Retail Rallies on Business Spending

September 27, 2010

Retail stocks gained 3 percent Friday as orders for durable goods hinted at a somewhat more confident corporate America.

The S&P Retail Index perked up 13.37 points to 460.61, rounding out a 5 percent gain for the week. Among the retail winners on Friday were The Talbots Inc., up 10.7 percent to $12.06; Pacific Sunwear of California Inc., 8.9 percent to $4.92; The Bon-Ton Stores Inc., 8.9 percent to $8.72; AnnTaylor Stores Corp., 7.5 percent to $20.24; Sears Holdings Corp., 5.9 percent to $75.13, and Abercrombie & Fitch Co., 5.6 percent to $38.79.

Last week’s advance left retail stocks up 12 percent for the year.

Of 171 equities tracked by WWD, 123 were up last week and 43 down, while five were unchanged. The Dow Jones Industrial Average stepped up 1.9 percent, or 197.84 points, to 10,860.26 Friday, making a 2.4 percent gain for the week. On Friday, the Commerce Department said durable goods orders, outside of the transportation sector, rose 2 percent last month.

Increased orders for machinery, computers and communication equipment demonstrated companies’ willingness to spend that could eventually lead to more hiring, lower unemployment and a broader recovery in the economy, helping to ease fears of a double-dip recession and lifting the equity markets.

European markets also posted gains for the week with the CAC 40 in Paris and the FTSE 100 in London both increasing 1.6 percent. Asian investors were feeling more cautious for the week and pushed the Hang Seng Index up a lesser 0.7 percent in Hong Kong as the Nikkei 225 slid 1.6 percent in Tokyo.

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Talbot & CEO Pension

June 24, 2009

Some eyebrows have been raised after a decision by the Talbots Inc. board to pay chief executive Trudy Sullivan $1.2 million (six payments of $200,000 over a six-month period) to compensate her for a cut in retirement benefits. Ms. Sullivan saw her earning power take a hit after the company froze its pension and executive retirement plans in a cost-cutting move.

According to a Boston Business Journal report, Talbots’ board said it approved the payment because it was “required to provide a substantially comparable benefit” due to recent changes that had affected Ms. Sullivan’s pension and supplemental executive retirement plan.

Talbots, like many other retailers, has struggled during the recession and has taken a number of steps to improve its position including cutting 695 jobs (325 in the past two weeks), freezing benefits, closing underperforming locations and finding a buyer for its J. Jill chain earlier this month.

Ms. Sullivan, who earned a base salary of $1 million in 2008 also received $4.7 million from stock sales and additional compensation, according to a Boston Globe report.

http://www.retailwire.com/discussions/sngl_discussion.cfm/13825

Quarterly profits: Win Or Lose

June 9, 2009

Retail stocks rose Tuesday as women’s clothing retailer Talbots Inc. posted a smaller-than-expected first-quarter loss and men’s clothing company Men’s Wearhouse Inc. reported an unexpected quarterly profit. Surf-inspired teen apparel company Quiksilver Inc. stock tumbled after its fiscal second-quarter profit missed analysts’ average estimate.

Talbots shares rose 1.8% to $5.10. The retailer swung to a first-quarter loss of $23.6 million, or 44 cents a share, from a profit of $1.6 million, or 3 cents a share, a year earlier. Sales in the quarter ended May 2 fell to $306.2 million from $414.8 million with comparable-store sales declining by 27%. Excluding restructuring charges of 12 cents a share and a 9-cent loss from discontinued operations, the company said it would have lost 23 cents a share.

Talbots said Monday it agreed to sell J. Jill to private equity firm Golden Gate Capital for $75 million.

The company said it’s taking additional steps to reduce its corporate headcount across all locations by 20% as part of its plan to reduce $150 million in expenses. It forecast a second-quarter loss of 50 cents to 58 cents a share. Analysts, on average, estimated Talbots to lose 49 cents a share in the first quarter and 68 cents in the second quarter, according to FactSet.

Men’s Wearhouse Inc. shares rose 11% to $19.78 after the men’s clothing retailer posted an unexpected first-quarter profit of 10 cents a share. That compared with analysts’ average loss estimate of 1 cent a share, according to FactSet.

The S&P Retail Index rose 0.8% to 338.65.

Quiksilver shares plunged 19% to $2.93 after its adjusted profit came a penny shy of the average analysts’ estimate surveyed by FactSet. The company said the environment remains “extremely challenging” and that it has yet to see an improvement in overall business trends. Quiksilver forecast third-quarter revenue to be down in the mid-teens on a percentage basis and per-share profit in the low-single-digit range.

For further information, visit: http://online.wsj.com/article/BT-CO-20090609-708517.html