US Retail Stocks Mark Strong 1Q, With Strength Seen Continuing
March 30 2012 - 3:31PM
Dow Jones News
Retail stocks began 2012 with a head of steam that continued
throughout the quarter, with many posting record or multi-year
highs during the period, amid sentiment that the gains can
continue.
For the first quarter, which ends at the close of trading, the
Standard & Poor's Retail Index has risen 101 points, or 19%,
with the percentage rise representing its best gain since the
second quarter of 2003. The move outpaces that of the broader
market, with the S&P 500 up 12% so far in the first
quarter.
Sentiment about an improving economy helped to fuel retail
stocks' gains, as did rather decent earnings these companies turned
in during the period.
Retailers with the biggest gains during the quarter include Gap
Inc. (GPS) and Aeropostale Inc. (ARO), both up 42%; Chico's FAS
Inc. (CHS) up 36%; Macy's Inc. (M), up 24%; Saks Inc. (SKS) up 21%;
and Target Corp. (TGT) up 14%.
Target was also among stocks that hit multi-year highs during
the first quarter. Others include Wal-Mart Stores Inc. (WMT),
Nordstrom Inc. (JWN), Coach Inc. (COH), Family Dollar Stores Inc.
(FDO) and Lowe's Cos. (LOW).
While some of the easier gains have already been made, there is
opportunity for further advances by retail stocks if the economy
cooperates, analysts said.
"The environment is still slowly getting better for retailers,"
said David Abella, portfolio manager at Rochdale Investment
Management. "They were able to have pretty strong sales when the
economy was weaker, so it stands to reason if the economy improves
they should do even better."
Still, the big unknown is how gasoline prices act. If prices
continue to climb, lower-end retailers may lose out. Abella cited
Kohl's Corp. (KSS), J.C. Penney Co. (JCP), Wal-Mart and Target as
retailers that could be pinched by high gasoline prices.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com
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