Retail stocks can be a lot like the merchandise and the sales of the companies they represent -- in constant fluctuation. In this column I like to point out a few notable daily moves from the big retail stocks and help investors figure out whether they should buy, sell, or hold. Today's movers and shakers: RadioShack (RSHCQ), J.C. Penney (JCPN.Q), and Abercrombie & Fitch (ANF 0.94%).
RadioShack was the biggest loser by far, down 17.28%. Not only did the company say it will close 1,100 of its stores, but its quarterly numbers were also brutal. Revenue of $935.4 million fell short of the $1.17 billion in last year's comparable quarter and the $1.12 billion analysts were expecting. Earnings came in at a loss of $1.90 per share, while analysts were predicting just a $0.14 deficit. Weak holiday sales and heavy promotions capped off a 19% sales drop at stores open at least a year.
About 20% of RadioShack's stores will be closing its doors, which should help the company reduce costs and boost earnings, but investors need to watch the inventory backlog as these 1,100 stores start to close.
Another struggling retailer, J.C. Penney, jumped 4.15% this afternoon. The S&P's rating service increased the company's credit rating from "negative" to "stable" yesterday, and that move follows a 25% stock increase last week, after quarterly earnings came out and management said it anticipates seeing a profit this quarter. If so, it'll be the first time since early 2011. Granted, even with the S&P's move yesterday, the company's rating still resides in "junk" territory, but every little upgrade means the potential that more people will be willing to lend the company money, and at lower borrowing costs. J.C. Penney may need the help if it wants to get out of the hole it's stuck in.
Finally, an upgrade from "neutral" to "outperform" sent shares of Abercrombie & Fitch up 6.68%. Citing Abercrombie's cost-cutting measures, reduced square footage, tighter inventory control, improved policy on returning cash to shareholders, and hard focus on its online presence, Credit Suisse also raised its price target on the stock from $36 to $52. It all sounds great, but keep in mind that this is one analyst's opinion and the world of teen retail can be as fickle as its customers.
