With the gift-giving season fast approaching (here comes Black Friday), what better time to revisit a retailer's recent earnings? Last week, Too Inc.
Too, which many remember from the days before it was spun off by Limited
Its third-quarter net income more than doubled to $11.5 million, or $0.33 per share. Sales jumped a whopping 20% to $174.9 million, with same-store sales increasing by 11%. Longtime Fool Rick Munarriz saw the writing on the wall back in October, when Too's same-store sales figures held a promising outlook for yearly earnings.
A quick peek at the company's balance sheet and cash flow statement shows that cash and equivalents increased 7% to $122.7 million. Foolish investors might like the fact that free cash flow for the first nine months of the year was $9.2 million, a vast improvement over last year at this time, when the company had negative free cash flow.
Among the things investors will want to continue watching is how Too's low-cost offshoot, Justice, does. Justice is meant to appeal to value-conscious tweeners. (Or rather, it may be the parents, who have their hands on the wallets, who are the value-conscious ones.)
According to the company's conference call, Justice is still reporting a "small" operating loss, which was within Too's expectations. With a current store count of 33, though, the expanding concept certainly bodes watching. So far, the company believes Justice competes with Wal-Mart
In its conference call, the company underlined its conservative guidance for same-store sales, saying that this year it lacks certain catalysts, such as a promotion program it had with McDonald's
Investors eyeing a stake in Too should keep in mind that the stock price has been steadily marching upward, and it's currently trading at a forward P/E of 22. Although there's plenty to like about Too, one might wonder whether it's a little late to call it a bargain.
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Alyce Lomax does not own shares of any of the companies mentioned.