) to neutral from buy.
Analyst Frank Brown says the 4.3% same-store sales decline for the third quarter was well below his 3% growth estimate. With sales growth key to expense ratio improvement, it appears recent initiatives may not be sufficient to drive stronger sales momentum.
He believes it will be difficult for investors to take a leap of faith on further profitability improvement at the current stock price level without evidence of same-store sales improvement.
Brown cut his 49 cents fiscal 2005 (ending February) earnings per share estimate to 40 cents, and 80 cents fiscal 2006 to 70 cents. He thinks the stock will take time to build momentum again.