Make Bank With Christopher & Banks Corporation
Dec 18th 2013 5:30PM
Updated Dec 18th 2013 5:32PM
The retail isn't easy these days with J.C. Penney on the ropes and Walmart pining about the state of the American consumer. This is not to say all retailers are suffering, in fact some are outright thriving. One such retailers is women's apparel focused Christopher & Banks Corporation . They aren't the only company in this sector performing well, as Christopher & Banks competes with peers ANN Inc. and Ascena Retail Group but it is certainly worth a closer look by Foolish investors looking for a strong retail play in their portfolios.
Christopher & Banks Corporation's results
Christopher & Banks Corporation reported its fiscal third-quarter results on Dec. 4. Net sales inched up 0.7% despite the retailer having 7.3% fewer stores. Same-store sales popped 4.9%. Net income exploded 139% to $8.6 million. It was the sixth consecutive quarter of positive same-store sales and net income gains.
Like many other retailers, Christopher & Banks is seeing a big surge in online sales. Sales grew 10.2% while average profitability per sale improved by 0.5%. Christopher & Banks recently launched a mobile version of its website. Since then, "mobile website traffic and revenue per user have both increased."
CEO LuAnn Via credited the success to "merchandise strategy, greater focus on targeted marketing programs, optimization of our multi-channel opportunities and our enhanced store experience." Though the company expects the "promotional environment to remain aggressive" through the holiday season, Christopher & Banks believes it will do well and grow over the next three years. Christopher & Banks expects solid same-store sales gains again in the holiday quarter.
In the call, Via described the retail space as "a "tough retail environment" and noted a "more aggressive promotional stance that we continued to see from our peers." Christopher & Banks actually saw less traffic during the quarter yet it was still able to grow sales through its strategies that yielded more sales per customer. Via is confident that Christopher & Banks will see "sustainable, long-term sales and earnings growth."
CFO Peter G. Michielutti revealed just how severely traffic was down, by 8.4%. Christopher & Banks was still able to overcome this decline with gains in overall sales and same-store sales. Just imagine if traffic had been positive? For the holiday quarter last year, same-store sales rose a mind-numbing 18.5%. If Christopher & Banks shows gains again this year as the company expects, despite lower traffic, it's an excellent sign.
How ANN stacks up
Just like Christopher & Banks, ANN's stores have figured out how to make money in this climate. Last quarter, ANN reported that net sales increased by 7% to $657.5 million. Same-store sales jumped 3.7% despite going up against a 5.5% rise in the year-ago period. Adjusted diluted earnings per share popped 17.1% to $0.76.
CEO Kay Krill said the success came despite a "challenging and highly promotional retail environment." She said that the customers simply responded to the "brand's fashionable assortment and exceptional value" and "our new shoe and jewelry collections." Apparently customers aren't just going to walk into the door and buy whatever you've got for them. There's money to be made in women's fashion if companies find the specific ingredients that women want and ANN as well as Christopher & Banks are successfully figuring that out. ANN expects that this year will be a record in terms of earnings per share.
Ascena Retail Group
Meanwhile, Ascena Retail Group reported its own fantastic results last quarter. Sales bumped up 5%, same-store sales rose 4%, and even its e-commerce sales rocketed 27%. While Ascena Retail Group still sees the environment as "challenging for the foreseeable future," the company still sees more growth ahead. Ascena Group had a great Black Friday and it is "cautiously optimistic" about the holiday season. The company has been making various investments in its SG&A in response to the environment, and those investments have been paying off as evidenced by the increased sales.
Foolish final thoughts
For Fools looking for a company doing well in the women's fashion world despite the economy, look no further than Christopher & Banks. While earnings next year are forecast to only be $0.32 per share, look for that number to rise. After all, this past quarter Christopher & Banks smashed the consensus estimate by more than double so its important to remember that estimates are just that - estimates. As Christopher & Banks, ANN Inc. and Ascena Retail Group show, it's still more than possible to make money and grow in women's fashion.
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The article Make Bank With Christopher & Banks Corporation originally appeared on Fool.com.Nickey Friedman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.