Retail stocks slump as Black Friday joy fades
NEW YORK (Reuters) - Retail stocks such as Macy's Inc (M.N), Guess Inc (GES.N) and Urban Outfitters Inc (URBN.O) fell on Monday as investors digested conflicting, but largely bearish, reports about this year's holiday shopping kick-off.
Investors and retailers were already bracing for less spending by consumers this year amid soaring oil prices and continued concerns about the U.S. housing downturn and fears the U.S. economy might be heading toward a recession.
But shares rallied slightly on "Black Friday" -- the day after the U.S. Thanksgiving holiday, which unofficially marked the start of the holiday shopping season -- as crowds stormed malls across the country hungry for eye-popping deals.
That delirium came to a screeching halt end on Monday, as feedback from several analysts differed from the optimistic readings made this weekend. The Dow Jones U.S. Retail index .DJUSRT closed down 2 percent, erasing Friday's gain.
The National Retail Federation (NRF) trade group said on Sunday that there were 4.8 percent more shoppers out over the four-day holiday weekend, but the average customer spent 3.5 percent less, making the total spending "extremely similar" with last year.
On a more optimistic note, research firm ShopperTrak RCT said on Sunday that retail sales rose 8.3 percent on Friday and 7.2 percent for Friday and Saturday combined, or "absolutely stronger" than anticipated. ShopperTrak has forecast total sales for the holiday season would rise 3.6 percent.
"While this sounds strong, we have doubts that sales made plan in most cases and that same-store sales were all that positive," said Lazard Capital Markets analyst Todd Slater.
Investors agreed, sending stocks down across the different sectors of retail.
"Business was heavily weighted to low-margin door-busters (such as promotionally priced cashmere sweaters) and electronics deals," Slater said, noting that much of the optimism of the weekend reports was "probably overstated."
"We called it 'Blue Friday' instead of 'Black Friday'," he said.
Noting that electronics were the big sellers over the weekend, Jefferies & Co analyst Daniel Binder said discounters such as Wal-Mart Stores Inc (WMT.N), Target Corp (TGT.N), Costco Wholesale Corp (COST.O) and BJ's Wholesale Club Inc (BJ.N) were "in the sweet spot" as high-definition televisions become cheaper and accessible to the mass market.
"I had one store manager tell me: 'If it had a plug on it, it did well'," Binder said, but he cautioned that, from a wider perspective, this could spell trouble in the future.
"The strength over the weekend may have been an indicator that the consumer is stretched and came out in droves looking for all the great deals," Binder said. "Maybe that pulls away demand later on in the season."
This could fuel investor worries over profits if retailers end up having to keep marking down items.
"I think this holiday is going to be very promotional," said Needham & Co analyst Christine Chen, pointing particularly at chains such as Talbots Inc (TLB.N), AnnTaylor Stores Corp (ANN.N), Chico's FAS Inc (CHS.N) and Coldwater Creek Inc (CWTR.O), which cater to mature women.
Those retailers, which Chen said did not have huge crowds over the weekend, were among the big losers on Monday, with Talbots closing down 5 percent at $13.18 and AnnTaylor closing down 5.2 percent at $30.53 on the New York Stock Exchange. Coldwater closed down 4.5 percent at $8.04 on the Nasdaq. Guess closed at $40.07, down 6.3 percent, while Macy's lost 6 percent, at $28.21.
(See here for "Shop Talk" -- Reuters' retail and consumer blog)
(Additional reporting by Nicole Maestri, editing by Dave Zimmerman and Andre Grenon)
