Hot Stock Minute

Gap Enjoys Success Despite Larger Downturn; Aeropostale and Abercrombie Astonish

Gap says profits were up 25% when it released quarterly results after yesterday's closing bell. The chain reported earnings of 64-cents a share, exactly what was expected, on revenue of $3.87-billion just a hair above the consensus. Delving deeper, same-store sales rose 5% from a year ago. All of this good news stems from a strategy to carry more brightly-colored clothing and make stores look livelier. By the way the company raised its full-year earnings guidance and upped its dividend. Gap stock has been up 34% year-to-date which may explain why this upbeat report has it trading just fractionally higher so far.

Teen retailer Aeropostale has been down 11% since reporting earnings after the bell. That adds to a decline of 23% we have already seen over the past month. Why the negative sentiment? Adjusted earnings loss of 34-cents a share, even worse than the loss of 24-cents that was expected. Revenue did manage to come close to expectations, but the outlook is weak. The one thing rising at the company? Number of stores it plans to close. Aeropostale has been trying to offer trendier clothes, but so far the higher price tags seem to be scaring people away. By the way, Aeropostale's larger competitor Abercrombie and Fitch was down a whopping 17% yesterday on its own dismal report.

It's not just retailers feeling the pain after earnings. Internet radio service Pandora beat the street posting adjusted earnings of 4-cents a share, twice the consensus on revenue that beat expectations. Still, shares swooned 12% before paring losses back to 6%. No shareholder likes to these kinds of declines, but keep in mind, before today shares were up 129% year-to-date. The reason for the drop is a weaker-than expected outlook for the coming quarter. There's also concern that the radio industry is changing too fast to know where it's actually going. But Pandora now has more than 70-million active users.

Big Lots reports its earnings today.The chain is expected to post profits of 24-cents a share, down about a third from a year ago, but on revenue that's basically flat. The company recently lowered guidance for same-store sales. But has been forecasting a giant jump in sales at new stores. Big lots is down 10% over the last month but up 15% year-to-date.

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