Zacks Investment Research downgraded Elizabeth Arden Inc. (RDEN - Snapshot Report) to a Zacks Rank #5 (Strong Sell) on Jan 21, 2014.
Why the Downgrade?
Elizabeth Ardenhas witnessed sharp downward estimate revisions after reporting bleak preliminary second-quarter fiscal 2014 results on Jan 16, 2014. The Miramar, Fla.-based cosmetics company also withdrew the previous fiscal 2014 guidance based on weak sales during the second quarter.
The company is scheduled to report second-quarter fiscal 2014 results (ended Dec 31, 2013) on Feb 5, 2014.
Elizabeth Arden expects to report net sales between $415 million and $418 million in the second quarter versus a range of $450 million to $475 million guided earlier. The company expects earnings per share to range between $1.05 and $1.08, lower than the guidance range of $1.30 to $1.60, due to soft sales during the quarter. Management also blames increased promotional activity to be responsible for lower earnings during the second quarter.
Weaker-than-expected holiday sales prompted management to lower the top- and bottom-line forecasts for the second quarter. Like Elizabeth Arden, many U.S.-based retailers like Fred’s Inc. (FRED - Analyst Report), Gap Inc. (GPS - Analyst Report) and Ross Stores Inc. (ROST - Analyst Report) have witnessed weakness during the latest holiday season.
The Zacks Consensus Estimate came down 27.2% to $1.07 for the second quarter over the last seven days. For fiscal 2014 most of the estimates were revised downward over the last seven days, sinking the Zacks Consensus Estimate by .6% to $2.09.
Fiscal 2014 Outlook Withdrawn
Elizabeth Arden also expects fiscal 2014 earnings and sales to be below prior guidance range.In the first-quarter conference call, Elizabeth Arden announced that sales are expected to grow between 3.0% and 5.0% year over year for fiscal 2014. Earnings were expected in the range of $2.15 to $2.30, representing approximately 4% growth at the mid-point.
However, in the light of the preliminary second-quarter results, Elizabeth Arden now decided to withdraw the fiscal 2014 guidance and will not provide any guidance in its second-quarter conference call.