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.

For further information, visit: http://www.wwd.com/retail-news?module=tn#/article/business-news/retail-rallies-on-business-spending-3300760

Retail Stocks Are Slowly Rising

July 29, 2009

Retail stocks rose Wednesday in the wake of better-than-expected corporate earnings reports. Apparel giant VF Corp. jumped after its second-quarter profit decline was smaller than expected and it signaled an improved second-half outlook.

The S&P Retail Index rose 1.4% to 344.99. VF, owner of brands from Wrangler to 7 for All Mankind, climbed 6.8% to $64.68.

The company said late Tuesday that while business remains tough and profit was hurt by a stronger dollar and pension costs, its largest brands – Wrangler, Lee, North Face and Vans, continued to gain market share. Chief Executive Eric Wiseman also said that profit and sales in the second half of the year should show a “marked improvement” from the first half.

The positive surprise from VF also bodes well for results from other apparel companies, analysts said. Jones Apparel Group Inc. rose 2.3%. Liz Claiborne Inc. was up 1.4%.

VF’s results “will alleviate concerns about another leg down in vendor industry earnings and represents a good first step towards rebuilding investor confidence in management’s ability to plan and execute after last quarter’s earnings disappointment,” said Credit Suisse analyst Omar Saad. “The fact that management is now seeing signs that international businesses are starting to stabilize suggests that the global apparel recession could be in its final throws in certain regions.”

VF’s net income fell to $75.5 million, or 68 cents a share, from $104 million, or 94 cents, a year ago. Revenue for the three months ended June 30 fell 11% to $1.49 billion. Analysts polled by FactSet Research had predicted the Greensboro, N.C.-based company would earn 57 cents a share on $1.53 billion in revenue. The company said it expects to earn between $4.70 and $5 a share for the full year, in line with analysts’ expectations of $4.84.

Investor sentiment also was helped by coffee giant Starbucks Corp.’s better-than-expected quarterly result and the company showed that its traffic has improved even as consumers remain watchful of what they spend. See full story. Tech bellwether Apple Inc.’s quarterly results also beat Wall Street expectations as it sold 5.2 million iPhone units and recorded strong sales of Mackintosh computers.

Largest U.S. electronics retailer Best Buy Co. was down 0.6%. Wal-Mart Stores Inc., the world’s biggest retailer that’s also making a push in electronics, was up 0.3%.

For further information, visit: http://www.marketwatch.com/story/retail-stocks-rise-as-apparel-giant-vf-beats-views

Stocks Still Rise After June Sales

July 10, 2009

Retailers with a value message showed signs of strength on Thursday even though overall June sales were a bit of a disappointment.

Sales at stores open at least a year, or same-store sales, fell 4.9 percent in June according to the Thomson Reuters index. But a handful of companies posted stronger sales, including TJX Cos Inc, which runs discount-oriented chains such as T.J. Maxx.

The Standard & Poor’s retail index is already up 11 percent this year and rose less than 1 percent on Thursday, while the S&P 500 has fallen nearly 3 percent in 2009.

Have investors made all of the money they can betting on retail’s rebound following a rough 2008? Is there more room for growth?

KEEP BUYING

“I would say look at value, look at consumables and those are really the two major themes,” said Sarah Henry, a retail analyst at MFC Global Investment Management. “I think there’s some more opportunity there left this year.”

“There are clear market share beneficiaries, the big one this morning, by far, was T.J. Maxx, you can see how powerful it is. And of course yesterday we saw Family Dollar really performing very well in this environment,” Henry said.

Retailers with better balance sheets and cash flow have been able to squeeze some concessions on costs from vendors, a move mentioned by Family Dollar and alluded to by Target Corp, she said.

“There’s a meaningful earnings driver here in companies that are more flexible with their cash flow,” she said, adding that others such as TJX and Wal-Mart Stores Inc could see similar benefits.

NO REAL DEALS FOR NOW

“Is this the best time to buy retail stock? Probably not. The consumer remains very weak. There are still limited signals there will be a return to growth,” said Eric Beder, an analyst with Brean Murray Carret, noting that investors need to judge on a company-by-company basis.

Short-term traders have to be particularly careful, he said.

“If you’re trying to trade these names you’ve got to have a really tight trigger finger. If you’re looking for longer plays there are a lot of strong companies trading near their low … they have potential to drive upside when the consumer comes back,” Beder said.

Short-term investors need to look at sectors that provide good value, Beder said, citing Aeropostale Inc and Family Dollar as two stocks that benefit from consumers’ focus on affordable goods.

Longer-term investors need to look at the concept and quality of management, he said, citing Urban Outfitters Inc, Warnaco, True Religion and Guess? Inc as companies with “significant potential growth” once the downturn is over and “lots of cash.”

HOLD ON

“People always say if you are looking to buy stocks, if you are an investor in the industry, sometimes the best time to buy is in the worst of times. (You) say, ‘how low can it go?’ Problem is, it could stay still for a long time,” said Al Ferrara, director of the retail practice at BDO Seidman.

“I would be neutral on the retail sector. I wouldn’t be an aggressive buyer. Whatever you have, hold. I wouldn’t be putting more money into the sector now. I don’t think the worst is over for it.”

For further information, visit: http://www.reuters.com/article/pressReleasesMolt/idUSTRE56861K20090709?pageNumber=2&virtualBrandChannel=0