Charlotte Russe guides in line with the Street for FY08 Q1, Q4 beats by penny
Teen fashion retailer Charlotte Russe Holding, Inc. (Nasdaq: CHIC) said after Wednesday’s close that it expects 2008 first fiscal quarter earnings to be in line with the Street due to a positive October and November. The small cap also reported fiscal fourth-quarter earnings a penny above the consensus on Wall Street.
For the first quarter of fiscal 2008, Charlotte Russe guided for a flat to low single digit decline in comparable store sales and earnings of $0.47 to $0.50 per share. Three analysts polled by Thomson Financial are on average forecasting earnings of $0.48 per share. The company earned $0.55 per share for the first quarter of 2007.
“They are already 40% through their quarter so they have good visibility and are running positive comps,” said FBR Capital analyst Adrienne Tennant. “As we get into December, comps will get easier … the notion that guidance is beatable because it is so conservative is boosting the stock today.” Tennant’s EPS estimate for the first quarter stands at $0.48.
Charlotte Russe said it has seen continued improvement in sales trends so far for the first quarter of fiscal 2008 due to a well-received merchandise line and good inventory management.
“The consumer, who had been holding back given an unseasonably warm October, began to come out in early November and shop for winter clothing now that the weather has turned cold,” said Tennant.
The mall-based retailer also reported fourth quarter results after the closing bell Wednesday. For the last three months ended Sept. 29, Charlotte Russe recorded diluted earnings per share of $0.33, a penny above the Thomson Financial mean earnings estimate or $0.32 per share. For the fourth quarter of 2006, the company netted $0.51 per share.
Net sales for the fourth quarter increased 0.9% to $190.3 million from $188.6 million for the fourth quarter last year.
Comparable store sales dwindled 5.3% for the quarter, compared with an increase of 7.4% for the fourth quarter of fiscal 2006. Charlotte Russe said comparable store sales declined due to continued languishing consumer spending and a decline in store traffic that began in June and continued through July. The company noted that although it saw an improvement in store traffic in August and September, it was not enough to offset a slow start to the quarter.
Tennant, who values the stock as trading at 4 times EV/sales and a 10.7 times price to earnings, currently has a “market perform” rating on the stock and said she is remaining on the sidelines given the expected near-term volatility.
Shares of Charlotte Russe (CHIC) rose $1.59, or 11.13%, to $15.88 at noon. Shares of Charlotte Russe have been trading in the range of $12.27 to $33.93 for the past 52 weeks.
