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Gordmans Stores Inc. (GMAN - Snapshot Report) posted earnings per share of 41 cents in the first quarter of fiscal 2012, in line with the Zacks Consensus Estimate and above 38 cents earned in the year-ago quarter.

Behind the Headline Numbers

Net sales for Gordmans Stores grew 13.8% year over year in the first quarter to $133.9 million.

Quarterly comparable store sales (comps) increased 4.7% year over year. Apparel stole the show in the quarter, clocking a high single-digit comps increase. Within apparel, children and women’s ware were the star performers. This was followed by Home Fashions business, which generated a low single-digit comps increase.

During the quarter, Gordmans Stores' gross margin fell 10 basis points (bps) to 47.4% due to higher-than-planned markdowns to facilitate disciplined inventory management. Selling, general and administrative costs as a percentage of total revenue were up 20 bps year over year due to higher advertising and pre-opening expenses due to the opening of four new stores in the first quarter of 2012 versus two new stores in the first quarter of 2011 and higher depreciation expense.


At quarter end, Gordmans Stores had cash and cash equivalents of $41.7 million and total non-current liabilities of $22.7 million.


For the second quarter of 2012, management expects net sales in the range of $130–$131 million and earnings per share in the range of 17–18 cents.

For full fiscal 2012, Gordmans Stores has retained its top-line expectation of $629 million to $634 million, reflecting a low single-digit uptick in comparable store sales and the opening of nine new stores. Guidance for earnings per share was also reiterated at $1.46–$1.51.

Our Take

Gordmans Stores houses a large pool of the latest brands and fashion, and operates around 78 stores in 18 states in the U.S. The company is in an expansion mode in new as well as existing markets. It now plans to widen its store base by 50% year over year. Additionally, fiscal 2012 includes an additional week. Management projects $7.5 million to $8 million in sales in the 53rd week of 2012 that will likely translate into an incremental 1.3% comps in fiscal 2012 compared to fiscal 2011.

Gordmans Stores, which competes with Dollar Tree Inc. (DLTR - Analyst Report), currently retains a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. We are also maintaining our long-term “Neutral” recommendation on the stock.

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