Strong June retail sales results lifted the S&P Retail Index to its highest level ever Thursday, totally erasing a more than 10 percent decline suffered after it hit an historic high less than two months ago.
At midday, the retail index stood at 557.11, up 12.71 points or 2.3 percent and only slightly off the 557.39 zenith reached earlier in the day. Prior to today, the index’s peak since its June 2002 recalibration was 552.11, reached on May 13. However, doubts about the strength of the economic recovery and retailers’ ability to withstand an uncertain rebound and higher prices for many apparel products this fall had sent the index reeling.
It bottomed out in midday trading on June 13, sinking to 494.18, before beginning a comeback that has seen it make up the lost ground and then some.
U.S. equity markets were up strongly, with all three major indices generating strong gains Thursday. The Dow Jones Industrial Average began the afternoon at 12,726.38, up 0.8 percent, while the S&P 500 stood at 1,353.13, up 1 percent. The better-than-expected results reported by retailers in the morning were a major factor, indicating pent-up demand for a wide range of consumer goods, but stocks also received a boost from news that first-time unemployment claims for last week came in lower than anticipated at 418,000, their lowest level in seven weeks.
Adding to an improved jobs picture, Automatic Data Processing said companies added 157,000 jobs last month, up from just 36,000 in May.
American Apparel Inc. and Bebe Stores Inc. registered double-digit gains in their stock prices as both reported strong sales trends for the month and quarter. American Apparel was ahead 16.1 percent to $1.08, while Bebe rose 17.7 percent to $7.93. Neither reports sales on a monthly basis.
Among those stores participating in monthly reporting of comparable-store sales, a group that has dwindled in size in recent years, Cato Corp. shares were up 11.1 percent to $27.33; Hot Topic Inc. ahead 9.8 percent to $8.15; Dillard’s Inc., up 8.2 percent to $58.90; Kohl’s Corp., up 6.8 percent to $55.62; Target Corp., up 6 percent to $51.35, and Gap Inc., up 4.8 percent to $19.21. All reported results surpass analysts’ consensus expectations, and all but Hot Topic reported increases.
Shares of J.C. Penney Co. Inc. fell 1.7 percent to $33.61 in morning trading. With a 2 percent increase in June, the Plano, Tex.-based retailer was one of only a few to fall short of analysts’ estimates for the month and revised its second-quarter sales and earnings forecast downward.