California Apparel News

Several large publicly traded retailers fared well over the past five years, despite disappointing fourth-quarter results and first-quarter expectations for the industry in general, according to a recently released survey.

Almost 500 U.S. companies have put out first-quarter earnings forecasts so far this year, with 321 companies, or nearly two-thirds, warning of lower-than-expected earnings to come.

That’s almost seven times the number of companies that warned of lower-than-expected earnings at this time one year ago, according to a survey by First Call/Thomson Financial, which tracks both analysts’ expectations and companies’ earnings. That survey was summarized in a recent Reuters wire-service report.

One retailer that sailed right above tough economic times of the recent fourth quarter and should continue to do so in the near future: Bentonville, Ark.-based giant Wal-Mart, which took in fourth-quarter net income of $2 billion on more than $56.5 billion in revenues, with more than $6.2 billion in profits tallied for the full fiscal year; the chain currently operates more than 4,100 stores and has more than 1.2 million employees worldwide.

Ironically, many big retailers are doing fairly well in Wall Street’s longer-term estimations, despite their daily stock fluctuations and generally dismal quarterly reports. Part of the reason: The Street’s analysts generally believe that many retailers’ current shaky bottom lines will benefit from the belt-tightening and inventory-clearing that many are undergoing, and that the economic worst will be over by the end of the first half of the year, when worried consumers finally will return to malls and stores.

Another reason is the stocks of the apparel retail industry overall have done quite well over the past five years, and their drop over the year just ended has been less than other high-flying economic sectors, particularly the Internet stocks that until recently were the darlings of Wall Street. A recent stock performance survey of 1,000 companies and several industries conducted by The Wall Street Journal found the value of apparel retailers’ stocks in the aggregate ranked 13th when considered over a five-year basis. Not surprisingly, Internet-related stocks in the aggregate were in first place over that period.

Apparel stocks came in 17th on a three-year basis, with Internet stocks again leading in that category. Apparel stocks dropped down to 47th over the past single year, while Net stocks fell all the way back to 70th. The increase in value in tobacco stocks in the past year put them in first place.

The Jones Apparel Group, Reebok International and American Eagle Outfitters joined the tech-, financial- and pharmaceuticals-heavy best stock performers; the various categories of worst-performing stocks included J.C. Penney, Saks and Kmart. —Louis Chunovic