The holiday season is a great time of year to be with family and friends. It also can be a very hectic time of year, especially fighting the crowds at malls and getting everything done as dates get closer. For retailers, this time of year is also stressful because the holiday shopping season is an important part of earnings and could miss end year profit goals. Since the 2008 recession, retailers have had a couple of good holiday seasons, but overall the American consumer is continuing to feel the pinch of unemployment, sinking wages, and government induced economic setbacks. That being said, there are some retailers that have done very well, but Gordmans Stores, Inc. (NASDAQ: GMAN) is not one of them. Gordmans Stores "offer apparels, including young men's, men's, juniors', women's, team, plus sizes, maternity, and children's clothing, such as offerings for infants, toddlers, boys, and girls; and accessories consisting of designer fragrances, intimate apparel, handbags, sunglasses, fashion jewelry, leg wear, and sleepwear" (finviz).
Shares of Gordmans Stores have been especially hammered as of late, down over 27 percent in the past month. This major underperformance since the start of December can be credited to the company's third quarter earnings release. The department store missed on earnings per share by $0.07 and revenues were around analysts' estimates. However, the company lowered fourth quarter's earnings and revenue guidance. Gordmans top competitors are Wal-Mart Stores, Inc. (NYSE: WMT), Target Corp. (NYSE: TGT), Kohl's Corp. (NYSE: KSS), and The TJX Companies, Inc. (NYSE: TJX). With some of the big box retailers expressing concerns over sales this holiday season, that was a hint that Gordmans stock could be headed for a fall. Additionally, with the company's larger retailers' ad match guarantee programs, consumers could end up flocking to the larger rivals instead.
Turning to fundamentals, Gordmans Stores has a market cap of $139.98 million and rated a "hold" by analysts. Price to earnings is at 10.66 and forward price to earnings is at 13.3. Price earnings growth is undervalued at .71, price to sales is at .22, and price to book is at 3.61. The department chain has a total debt to equity of 1.56 and only holds cash per share of $.48, giving the stock a shaky current ratio of 1.30. Earnings are expected to fall 7 percent this year, rise 39 percent next year and 15 percent the next five years.
Overall, I do not like the retail space right now. The consumer is still wounded and unemployment is still in the recovery process. I believe Gordmans is a value trap and should be avoided until conditions improve.