By  on August 5, 2009

Shares of The Talbots Inc. led the retail sector Tuesday, shooting ahead 22 percent on the heels of an upgrade from FBR Capital Markets.

The S&P Retail Index fell 0.9 percent, or 3.11 points, to 357.09, as the Dow Jones Industrial Average inched up 0.4 percent, or 33.63 points, to 9,320.19. The S&P 500 rose 0.3 percent, or 3.02 points, to 1,005.65, its second consecutive close above 1,000.

Talbots rose $1.12 to $6.22 after FBR analyst Adrienne Tennant upgraded the stock to “outperform” from “market perform.”

Tennant said the company’s inventory and expense controls should help drive earnings and that “tremendous progress” had been made on stabilizing the balance sheet.

But Talbots is still in turnaround mode and the analyst expects negative comparable-store sales to continue for at least the next several quarters.

“We stress the fundamental top-line turn is not yet apparent; nonetheless, we believe investors with a higher risk appetite may find [Talbots] interesting,” Tennant said.

Also on the rise was Simon Property Group Inc., which saw its stock advance 6.9 percent to $60.91 despite weaker second-quarter results.

Simon Property’s funds from operations fell 26.8 percent to $313.1 million, or 96 cents a diluted share, for the quarter ended June 30.

Comparable sales per square foot at Simon’s regional malls fell 10.5 percent, as its premium outlet centers comped down 3.3 percent.

“The holiday season is going to be important in terms of the psyche of the retailer for 2010,” said David Simon, chairman and chief executive officer, on a conference call with analysts. “And…even though the economy and a lot seems to be shifting in the right direction, I think it’s safe to say that retail is somewhat lagging in that.”

The occupancy rates at Simon’s regional malls declined to 90.9 percent from 91.8 percent a year ago as occupancy in its premium outlet centers fell to 97 percent from 98.3 percent.

Among the retail decliners for the day were Chico’s FAS Inc., off 5.1 percent to $11.33; Aéropostale Inc., 4.6 percent to $36.15; American Eagle Outfitters Inc., 3.7 percent to $14; J. Crew Group, 3.1 percent to $28.53; Macy’s Inc., 2.8 percent to $14.09, and Target Corp., 2 percent to $42.17.

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