:BOBE) to Applebee's (NASDAQ:APPB) and Select Comfort (NASDAQ:SCSS) -- but it's worth noting that Goody's management added a new culprit: "unreasonably warm weather during portions of the quarter." Hot weather is unpleasant, for sure, but I'm still trying to grasp how it hurts shopping for clothes in air-conditioned stores. Are more people just going around naked?
Still, heat or hurricanes, it's difficult to ignore Goody's financials. It's not often that you see a company with growing sales, $67 million in cash, and no debt valued at just $325 million. On one hand, that's certainly a reason why the stock was put on the Hidden Gems watch list. On the other hand, its market cap was fairly similar when it was put on that watch list a year ago. While Goody's is clearly an attractively priced company with a long history, somewhat of a niche business, and the ability to generate significant profits, it's also a prime example of why value investing requires patience, patience, and more patience.
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Fool contributor Marko Djuranovic owns shares in Select Comfort but no other companies mentioned in this article.
