Speciality Fashion shares soar 35%, Noni B plummets as retailers give mixed earnings guidance reports

A set of mixed retail results has given retail investors pause this morning, with both Noni B and Speciality Fashion Group announcing their expectations for profit in the first half of the year resulting in massive fluctuations for both company’s share prices.

Analysts have warned investors not to get too excited though as isolated positive results don’t necessarily indicate the market is recovering.

Peter Esho, analyst at City Markets, told SmartCompany the market can get carried away by such results. He says full results need to be seen before getting more optimistic about the industry’s health.

“There are some rosy assumptions for all the major retailers, and not all of them will be met,” he says.

Noni B shares plummeted 14% yesterday after the company announced its interim net profit would fall by between $1.7 million and $1.9 million, down from $2.4 million in the previous corresponding period.

The company’s shares rebounded slightly this morning and were trading up 1.33% to 76 cents. This comes just a few months after the company released positive news on earnings, giving hope to retail analysts.

Joint managing director David Kindl said in a statement Noni B will keep all its staff despite the result.

“We plan to maintain staffing levels and investment in training so we can continue to improve the personalised service we offer,” he said. “We believe retailers who are committed to the development of their people will be best placed for long-term growth, both in-store and online.”

Meanwhile, Specialty Fashion Group has announced its own guidance for the six months to December 31, 2012, saying revenue was up 1.3% from the previous corresponding period, while like-for-like sales growth was up 2%.

EBITDA is expected to be between $37-38 million, compared to the $21.9 million recorded during the previous corresponding period. Net profit is also expected to be between $17-18 million, up from the previous $6.2 million.

The company’s shares have surged 35% this morning as a result, trading at 95 cents, with the market starved for more good news from retailers.

But Esho says despite the good news, it’s too early to suggest Speciality Fashion has delivered an outstanding result and says further scrutiny is needed.

He also points out these results can’t be indicative as to whether the retail market will see a recovery this year, saying the market is tumultuous and each company will need to be judged on its own merits.

“We need to see what the composition of the numbers area, because in the past what they’ve done is amended the value of their inventory and that can adjust gross profit, so not all of it is cash. I’d wait to have a look at that.”

“I think this year is going to be a case by case basis, and I don’t think one or two companies are reflective of what’s going to happen.”

“I think share prices have run out in anticipation, and those companies which don’t come with good numbers will be punished.”