Retail stocks increased 1.3 percent on Tuesday as Credit Suisse upgraded Gap Inc. and workforce management firm Kronos Inc. unveiled a new gauge of employment trends showing progress in the sector.
This story first appeared in the September 9, 2009 issue of WWD. Subscribe Today.
The S&P Retail Index, which ended last week with two days of gains, advanced 4.92 points to 370.92 and outpaced the Dow Jones Industrial Average, which picked up 0.6 percent, or 56.07 points, to close at 9,497.34.
Among the retail gainers was Gap, which increased 2.3 percent to $21.60 after Credit Suisse analyst Paul Lejuez upgraded the stock to “outperform” from “neutral” and pointed to signs of a turn at the Old Navy division.
“After carefully managing expenses and inventories through the weak macro environment, [Gap] has now strategically chosen to go after the top line,” Lejuez said. “Improvements are evident at Old Navy and the company has begun to put more money into [the] Gap brand. With [Old Navy] at an inflection point and the potential for better performance at [the] Gap brand, we believe the risk-reward is favorable.”
The first public release of the Kronos Retail Labor Index showed that store managers who hire workers are feeling more confident than earlier in the year, said Robert P. Yerex, the firm’s chief economist.
The Kronos Retail Labor Index rose to 2.99 percent in July — indicating that retailers made one hire for every 33.4 job applications they received. The index, released for the first time Tuesday and based on data from 68 retailers, rose from 2.88 percent in June. The index has advanced from its three-year low of 2.75 percent in January.
Retail employment is still far weaker than before the recession, and the index is down from 7.1 percent in October 2006, when one of every 14.1 applications for work was accepted.