Retail stocks picked up 1.8 percent early Tuesday, hitting a new 52-week high, as investors found cause for optimism in a bullish full-year projection from Abercrombie & Fitch Co. and preliminary reports that indicate continuing strong trends in stores.
The S&P Retail Index rose 9.17 points to 529.42, eclipsing the 52-week high of 529.29 hit on Feb. 16. Major U.S. indices are up for the day, but, as demonstrated by the Dow Jones Industrial Average’s 0.2 percent pickup to 12,429.51, at a less bullish pace.
Leading the charge among retailers is Abercrombie & Fitch, which laid out for projections for expansion and earnings growth that exceeded expectations. A&F said it anticipates earnings of $4.75 a diluted share for the year, well above the $3.97 earlier projected by analysts. At 1 p.m., shares were up $6.45, or 10.9 percent, to $65.62.
Coming back from a steep decline Monday as it battles liquidity and covenant issues, American Apparel Inc. shares were up 4 cents, or 5.6 percent, to 78 cents in morning trading.
Other strong increases have come from Birks & Mayors Inc., with shares up 7.4 percent to $1.50; Zumiez Inc., 5 percent to $27.40; The Wet Seal Inc., 4.3 percent to $4.34, and Saks Inc., 4.1 percent to $11.86. Saks, Zumiez and Wet Seal will report March sales results on Thursday; Abercrombie and Birks report quarterly.
Continued interest in retail merger and acquisition activity has provided a foundation for share appreciation among store stocks, as have recent improvements in the employment picture. On Tuesday, the International Council of Shopping Centers and Goldman Sachs reported that chain store sales for the week ended April 2 were up 2.3 percent from the prior week and 2.8 percent from the comparable week in 2010.
“Despite the lingering winter weather curbing spring apparel demand, a shifting Easter holiday and rising gasoline prices, consumers continued to spend over the past week, which was largely propelled by improving income as U.S. employment has been picking up,” said Michael Niemira, vice president of research and chief economist at ICSC.
ICSC expects same-store sales to be flat to up 2 percent for March, with the later Easter pulling last month’s number down 1 to 2 percentage points. Most analysts expect business lost to the shift in March to be realized in April.