Though the thick of earnings season is behind us, several more key companies are still worth a look. We'll examine some of those earnings releases below, specifically focusing on retailers. And, as has been my M.O. for the last few weeks, I'm just as interested in what these companies didn't say as much as what they did.

IN PICTURES: 7 Tips On Buying A Home In A Down Market

Perry Ellis International Inc
Upscale fashion label Perry Ellis topped estimates for a 54 ceents per share loss by "only" losing 42 cents per share despite a 7.9% dip in the top line last quarter. Still, the company said to expect a profit of 70 to 85 cents next year; analysts were only looking for 68 cents worth of per-share income next year.

Encouraging? You bet, and the outlook was bolstered by specific comments like "Although our top line remains challenged for next quarter as retailers had already committed to conservative fall 2009 plans, we expect to pick up momentum during the month of October and return to solid growth for the fourth quarter of this year," from COO Oscar Feldenkreis.

What wasn't explained, however, are a couple of opposing realities. First, what's the plausible reason demand would pick up in Q4 if it was weak in Q3 (which it was)? Second, if demand does actually pick up in Q4, won't the 22% reduction in Perry Ellis' inventory leave it unprepared to deliver any goods? (Learn more on methods of calculating this component of the balance sheet, and how the choice affects the bottom line, read Inventory Valuation For Investors: FIFO And LIFO.)

BJ's Wholesale Club (NYSE:BJ)
The analysts underestimated BJ's Wholesale Club as well. The discount warehouse retailer had earnings per share of 64 cents last quarter versus estimates of 62 cents. The quarter was still better than the same quarter a year earlier, in which the company would have earned 58 cents per share had it not been for an income tax settlement. Sales were down 5% last quarter, and same store sales were down 7.7%.

So how were profits so much better this time around? Expense control and lower food prices were the main culprits, which doesn't necessarily have to hurt margins.

That 'deflated price' theme might prompt a ho-hum response, since it's likely an issue all grocers are dealing with. To BJ Wholesale Club's credit though, not all the players in the grocery space made lemonade out of lemons.

For example, Supervalu, Inc. (NYSE:SVU) saw its income sink 30.2% last quarter on a comparable 4.5% dip in revenue. Translation: BJ's is properly managing expenses and promotion for their food lines as well as their hard line and soft line goods.

More than that, BJ's results may be even more encouraging if one reads the finer print. Removing the effect of lower prices at the gas pump, same-store sales would have been up 2.9%.

Tween Brands Inc. (NYSE:TWB)
Tween Brands is yet another retailer that analysts underestimated. The company, which specializes in apparel and accessories for seven to 14 year old girls, still lost 11 cents per share in Q2 of its fiscal 2009, but that was better than last year's 27 cent loss and the 37 cent loss analysts were planning on. Take out the impairment charge, and last quarter's income improves to only a 16 cent per share loss. (Learn more in The Industry Handbook: The Retailing Industry.)

So all is well, or at least promising? Not quite. Though the impending merger with Dress Barn Inc. (Nasdaq:DBRN) will mask this quite a bit, if analysts' current expectations for Tween Brands were anything close to right, then TWB's forward-looking (2010) price multiple is a hefty 67.

Given how inconsistent and unpredictable - and unprofitable - Tween Brands has been on the earnings front, I wonder if Dress Barn has made an expensive decision.

Bottom Line
Though the retailers above - as well as most so far - have beat estimates, take it all with a grain of salt, as last year's comps are still mostly unrivaled. Simultaneously, bear in mind the recession may have started in late 2007, but didn't kick into high gear until late 2008. So, even the current quarter's comparisons to last year could be unimpressive.

In Q4 of this year though, these companies will be comparing results to the fourth quarter of last year, when the economy was all but shut down. Those should be easy numbers to top, and therefore set up some upside moves from these names.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  6. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  7. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  8. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Organizational Behavior - OB

    Organizational Behavior (OB) is the study of the way people interact ...
  3. Board Of Directors - B Of D

    A group of individuals that are elected as, or elected to act ...
  4. The New Deal

    A series of domestic programs designed to help the United States ...
  5. Enterprise Investment Scheme (EIS)

    A UK program that helps smaller, riskier companies to raise capital ...
  6. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!