Two retailers posted disappointing third-quarter results Wednesday, despite matching analysts' estimates.
had a loss from a profit a year ago and cited a competitive promotional retail arena as well as more markdowns. Shares of the company were up slightly at $13.27 in morning trading.
Meanwhile, shares of
were down in morning trading after the company reported a drop in third-quarter earnings, saying a decline in sales, lower merchandise margins and higher buying and occupancy costs hurt overall results.
Going forward, Payless sees margins and quarterly results under pressure through the end of the year because of promotions.
In the quarter ended Nov. 1, Payless lost $2.2 million, or 3 cents a share, compared with earnings of $29.6 million, or 43 cents a share, a year ago.
Total revenue was $709.8 million, down 0.5% from $713 million last year. The company said same-store sales fell 1.4% during the quarter. Gross margin fell to 26.7% from 32.2% in the prior-year period. The company cited "aggressive" markdowns during the quarter.
"Following a difficult second quarter, we entered the third quarter with 22% more inventory than the previous year, and the belief that the retail environment would remain highly promotional in the second half of 2003," said CEO Steven J. Douglass.
The company said it continues to explore expanding its core business in new markets internationally. Payless cited its recent announcement of a joint venture agreement with Nichimen Corp. to test its concept in Japan. Under the agreement, Payless and Nichimen plan to open their first test store in 2004 in Japan.
Topeka, Kansas-based Payless said it expects total capital expenditures for fiscal 2003 to be $115 million.
In the fourth quarter, analysts are calling for a loss of a penny a share from a profit of 5 cents a share a year earlier.
New Albany, Ohio-based Too earned $4.5 million, or 13 cents a share, compared with $10.8 million, or 31 cents a share, in the previous-year quarter. Total sales were $148.9 million, down from $164.6 million in the year-earlier period. Comparable-store sales decreased 17%, compared with a drop of 1% in the same period last year. Too cited a weak apparel assortment for its back-to-school shopping offerings.
Shares of the company were recently down 62 cents, or 3.2%, at $18.88.
In the fourth quarter, the company said it expects "negative, mid-to-high single digit" comparable-store sales. Profit is seen at 50 cents to 60 cents a share, which is below analysts' projections of 63 cents a share. The company earned 72 cents a share in the year-ago period.
Too owns the Limited Too retail store chain, which caters to "'tween" girls ages 7 to 14.