Disappointing second-quarter guidance from Gap Inc. and Aéropostale Inc. led their shares to double-digit declines Friday morning as retail stocks pulled back 1.5 percent.
Gap shares fell $4.08, or 17.5 percent, to $19.21 and Aéropostale’s dropped $3.64, or 17.1 percent, to $17.70 in morning trading Friday following the companies’ disclosures of first-quarter earning results after the close of the markets on Thursday.
While both firms met analysts’ expectations for the first quarter, they provided second-quarter guidance well below consensus views and slipped rapidly in after-hours trading on Thursday. Gap, citing unexpectedly high cost pressures, lowered its second-quarter guidance to a range of $1.40 to $1.50 a share, down from the $1.88 to $1.93 range provided in February. Aéropostale now expects second-quarter EPS of between 11 cent and 16 cents a share, whereas analysts had projected 27 cents prior to Thursday’s earnings report.
The S&P Retail Index at noon stood at 530.78, down 7.9 points, 3 percent below its close last Friday.
Earnings reports from other retailers this week have reflected uneven results with a recognition of higher prices to come in the latter half of the year, a budget challenge expected to be especially hard on midtier and value retailers. Shares of J.C. Penney Co. Inc. fell 4.4 percent to $36.29 in morning trading, while Kohl’s Corp. was off a more modest 3.2 percent.
Shares of Wet Seal Inc. dropped 8.1 percent Friday morning after the specialty retailer introduced second-quarter earnings guidance of between 1 cent and 2 cents a share late Thursday while shares of Zumiez rose 5.1 percent to $27.63. The teen retailer, which emphasizes active sports in its offerings, beat first-quarter earnings guidance and introduced second-quarter guidance of between 2 cents a 4 cents a share, with the higher figure matching the consensus estimate for the period.
Shares of Zale Corp. rose 17 percent to $4.13 in morning trading. The Dallas-based jeweler is scheduled to report results for its fiscal third quarter next Wednesday.