Aug 27, 2010 10:04 AM PDT
SmallCap Stocks California Pizza Kitchen (CPKI), Hot Topic (HOTT) and Wet Seal (WTSLA) in positive pre-market trading today contributed to the bullish start this morning in all the markets as BigCap Alcoa (AA), who traditionally fires the starter's gun on Q3 results, reported a profit and the Labor Department announced the number of newly laid-off workers filing first-time claims for jobless benefits fell to the lowest level since early January.
Retailers California Pizza Kitchen (CPKI), Hot Topic (HOTT) and Wet Seal (WTSLA) all boast twelve month revenues over $550 million, twelve month diluted EPS in plus territory, substantial daily trading volumes and a high percentage ownership by institutions. They are also geared up and positioned for the first 'recovery holiday'. Because of recession values, I believe a whole lot of retail sector short-sellers will be covering their positions this autumn and that will help to fuel gains in retailer shares.
Gaining 9.77% ($1.37) this morning is California Pizza Kitchen Inc., (CPKI) http://www.cpk.com/ which is currently trading on the NASDAQ in the $15.39 range. CPKI has a new market cap of $371 million. CPKI has a 3-Month average daily trading volume of 314,342 shares and it easily surpassed that in one hour into today's session.
CPKI management gave new guidance yesterday and in the news-on-news cycle was given an upgrade today by research house KeyBanc Capital Markets. CPKI reported late yesterday the Company now expects to report earnings of 22 cents to 24 cents per share, up from its previous forecast of 19 cents to 21 cents. Analysts forecast 21 cents a share.
CPKI plans to release Q3 earnings November 5. Management also said its Q3 revenues fell 5.3% to $164.8 million. Analysts forecast revenue of $167.4 million. Sales at company-owned restaurants open at least 18 months fell approximately 8%, a steeper decline than the company's forecast calling for a drop of 6.5% to 7.5%.
CPKI's Rick Rosenfield and Larry Flax, the chain's co-CEOs, said the company spent much of Q3 testing: a takeout call center, catering and an expanded wine program. Those initiatives will be rolled out company wide in Q4. CPKI added one full-service restaurant in Q3, in Cherry Hill, New Jersey. A franchise partner also launched the first CPKI on a college campus, at Hofstra University in Hempstead, New York. CPKI management also noted the raise in Q3 earnings estimates came about after initiating more effective cost controls and taking advantage of a lower tax rate.
As of March 12, 2009, CPKI operated, licensed, or franchised 253 locations in 32 states of which 205 were company owned and 48 operated under franchise or license agreements. CPKI also has operations in the United Arab Emirates, Guam, Hong Kong, China, Indonesia, Japan, Malaysia, Mexico, the Philippines, Singapore, and South Korea.
At $15.39, CPKI is below its 52-week high of $17.44 set on 04-24-09 and is above its 52-week low of $5.24 set on 11-21-08. At $15.39, CPKI is above both its 50-day and 200-day moving averages. CPKI has trailing twelve month revenues of $667 million and a trailing twelve month diluted EPS of $0.35. CPKI is widely held by institutions and its shares out versus float ratio is near-parity.
Gaining 7.40% ($0.57) this morning is Hot Topic Inc., (HOTT) http://www.hottopic.com/ currently trading in the $8.15 range on the NASDAQ. HOTT has a new market cap of $359 million. HOTT has a 3-Month average daily trading volume of 973,388 shares and it handily topped that by mid-session.
After the market close yesterday, HOTT management said that sales in stores open at least one year fell 4% in September. Analysts were looking for a 6.3% fall. Sales in established stores rose 4% at the HOTT Torrid chain, but fell 6% at namesake stores. Total sales for HOTT during the five weeks ended October 3, fell 5% to $45.1 million. Year-to-date, HOTT sales in stores open at least one year fell 1.6%, while total sales edged down less than 1% to $353.6 million.
HOTT together with its subsidiaries operates as a mall- and Web-based specialty retailer in the United States. HOTT operates Hot Topic and Torrid store concepts, as well as an e-space music discovery concept, ShockHound. Its Hot Topic stores sell music and pop culture-licensed merchandise, its Torrid stores offer casual and clothing items. As of January 31, 2009, HOTT operated 681 Hot Topic stores and 159 Torrid stores.
At $8.15, HOTT is below its 52-week high of $13.87 set on 04-22-09 and is above its 52-week low of $4.61 set on 10-10-08. At $8.15, HOTT is ahead of its 50-day moving average and is pennies behind its 200-day moving average. HOTT has trailing twelve month revenues of $768 million and a trailing twelve month diluted EPS of $0.45. HOTT is widely held by institutions. Its shares out versus float ratio is at parity. Very Stable.
Gaining 7.65% ($0.27) this morning is Wet Seal Inc., (WTSLA) http://www.wetseal.com/ that is currently trading in the $3.80 range on the NASDAQ. WTSLA has a new market cap of $360 million. WTSLA has a 3-Month average daily trading volume of 1,077,420 shares and it easily topped that by mid-session today.
Point-Counterpoint
Yesterday, WTSLA received a downgrade from research house Piper Jaffray from 'Overweight' to 'Neutral' and this morning, WTSLA management came right back and reaffirmed its previously given Q3 guidance. Management said it holds to its Q3 earnings outlook of 2-5 cents a share. Analysts expect 3 cents.
WTSLA management also issued September store sales this morning; down 4.5%, beating analyst's expectations of minus 7.6-7.8%. WTSLA net sales for the five-week period ended October 3, fell 1.9% to $50.1 million. WTSLA President and CEO Ed Thomas said that September results benefited from Labor Day shifting one week later this year versus last year, which resulted in a similar one-week shift in back-to-school shopping.
Mr. Thomas added, "Our comparable store sales expectations for the third quarter remain within our initial guidance range, and we also currently expect earnings per diluted share for the quarter to remain within our initial guidance range of $0.02 to $0.05. We are comfortable with inventory levels at both of our operating divisions and expect to be well-positioned as we enter the holiday season."
WTSLA operates two mall-based chains of retail stores under the Wet Seal and Arden B brands. WTSLA operates Web-based stores, including wetseal.com that offers Wet Seal merchandise; and ardenb.com, which offers Arden B apparel and accessories. As of January 31, 2009, WTSLA operated 496 retail stores, including 409 Wet Seal stores and 87 Arden B stores.
At $3.80, WTSLA is below its 52-week high of $4.60 set on 05-06-09 and is above its 52-week low of $1.85 set on 11-20-08. At $3.80, WTSLA is ahead of both its 50-day and 200-day moving averages. WTSLA has trailing twelve month revenues of $569 million and a trailing twelve month diluted EPS of $0.20. WTSLA is widely held by institutions. Its shares out versus float ratio is near-parity.
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