Not every luxury retailer is raking it in these days.
Shares of Joe’s Jeans Inc (NASDAQ:JOEZ) were slammed today after posting disappointing quarterly results.
The retailer of high-priced denim clocked in with roughly half of the revenue growth that Wall Street was targeting. Declining profitability also missed the mark.
Joe’s Jeans Inc (NASDAQ:JOEZ) grew its net sales by 8%, to $30.9 million, fueled largely by its chain store expansion efforts.
Analysts were holding out for top-line growth of 15%, but that obviously didn’t happen. The 6% uptick in its wholesale business was disappointing, but the real letdown happened at the retail level. Joe’s Jeans Inc (NASDAQ:JOEZ) managed to post a 14% increase in net sales for the quarter, but that was with eight new store locations that have opened over the past year. Same-store sales actually plunged 6% during the period, and that’s the real dagger.
Investors had been treated to largely positive trends when luxury retailers were reporting fresh financials.
Michael Kors Holdings Ltd (NYSE:KORS) — the Hong Kong-based retailer of luxury handbags — saw its revenue soar 57% in its latest quarter. Comps popped a hearty 37% during the period. Yoga darling Lululemon Athletica inc. (NASDAQ:LULU) is still coming through with double-digit growth, even after an inventory-sucking recall and bolting CEO.
Weakness at Joe’s Jeans Inc (NASDAQ:JOEZ) shouldn’t worry Michael Kors Holdings Ltd (NYSE:KORS) and Lululemon Athletica inc. (NASDAQ:LULU) investors. Kors should crank out another strong performance when it reports in three weeks, and if lululemon survived the embarrassing Luon pants fiasco of March to post 21% growth in sales during that quarter, it should hold up well in the near term.
The problem at Joe’s Jeans Inc (NASDAQ:JOEZ) is limited to Joe’s, though if it’s general weakness when it comes to premium denim, it would be easier to justify the decision of larger rival True Religion Apparel, Inc. (NASDAQ:TRLG) to go private. Some investors — and a lot of class action lawsuit-chasing attorneys — seem to think that True Religion Apparel, Inc. (NASDAQ:TRLG) is letting itself go cheap in the $835 million buyout that should close this week. But what if there’s more to the shortfall at Joe’s than meets the eye?
Joe’s realizes that organic growth may not be enough to please investors right now. It announced a deal to acquire premium denim rival Hudson Clothing for $97.6 million in cash and convertible notes last night.
It’s a smart move, given the synergies that should be realized as two smallish players combine, but right now, it’s hard to convince investors that Joe’s Jeans is the growth stock that they thought they were buying into before Monday night’s report.
The article Say It Ain’t So, Joe’s originally appeared on Fool.com and is written by Rick Munarriz.
Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica.
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