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4 Women's Apparel Stocks: Earnings Winners & Losers

NEW YORK ( TheStreet) -- Wall Street was unimpressed with first-quarter results out of women's apparel retailers, despite some impressive beats. Here is a rundown of how four fared....

Ann

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Ann (ANN - Get Report) isn't getting any love from Wall Street despite posting a 21% jump in first-quarter earnings and raising its full-year outlook.

The market, which is demanding perfection out of the retailers that reported first-quarter results this week, is instead choosing to focus on the slight gross margin decline.

"In the current environment, we believe investors demand perfection and reports that don't live up to such lofty goals are being spurned," Janney Capital Markets analyst Adrienne Tennant wrote in a note.

During the quarter, Ann, which operates AnnTaylor Stores and Loft, reported a profit of $27.3 million, or 51 cents a share, on revenue of $523.6 million. Analysts were calling for EPS of 48 cents a share on revenue of $510 million.

Gross margin slipped to 57.3% from 59.4%, hurt by unseasonable weather, the later Easter and a promotional environment.

While improved sales did come at the expense of gross margin, it looks like Ann may not have to raise ticket prices to offset higher sourcing costs in the second half of the year.

"Ann has been one of, if not the best, at managing and preparing for these cost increases," Tennant noted. "As such, they have noted a complete mitigation of full-year costs and as a result will not be raising the price the vast majority of their product. As competitors are forced to attempt to pass on costs to customers in the form of price hikes, we believe Ann may benefit from an offering that comes free of an uptick."

Looking ahead, Ann foresees full-year sales of $2.2 billion, from its prior forecast of $2.18 billion. For the second quarter, it is calling for sales of $550 million compared with Wall Street's outlook of sales of $543 million.

"While the stock could get penalized today on first-quarter expectations falling short at Loft stores and gross margin, April strength and raised full-year guidance should be rewarded," UBS analyst Roxanne Meyer wrote in a note. "Ann is one of the few to deliver sales and margin growth this year, helped by being at the forefront of sourcing costs."

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