By  on January 11, 2008

After a volatile day of trading triggered by lackluster same-store sales results and talks of lowered interest rates, retail shares snapped back in late-session action on word that struggling mortgage lender Countrywide Financial Corp. might be bought by Bank of America.

The Dow Jones Industrial Average closed up 0.9 percent to 12,853.09, while the broader S&P 500 clocked a 0.8 percent gain, closing at 1,420.33, according to Yahoo Finance. The S&P Retail Index grew 0.9 percent to 378.38.

Shares of apparel stocks fell in early trading on weak December same-store sales numbers. Federal Reserve chairman Ben Bernanke's speech Thursday said that the central bank is prepared to act aggressively to help fix the faltering economy. But his remarks soothed investors only briefly.

However, the possible sale of Countrywide improved the mood of Wall Street in the last two hours of trading.

In the retail sector, women's apparel retailer AnnTaylor Stores Corp. was hit the hardest after slashing fourth-quarter earnings guidance and missing comps expectations. Shares of the company were down 15.5 percent, ending the day at $19.95. But competitor Chico's FAS Inc. saw a 3.8 percent rise in shares to $7.58 despite missing its sales guidance.

Gap Inc. dropped 7.1 percent to $17.97 on its weak December performance, while Limited Brands Inc. rose 2 percent to $16.01 on upwardly revised earnings guidance.

Teen retailers Pacific Sunwear of California Inc. fell 4.9 percent on a slight same-store sales decline, while Abercrombie and Fitch Co. dropped 2.3 percent, closing at $73.37, on softer same-store sales.

But shares of American Eagle Outfitters Inc., which has been struggling with sales recently, soared 7 percent to $18.97 despite lower earnings guidance. Investors keyed in on bright spots in the retailer's sales performance such as men's wear.

Off-pricers reported a successful holiday and were awarded by investors. Shares of TJX Cos. Inc. jumped 6.9 percent to $28.45, while Ross Stores Inc. soared 11.2 percent, closing at $24.57.

Discounter Wal-Mart Stores Inc. was also a bright spot in an otherwise dismal holiday. Shares of the retail giant swelled 3.2 percent to $48.40 as comps came in better than expected.

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