It can be nice to be a teen-oriented retailer when most adults are cutting back on spending, although many such stores are suffering along with their adult-centric counterparts. But let's take a look at two teen retailers that held their own in the first quarter.
On the other hand, inventory increased by 25.5%, which did outpace revenue growth a tad. However, management last quarter discussed a calendar shift that caused the change in inventory levels on a year-over-year basis, which it said in its conference call is playing out until the end of May.
On a brighter note, Aeropostale was able to boost gross profit to 33.1% of sales, from 32.2% this time last year. So there's probably something to be said for Aeropostale's statement that it's striking the right balance between fashion and value for its customers lately. And of course, its good fortune might spell bad news for some teen retail rivals in an economic climate where every customer counts.
Aeropostale offered an outlook of $0.22 per share to $0.24 per share for the second quarter. That's just about on par with analysts' estimates.
Unlike Aeropostale, which has had a pretty good couple of months despite the economic pressures, Zumiez
However, in the first quarter, it looks like Motley Fool Hidden Gems pick Zumiez managed to stay on its board, at least in the sense that it beat Wall Street analysts' expectations for $0.03 per share in earnings. Net income decreased 12.5% to $1.4 million, or $0.05 per share. Net sales increased 14.4% to $78.7 million, with a same-store sales dip of 0.8%.
Zumiez's inventory also slightly outpaced sales, up 16.6%; gross margin dipped just a tad to 31.2% of sales, from 31.6% of sales.
Even if it wasn't the most impressive quarter ever, Zumiez's results looked OK in light of the difficult economic climate, and also looked good compared to rival Pacific Sunwear
Maybe somebody's ready to take off
Zumiez shares are a far cry from their peak last November, when they were trading at nearly $54 a pop. They look reasonable at these levels, and the retailer does have a PEG ratio of just 0.95.
However, Aeropostale looks reasonable too, with a PEG ratio of 0.94, and it's coming from a position of more strength. I like Zumiez, but I have to wonder if it's going to have a more difficult short term. At the moment, I have to say that I believe Aeropostale continues to looks like the slightly more tantalizing bargain of the two.