Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Pacific Sunwear of California, were getting dumped today, falling as much as 26%, as guidance in its first-quarter report was underwhelming.
So what: The apparel retailer actually beat estimates in the past quarter, as comparable sales improved 3%. Meanwhile, overall sales actually fell 3%, to $166.4 million, due to store closures; but that matched estimates. On the bottom line, the company's $0.11 per-share loss was better than expectations of a -$0.13 shortfall. CEO Gary Schoenfeld said the company was competing in a "tough marketplace," and that weakness in some women's categories had prompted a "cautious outlook for the current quarter."
Now what: For the current quarter, the company sees comparable sales going negative for the first time in two years, and expects an EPS loss of -$0.08 to -$0.02, worse than the Wall Street view at a $0.02 profit. Revenue guidance of $200-$210 million was also below the consensus at $216.1 million. While that guidance may be conservative, and Schoenfeld pointed to growth in the company's men's division, after three straight years of losses, Pacific Sunwear doesn't deserve the benefit of the doubt from investors. I'd like to see more convincing steps to profitability and growth before considering investing in PacSun.
Will this stock be your next multi-bagger?
Give us five minutes, and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer handpicks one stock with outstanding potential. But it's not just any run-of-the-mill company; it's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% during the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.
The article Why Pacific Sunwear of California, Inc. Shares Got Burned originally appeared on Fool.com.Jeremy Bowman 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.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.