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

Retail Sales Rise; Wall Street Goes Up

July 25, 2009

U.S. stocks rallied on Thursday on investors’ relief that Federal Reserve Chairman Ben Bernanke was weathering a tough grilling in Congress relatively well.

Consumer discretionary shares had led stocks higher from early in the session, on positive news from the retail and home-building sectors that triggered a rally in the shares of home builder Lennar Corp and retailer Bed, Bath & Beyond.

The U.S. House of Representatives Oversight and Government Reform Committee questioned Bernanke on the Fed’s role in Bank of America’s takeover of Merrill Lynch, and whether he pressured BofA’s CEO Ken Lewis to go through with the deal after Lewis raised objections.

As the testimony wore on, however, analysts’ concerns faded and stocks sharply extended gains.

“There could have been a little apprehension ahead of this that Bernanke truly was in on forcing Bank of America (to buy Merrill), but that seems to have been blown a little out of proportion,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, Ohio.

“Nothing out of the ordinary is being reported so we’re getting a relief rally.”

The Dow Jones industrial average .DJI gained 138.15 points, or 1.66 percent, to 8,438.01. The Standard & Poor’s 500 Index .SPX rose 15.64 points, or 1.74 percent, to 916.58. The Nasdaq Composite Index .IXIC added 29.20 points, or 1.63 percent, to 1,821.54.

Home builder Lennar Corp posted a wider quarterly loss, but reported an increase in new home sales and orders. Its stock shot up 14.2 percent to $8.94.

The Dow Jones U.S. home construction index .DJUSHB jumped 4.1 percent.

Retailer Bed Bath & Beyond Inc reported a surprising increase in quarterly profit as it cut costs to offset slumping demand, and its stock soared 10 percent to $31.24.

Another bright spot among retailers was J.C. Penney Co Inc, up 6.1 percent at $28.223 after JPMorgan raised its rating on the stock to “overweight” from “neutral.

The S&P retail index .RLX shot up 3.4 percent.

The broad S&P 500 has climbed as much as 40 percent from March’s 12-year closing low on hopes the economy was stabilizing, but jitters over the strength of a potential recovery have stalled the rally recently. The S&P 500 is up about 36 percent from that trough.

For further information, visit: http://www.reuters.com/article/hotStocksNews/idUSTRE5501YF20090625

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

Christopher Banks Profit Plunged

June 27, 2009

Shares of women’s clothing chain Christopher & Banks Corp. surged as high as 14 percent Thursday after first-quarter results exceeded Wall Street expectations, although profits plunged from lower sales.

The Plymouth, Minn., company said profit fell to $1.7 million, or 5 cents a share, from $11.3 million, or 32 cents a share, last year.

Net sales for the quarter ended May 30 fell 23 percent to $120.4 million from $155.4 million a year earlier, while same-store sales tumbled 24 percent as tough economic conditions continued to pressure sales.

The retailer said it expects the second quarter will remain challenging, with sales at stores open at least a year to be similar to the first quarter. The nation’s high unemployment rate and the prolonged housing market downturn have made many consumers reluctant to spend on all but the basic necessities.

Analysts surveyed by Thomson Reuters expected the company to report a loss of 5 cents a share on sales of $121 million.

Although CEO Lorna Nagler expressed disappointment with the company’s revenue growth, she said it was able to deliver positive cash flow and earnings, which represented “a meaningful improvement” from the fourth quarter.

She said the company also has made progress by reducing inventory levels and cutting sales, general and administrative expenses, which were trimmed by $7.5 million.

The company said it expects to be cash flow positive for fiscal 2010, but offered little additional guidance.

Christopher & Banks has 814 retail stores in 46 states. Its shares settled back in midday trading, to $6.03, up 9.6 percent.

For further information, visit: http://finance.yahoo.com/news/Christopher-Banks-1Q-profits-apf-2260413935.html?x=0