By  on February 18, 2010

Gains in apparel and retail stocks outpaced the broader market on Wednesday, which got a boost from positive earnings and economic data.

Fashion investors were encouraged by upward adjustments in fourth-quarter earnings expectations from Perry Ellis International Inc. and Phillips-Van Heusen Corp. The overall market got better-than-expected results from Deere & Co., along with encouraging reports on housing starts and industrial production.

The S&P Retail Index advanced 3.31 points, or 0.8 percent, to close at 409.64, twice the gain of the Dow Jones Industrial Average, which moved ahead 40.43 points, or 0.4 percent, to 10,309.24.

Perry Ellis led the fashion charge, finishing the day with the largest percentage gain among the 172 stocks tracked by WWD. Perry Ellis shares rose $3.51, or 21.4 percent, to $19.91 after its Tuesday night disclosure that earnings for the full year ended Jan. 31 would land at or above the top of its previous guidance of 80 cents to 95 cents a diluted share. The forecast implies fourth-quarter earnings of 44 cents to 59 cents a share. The firm also introduced guidance for the new year of earnings per share of between $1.25 and $1.40 on revenues of $770 million to $790 million.

“Strong performance across our product lines, most notably within Perry Ellis Collection, allowed us to significantly reduce our markdown allowances,” said George Feldenkreis, chairman and chief executive officer.

Net debt to capitalization ended the year at 34 percent, down from 47 percent in fiscal 2009.

Brean Murray, Carret & Co. analyst Eric Beder maintained his “buy” rating on the stock and raised his target price to $21 from $18. The company, “after a year of cost-cutting and focusing on driving higher returns at a number of key brands, is one of the best positioned apparel players in our universe,” he said.

Perry Ellis expects to report fourth-quarter and full-year results “on or about” March 19.

Phillips-Van Heusen shares rose $1.53, or 3.8 percent, to close at $42.38 after the company raised earnings guidance for the fourth quarter ended Jan. 31 to 59 cents a diluted share, excluding an estimated 11 cents a share in charges for restructuring initiatives, up from previous guidance of between 52 cents and 54 cents. In last year’s fourth quarter, the firm lost 74 cents a share but earned 30 cents a share excluding restructuring charges.

PVH said the quarter ended strongly in January and its outlet stores generated quarterly same-store sales growth of 11 percent versus previous estimates of 8 percent. Royalty revenue attributable to the Calvin Klein brand was up about 20 percent in the period as jeans, underwear, fragrance, women’s sportswear, dresses and outerwear performed especially well.

The positive indications on Calvin Klein royalties also benefited two of its licensees. Warnaco Group Inc., which markets jeans and underwear bearing the designer brand, saw its shares move up $1.31, or 3.3 percent to $41.44, and G-III Apparel Group Ltd. advanced 23 cents, or 1.2 percent, to $19.98. G-III holds the rights for Calvin Klein women’s sportswear, dresses and suits as well as men’s and women’s outerwear.

Without commenting on its fourth-quarter earnings prospects, The Talbots Inc. adjusted sales guidance upward, saying it expects a decline of 4 percent for continuing operations versus previous projections of a 6 to 8 percent drop-off. The disclosure was accompanied by notification of an adjustment in the company’s merger agreement with BPW Acquisition Corp. to help assure BPW shareholders they would receive $11.25 worth of Talbots shares upon the closing of the transaction.

Talbots’ shares closed at $11.09, down 9 cents, or 0.8 percent.

U.S. markets were buoyed by a 0.9 percent rise in industrial output in January and the highest level of housing starts in six months.

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