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) 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."

New York & Company

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New York & Company ( NWY) fell more than 5% to $5.50 on Friday, despite the company reporting a smaller loss in its first quarter.

During the quarter, the company saw a loss of 4 cents a share on an adjusted basis on revenue of $239.4 million. Analysts were looking for a bigger loss of 8 cents a share on revenue of $236.6 million.

Avondale Partners analyst Mark Montagna advised investors to buy shares of New York & Company on the results.

The quarter demonstrated the impact of management's strategies of increasing full-priced selling by providing compelling assortments for its customers, controlling markdowns and carefully managing inventory levels, Brean Murray analyst Eric Beder noted.

"We believe results through this transitional year will reflect the constant improvements to the core businesses and will allow for both top and bottom-line upside," Beder wrote. "That said, we remain conservative in our estimates until we are provided with evidence of profit sustainability."

Chico's

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While Chico's ( CHS) reported better-than-expected profit, noting more full-priced selling, its sales fell short of analysts' estimates, sending shares in the red.

During the quarter, Chico's, which operates namesake stores, the White House Black Market chain and Soma Intimates, earned $45.9 million, or 26 cents a share, compared with $35.4 million, or 20 cents, in the year-ago period. Sales rose 11.5% to $537.2 million.

Wall Street was calling for a profit of 25 cents on revenue of $544.4 million.

"While we believe that Chico's turnaround is on its ways, much has been recognized by the Street, evidence in the share price," Stifel Nicolaus analyst Richard Jaffe wrote in a note.

Coldwater Creek

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Coldwater Creek ( CWTR)was the biggest loser in the space this week, with shares plunging more than 21% following its warnings that it will report a bigger-than-expected loss in its first-quarter.

The company foresees a loss of between 32 cents and 34 cents a share on revenue of $180 million, while analysts are predicting a loss of 10 cents on revenue of $219.1 million. This would assume an approximately 28% plunge in same-store sales during the quarter, analysts estimate.

"We are in the process of repositioning our brand and view 2011 as a transitional year for Coldwater Creek," Chief Executive Dennis Pence said in a statement.

Coldwater Creek's merchandise continues to uninspire its core shoppers, an issue the entire sector has faced since even before the recession. In order to generate sales, the company has to resort to significant markdowns, which is expected to have eroded margins, according to Jaffe.

The company is scheduled to report its first-quarter results on June 1.

--Written by Jeanine Poggi in New York.

>To contact the writer of this article, click here: Jeanine Poggi.

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