Retail stocks hit fresh multiyear highs Tuesday as investors fosteredhopes that the consumer resurgence seen in January would continue.
TheS&P Retail Index jumped 1.5 percent, or 7.6 points, to 517.13 — itsbest close since July 2007. The Dow Jones Industrial Average increased0.6 percent, or 71.52 points, to 12,233.15, a level not seen since June2008.
Retail gainers included Urban Outfitters Inc., up 5.6percent to $37.06; J.C. Penney Co. Inc., 4.9 percent to $35.03; Chico’sFAS Inc., 4.2 percent to $11.95, and Dillard’s Inc., 3.9 percent to$42.04. Vendors also picked up steam, and among those logging new52-week highs were Under Armour Inc., which closed up 2.3 percent to$66.99; Fossil Inc., 2.2 percent to $78.21, and Polo Ralph Lauren Corp.,1.7 percent to $115.77.
Fast-food giant McDonald’s Corp. helpedspark the consumer-based rally with a 5.3 percent gain in globalcomparable-store sales. Consumers have shown signs of increasedconfidence and expanded credit card debt for the first time in 27 monthsin December, according to a Federal Reserve report issued Monday.
Additionally,the International Council of Shopping Centers and Goldman Sachs saidchain store sales increased 2.2 percent during the week ended Feb. 5 andwere up 2.5 percent on a year-over-year basis. The challenges of winterweather woes notwithstanding, “retailers were able to post a solidsales increase for the first time in four weeks,” said ICSC chiefeconomist Michael Niemira.
Despite the new high, Amy Noblin, ananalyst at Weeden & Co., said concerns about increased sourcingcosts and tough comparisons with last year have taken their toll onretail stocks, which are lagging the overall market in 2011.
“It’sgoing to be hard for anyone to step in with any conviction on thisgroup until we get through earnings season,” she said. “The sourcingcommentary is not good. Most people think that costs in the back half ofthe year can be up 10 to 15 percent, potentially even higher.”
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