Can Joe’s Jeans (JOEZ) Get Its Earnings Back in the Black?

Joe’s Jeans Inc (NASDAQ:JOEZ) will release its quarterly report next Monday, and the tiny company is hoping to return to its profit-making ways after posting a loss in its fiscal first quarter. But, with a major transaction having taken place in the industry, Joe’s Jeans Inc (NASDAQ:JOEZ) will have to work hard in order to maintain its competitive position in high-end retail.

Joe's Jeans Inc (NASDAQ:JOEZ)Joe’s Jeans Inc (NASDAQ:JOEZ) has had great success in attracting buyers for its premium jeans, with shoppers willingly paying up for its products. But, as other retailers clue in and seek to capitalize on the space, can Joe’s Jeans Inc (NASDAQ:JOEZ) fend off much larger competition? Let’s take an early look at what’s been happening with Joe’s Jeans Inc (NASDAQ:JOEZ) Jeans over the past quarter, and what we’re likely to see in its quarterly report.

Stats on Joe’s Jeans

Analyst EPS Estimate $0.03
Change From Year-Ago EPS 50%
Revenue Estimate $32.47 million
Change From Year-Ago Revenue 13.4%
Earnings Beats in Past 4 Quarters 3

Source: Yahoo! Finance.

Will Joe’s Jeans earnings turn around this quarter?
Analysts have been pessimistic about Joe’s Jeans Inc (NASDAQ:JOEZ) earnings prospects over the past few months. Although they’ve held steady on their May-quarter estimates, they’ve cut their full-year fiscal 2013 calls by two-thirds. The stock has also fallen back substantially, with shares down 14% since early April.

Most of the decline in Joe’s share price came immediately after its April earnings report, in which the company reported a surprising loss. Even though the company saw sales increase 13%, and operating income rise 30%, the company took a substantial one-time charge related to contingent consideration buyout expenses. That charge relates to money that the company pays to founder Joe Dahan in lieu of the portion of the profits Joe’s Jeans earns above certain tiered amounts through 2017. By fixing the amount owed, investors will earn more of the reward — and bear more of the risk — of the company’s earnings experience than it would have under the previous agreement. Nevertheless, investors weren’t pleased with the results, and sent shares down about 20% within a week after the announcement.

But Joe’s Jeans isn’t letting poor past performance stop it. The retailer is turning to plans to increase its domestic store count and expand internationally, with a targeted approach that chooses certain high-potential cities for growth. That has some analysts looking favorably on the stock, with one analyst upgrading Joe’s Jeans early last month with expectations that moving away from its wholesale business, and toward reaping more full-price retail sales, should help boost profitability.