Retail stocks rallied on Friday after Ross Stores Inc., Abercrombie & Fitch Co. and Foot Locker Inc. reported better-than-expected sales, giving a boost to an industry that’s been battered in recent weeks.
A wide range of retailers advanced, helped by a broader stock resurgence and more encouraging results than investors saw last week from Macy’s Inc. and Nordstrom Inc. Even shares of Gap Inc., which lowered its annual forecast and doesn’t expect a sales rebound until spring, rose 7.5 per cent on Friday.
Retailers have been circumspect about the holidays, stoking fears that consumer spending will be disappointing during this crucial sales period. Best Buy Co. said earlier this week that revenue would decline in the fourth quarter, partly because fewer shoppers are buying tablets. With the latest results, retailers struck a more optimistic note. Foot Locker and Ross both beat sales and profit estimates. At long-beleaguered Abercrombie & Fitch, meanwhile, sales fell less than projected.
The bleak view of the retail industry helped Abercrombie shine on Friday, according to Paul Lejuez, an analyst at Citigroup Inc. Abercrombie’s adjusted third-quarter profit was 48 cents a share, compared with the 29 cents Lejuez had estimated.
“With market expectations reduced after hearing earnings reports from other retailers over the last several weeks, today’s number was impressive,” he said in a report.
Abercrombie jumped 25 per cent to $24.37, marking the stock’s best day in three years. It had been down 32 per cent this year before Friday’s gain.
Foot Locker
Foot Locker shares increased 5.7 per cent to $65.02, the biggest gain in more a year. Ross, a discount chain, rallied the most in more than seven years. Its stock climbed 10 per cent to $50.84. Gap’s gain was its biggest jump since November 2013.
Hibbett Sports Inc. also climbed after posting third-quarter profit that topped estimates and raising its forecast for the year. The chain of more than 1,000 sporting-goods stores, mostly in the southeastern U.S., rose 16 per cent to $33.30.
A $12 billion stock buyback plan at Nike Inc. helped lift its shares as well. It climbed 5.5 per cent for its best performance since September. Lululemon Athletica Inc., a maker of yoga wear that has been cited as a Nike takeover target, rose 4.1 per cent.
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.
