By Andria Cheng
Retail stocks headed higher Tuesday as Macy's Inc. (M) was upgraded to buy from hold by Citigroup. Lowe's Cos. (LOW) dropped after the No. 2 home-improvement retailer gave profit forecasts that may fall short of Wall Street expectations.
The S&P Retail Index rose 0.6% to 388.04, a day after the Conference Board reported that its index of leading economic indicators rose for the fifth consecutive month. The Federal Reserve also kicks off a two-day meeting Tuesday.
Lowe's was among the few decliners, with its stock down 1.1% to $21.69. The home-improvement retailer on Tuesday kept its profit forecast for this year and gave an outlook for next year that may fall short of Wall Street expectations even as it expects to gain market share.
Shares of its larger rival, Home Depot Inc. (HD), were up slightly.
Macy's shares rose 4.8%. Analyst Deborah Weinswig said the company's My Macy's initiative to target local markets continues to gain traction and should lead to improved sales and margin trends ahead, particularly beginning in 2010. Declining product costs also could lift gross margin by half a percentage point next year, she said. The analyst raised her 2009 to 2011 profit estimates and doubled her price target on the stock to $30.
Buckle Inc. (BKE) shares rose 3.5%. The teen retailer said its board authorized a $1.80 per share special one-time cash dividend to be paid to shareholders of record as of Oct. 15. The board also authorized a 20-cent per share regular quarterly dividend to be paid to shareholders of record as of Oct. 15. Both the special one-time cash dividend and the regular quarterly dividend are payable on Oct. 27 and will be paid together.
Gymboree Corp. (GYMB) rose 3.5% after the children's clothing retailer was upgraded to outperform by FBR Capital Markets.
-By Andria Cheng; 415-439-6400; AskNewswires@dowjones.com