<BREAKFAST WITH THE FOOL>
Thursday, January 7, 1999
"There can be no one best way of organizing a business." -- Joan Woodward
Fly Like an Eagle
American Eagle Outfitters' <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AEOS)") else Response.Write("(Nasdaq: AEOS)") end if %> sales soared again in December, finishing up 32% from last year on a comparable-store basis for the 48 weeks ended January 2. Same-store sales for the men and women's casual apparel retailer jumped 20.9% during the all-important holiday shopping month of December. During that month, total sales increased 35.3% to $116.9 million. For the last 48 weeks, sales came to $555.3 million, a gain of 44.5%.
Last month, American Eagle reported a 24.8% rise in November same-store sales and a 39.1% increase in total sales. Shares of American Eagle have taken off in the past year, gaining more than 300% as the retailer reported strong monthly sales numbers and quarterly earnings. Investors took notice last March after the company turned in a 40% increase in February same-store sales, with total sales climbing 50%. It's hard to believe that the company's shares were trading under $4 each in early 1997 -- see our special '98 Year in Review feature and recent Daily Double for more information.
Elsewhere in the retail world, several other merchants also reported gains in same-store sales:
-- Wal-Mart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WMT)") else Response.Write("(NYSE: WMT)") end if %> posted a 9.4% rise in December comp-store sales -- 9.1% at Wal-Mart stores and 11% at Sam's Club. Total sales last month gained 15.8% to $19.11 billion.
-- Home improvement retailer Lowe's Cos. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %> turned in a 10.6% gain in same-store sales and a 23.7% increase in total sales.
-- Sharper Image Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SHRP)") else Response.Write("(Nasdaq: SHRP)") end if %> announced that same-store sales climbed 8% while total sales rose 13% on a 20% increase in mail-order sales and a 444% gain in online sales.
-- The Limited Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LTD)") else Response.Write("(NYSE: LTD)") end if %> reported a 4% rise in same-store sales, though net sales dipped 2% to $1.84 billion due to its spin-off of Abercrombie & Fitch <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ANF)") else Response.Write("(NYSE: ANF)") end if %> last May.
-- Talbots Inc.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TLB)") else Response.Write("(NYSE: TLB)") end if %> same-store sales rose 5%, while overall sales were up 10%.
-- High-end jeweler Tiffany & Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TIF)") else Response.Write("(NYSE: TIF)") end if %> said its U.S. same-store retail sales jumped 12% during November and December. Internationally, total retail sales rose 20%, with a 15% increase in Japan in local currency terms.
Not so lucky was:
-- J.C. Penny <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: JCP)") else Response.Write("(NYSE: JCP)") end if %>, which reported a 7.6% drop in December same department-store sales. Total revenues fell 4.3% to $4.4 million.
News to Go
Blaming "major storms in key markets," Borders Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BGP)") else Response.Write("(NYSE: BGP)") end if %> warned that it expects to fall short of analysts' earnings expectations for the fourth quarter and fiscal 1998. It projects 1998 earnings of $1.14 to $1.18 a share, which would miss consensus estimates by 4% to 7%. Borders' earnings (or lack thereof) online offset a 21% to 25% increase generated by its stores during the year. The company anticipates a loss of $0.12 to $0.14 per share from its Internet operations.
Computer connectivity and network products maker Adaptec Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADPT)") else Response.Write("(Nasdaq: ADPT)") end if %> announced it anticipates better-than-expected fiscal Q3 EPS in excess of $0.20 thanks to strong sales and substantial cost cuts. Analysts were expecting EPS of $0.14.
Computer electronics parts manufacturer Solectron Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLR)") else Response.Write("(NYSE: SLR)") end if %> has agreed to buy IBM's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> electronic card assembly and test operations in Austin, Texas for an undisclosed sum. Solectron will also provide fully integrated printed circuit board (PCB) assembly manufacturing services to IBM for the next three years.
Sunglasses maker Oakley Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: OO)") else Response.Write("(NYSE: OO)") end if %> said it expects Q4 EPS of around $0.05, same as the year before and below the IBES analysts' mean estimate of $0.08. The company attributed the shortfall to lower-than-expected footwear sales due to softness in the U.S. market as well as "slower-than-anticipated acceptance of our limited product offering."
More Foolishness
A look back at 1998: Tom Gardner reflects on the year's highlights in Fooldom... The Rule Breaker Portfolio (formerly called the Fool Portfolio) stomped the S&P 500 and 100% of all mutual funds... 1998 winners and losers, Internet mania, and a timeline of the year's most newsworthy events... Plus Foolish resolutions for the new year.
-- Wednesday's Evening News
-- Fool Community