Retail shares bounced back Monday in intraday trading after the S&P Retail Index fell to its lowest point in nearly 11 months, then rallied to close up 2.2 percent to 478.89.
The index opened flat from Friday's close at 468.47, fell to 463.55, its lowest intraday trading point since last September, and then made steady gains throughout the day.
"What we are getting today is a dead cat bounce in what remains a depressed market," A.G. Edwards analyst Robert Buchanan said. "The bears out there are probably talking about a recession and that's what we are seeing."
By the end of the trading day, there were more gainers among retailers than losers. Among the winners were Pacific Sunwear of California Inc., up 6.5 percent to close at $16.98; J.C. Penney Co. Inc., up 5.8 percent to close at $69.53, and Kohl's Corp., up 5.2 percent to close at $60.31. Shares of Tiffany & Co. lost ground, down 5.6 percent to close at $45.82.
Meanwhile, shares of Hot Topic Inc. marked a new 52-week low of $7.47 and closed down 3.7 percent to $7.97. In the past 52 weeks, the stock traded between $8.16 and $14.45.
Last week, Buchanan cut his rating on Hot Topic to "sell" from "hold" based on negative performance momentum and dull back-to-school prospects.
"I think this is a good management team but they're stuck in a tough situation. The store base is maxed out at 694 stores," said Buchanan, who noted Hot Topic's past success was rooted in its appeal to the "James Deans of the teen generation," a notoriously hard group to get into the mall.
And shares of The Bon-Ton Stores Inc. hit a new 52-week low Monday after First Albany Capital started coverage of the department store chain with a "neutral" rating.
"We believe that Bon-Ton should trade at a discount to the peer group because of the increasing reliance on [the second half of 2007, particularly the fourth quarter], to achieve management's guidance, and the uncertainty that the back-end weighting creates, as well as Bon-Ton's significant debt load," said First Albany analyst Paula Kalandiak in a research note.
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