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Gordmans Stores Inc. (GMAN - Snapshot Report) posted earnings per share of 41 cents in the fourth quarter of fiscal 2012, ahead of the Zacks Consensus Estimate of 36 cents. However, quarterly result lagged the year-ago quarter’s earnings of 53 cents per share. Decline in comparable store sales combined with higher expenses led to the fall in net income.

Behind the Headline Numbers

Net sales for Gordmans Stores grew 9.4% year over year in the fourth quarter to $202.5 million, buoyed by nine new stores that led to a 12% expansion in its store base. Revenues missed the Zacks Consensus Estimate of $207.0 million.

Quarterly comparable store sales (comps) declined 4.1% year over year in contrast to a 2.1% increase in comps in the prior-year quarter. Seasonality as well as the lack of variety in merchandise offerings in several categories hurt comps in the quarter.

During the quarter, Gordmans Stores' gross margin dipped 140 basis points (bps) to 38.7%. To manage inventory, the company banked on various sales-driven initiatives that in turn hurt margins.

Full-Year Update

In fiscal 2012, earnings per share were $1.21 versus $1.30 in fiscal 2011 due to increased costs. Net sales for Gordmans Stores grew 10.2% to $607.7 million.

Store Update

For 2013, the company plans to open 10 new stores in 4 new and 2 existing markets.

Our Take

Gordmans Stores houses a large number of brands. The company is in an expansion mode in new as well as existing markets. However, the company slashed its 2012 guidance several times last year.

Sluggish comps growth and successive declines in revenue guidance indicating a poor business environment remain causes of concern. The beginning of the year was also tepid for the company, which makes us cautious at the current level and we prefer to take a wait and see approach.

Gordmans Stores currently carries a Zacks Rank #5 (Strong Sell). Some other retail industry stocks currently performing well include Sears Holdings Corp (SHLD - Analyst Report) and Costco Wholesale Corp. (COST - Analyst Report)  both with a Zacks Rank #2 (Buy). Investors can also consider Red Robin Gourmet Burgers Inc. (RRGB - Analyst Report), which currently holds a Zacks Rank #1 (Strong Buy)

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