Retail Stocks Are Showing Rise For 1Q, But Momentum Is Waning
March 31 2011 - 4:01PM
Dow Jones News
Reflecting continued optimism about the U.S. economy, retail
stocks are on pace to mark their third quarterly gain in a row.
The advance would contribute to their almost doubling in price
since a low at the end of 2008 as retailers licked their wounds
from a terrible holiday selling season.
But the stocks' momentum is slowing, with the Standard &
Poor' Retail Index up 1.4% for the first quarter, after an 11% rise
in the prior quarter and a 19% advance in the last year's third
quarter. The retail index is also lagging the 5.6% first quarter
advance being seen by the broader market Standard & Poor's 500
Index. The first quarter ends at the close of trading Thursday.
Still, the upward move by retail stocks reflects how investors
are feeling about conditions in the U.S. since retailers' own
fortunes are so closely tied to consumer spending.
The stocks' trajectory "speaks well for sentiment against a
double-dip recession," said Sahk Manuelian, managing director of
trading at Wedbush Securities. "The economy is trying to get well
and people are starting to spend again, especially on the high
end."
Lower-end retailers' shares have also been elevated, by takeover
chatter, which is another positive indicator, Manuelian said.
"People feel that things are still priced inappropriately low and
that is why you are seeing private equity come in."
Retailers have recovered sharply from the worst recession in
over a generation, with many posting very strong results last year
that were reflected in reports issued during the current
quarter.
The first quarter's big gainer is Big Lots Inc. (BIG), up 42%
amid ongoing takeover speculation during the period. 99 Cents Only
Stores (NDN), another takeover candidate, rose 23% during the first
quarter.
Chico's FAS Inc. (CHS), Jos. A Bank Clothiers Inc. (JOSB) and
Tractor Supply Co. (TSCO) were also double digit percentage risers
in the first quarter.
Target Corp. (TGT), Barnes & Noble, OfficeMax Inc. (OMX) and
RadioShack Corp. (RSH) all fell 16% or more over the period.
Wal-Mart Stores Inc. (WMT), which is not in the index, but is
the biggest retailer in the U.S., dropped roughly 3.5% in the first
quarter. The retailer is trying to bring domestic operations back
up to speed after U.S. same-store sales have fallen seven quarters
in a row.
As the quarter wraps up on Thursday, the S&P Retail Index is
finishing the session to the downside, off 0.6%. Barnes & Noble
Inc. (BKS), J.C. Penney Co. (JCP) and Best Buy Co. (BBY) are all
down more than 2%. Zumiez Inc. (ZUMZ), Abercrombie & Fitch Co.
(ANF) and Williams-Sonoma Inc. (WSN) lead the advancers with gains
of at least 1.5% on Thursday.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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