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Retail Stocks Drop Thursday

Stock for AnnTaylor Stores, Dillard and J.C. Penney fell yesterday.

Retail stocks dropped 3 percent Thursday as questions about the current quarter overwhelmed strong first-quarter showings from Kohl’s Corp. and Urban Outfitters Inc.

The S&P Retail Index fell 14.15 points to 460.24 as the Dow Jones Industrial Average slipped 1.1 percent, or 113.96 points, to 10,782.95.

Kohl’s posted a 45.3 percent rise in first-quarter profits, but its outlook for the current quarter came in short of expectations and the stock fell 5.8 percent to $53.81. Urban Outfitters’ profits shot up 72 percent, but the stock still fell 6.7 percent to $36.78 as analysts noted the company gave little guidance on current business trends.

Among other decliners were AnnTaylor Stores Corp., down 6.4 percent to $23.27; Dillard’s Inc., 5.4 percent to $25.72; J.C. Penney Co. Inc., 4.9 percent to $28.17, and Macy’s Inc., 4.9 percent to $23.48. Dillard’s and Penney’s are scheduled to report their first-quarter results today.

Retail stocks have been particularly volatile since last week’s still-unexplained crash in equity markets and then Monday’s rally following Europe’s nearly $1 trillion bailout for Greece and other cash-strapped countries.

Shares in the sector have fallen in seven of the last 10 trading sessions and are down 7.9 percent from their April 26 high this year.

Retail profits are benefiting from two years of cost cuts and inventory discipline that have made for leaner operations. Spending is also starting to pick up. Earlier this month, the Commerce Department said personal consumption expenditures jumped 3.6 percent in the first quarter, leading to growth of 3.2 percent in the U.S. economy.

Around the world Thursday, the Nikkei 225 shot up 2.2 percent to 10,620.55 in Tokyo as the Hang Seng Index rose 1 percent to 20,422.46 in Hong Kong, the FTSE 100 increased 0.9 percent to 5,433.73 in London and the CAC 40 slipped 0.1 percent to 3,731.54 in Paris.

• NexCen Sells Franchises: NexCen Brands Inc. said Thursday it has inked a deal to sell its franchise businesses, including The Athlete’s Foot and Shoebox New York, to Levine Leichtman Capital Partners for $112.5 million. The company also said that following closure of the Levine Leichtman acquisition, expected in the third quarter, NexCen’s board is expected to approve a plan to dissolve the firm. The franchise sale and decision to dissolve the firm require shareholder approval. NexCen sold the Bill Blass designer brand in December 2008 to Peacock International Holdings LLC for $10 million in an all-cash transaction.

• Express Completes IPO: Specialty chain Express raised $272 million Wednesday after going public, selling 16 million shares at $17 a share. The shares, traded under the ticker symbol EXPR, priced lower than the expected $18 to $20 range. Golden Gate Capital paid $602 million to acquire a 75 percent stake in the chain from Limited Brands Inc. in 2007. Limited remains a shareholder. The company targets men and women between the ages of 20 and 30 and operated 573 stores with average square footage of 8,700 as of Jan. 30. Since Golden Gate took its stake, Express has converted stores to a dual-gender format, redesigned its go-to-market strategy and launched an e-commerce platform.