Aeropostale Dives and The Fresh Market Blooms in After-Hours Earnings

Stocks climbed again as today as momentum stocks swung higher, and an existing home sales report lifted the housing sector. As a result, the Dow Jones Industrial Average  finished up 10 points or 0.06%, while the S&P 500 and Nasdaq added on 0.2% and 0.6%, respectively.

Existing home sales in April rose slightly as the seasonally adjusted annual rate improved from 4.59 million in March to 4.65 million, the first gain in the metric this year. That mark was slightly below estimates at 4.66 million, but it was good enough to lift homebuilder stocks as optimism about the housing recovery seems to be building again after cooling off during the slow winter months. April's total was still down 6.8% from a year ago, and inventory rose to 5.9 months from five in March, which can dampen demand for new homes to be built. Elsewhere, initial unemployment claims rose last week from 298,000 to 326,000. That was ahead of estimates at 305,000, though the four-week moving average, sometimes a favored indicator, fell by 1,000 to 322,500. The number of continuing unemployment claims also continued to fall, dropping to 2,653,000, its lowest level since December 2007 and a sign that the job market is on the right track. 

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Retail earnings reports continued to roll on as Aeropostale  plummeted yet again after delivering its quarterly update. The teen fashion retailer was trading down 15% after hours, sinking on abysmal sales and guidance. Its first-quarter actually beat the low bar set by analysts as the company posted a loss of $0.52 per share against estimates of a $0.72-loss, though sales fell 12.5% to $395.9 million, missing the consensus at $409.1 million. Same-store sales fell by a whopping 13%. CEO Thomas Johnson noted a "challenging macroeconomic environment" with low mall traffic and unseasonable weather, but a pattern's established here as Aeropostale and its teen-focused brethren American Eagle and Abercrombie & Fitch have gotten crushed in recent quarters as tastes shift to fast fashion brands like H&M and Forever 21. For the current quarter, Aeropostale projected a per-share loss of $0.61-$0.55, worse than estimates of $0.50. The guidance seemed to reflect the fact that the company's problems extend beyond the weather, and Johnson said management was working to "transform the brand." Still, considering the stock is down nearly 80% in the last year, I wouldn't jump in until results improve.

Moving in the other direction was The Fresh Market , whose shares surged 12% after its earnings report came out after hours. The natural-foods grocer matched results on the bottom line with per-share earnings of $0.43, but revenue grew 17.6% to $431 million on a 2.5% increase in comparable sales, ahead of the consensus at $420 million. The company's stock had gotten banged up recently as competition intensifies in the organic space so investors seemed to give it a big reward for beating sales estimates. For the full year, management sees comps of 1.5% to 3.5%, and an EPS of $1.56-$1.66 against estimates of $1.58. While that's a promising sign, I'm wary of the natural grocer segment after Whole Foods stock fell off a cliff, and I'd like to see stronger comps for a chain expanding so quickly.

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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends The Fresh Market and Whole Foods Market and owns shares of Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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