Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
Retail stocks fell again today as the broad market edged lower for the fourth day in a row despite a strong employment report from ADP. The Dow Jones Industrial Average (^DJI 0.40%) finished down 25 points, or 0.2%.
According the employment report from ADP, the nation's largest payroll processor, 215,000 jobs were added in November, well ahead of expectations of 160,000 and last month's total of 184,000. The figure was also better than October's official tally from the Department of Labor of 204,000. While the ADP report at times differs from the Labor Department's reading, it's the best predictor of the official total, which will come out Friday
Investors have begun to fear the Fed's stimulus taper will come sooner than expected if it sees strong employment growth, which explains why stocks did not move higher today. Elsewhere, economic reports were mixed as a gain in exports drove the trade deficit down, and new-home sales for September and October were short of expectations as was November's ISM services index.
Retail stocks continued to take it on the chin as concerns about weak holiday sales persisted. Wal-Mart fell 1.2% to make it the Dow's worst performer, while Express (EXPR) shares finished down 23% as the fashion label issued downbeat guidance in its quarterly report. Management lowered its full-year EPS outlook from $1.52-$1.60 to $1.46-$1.51, below the consensus as it sees an increasingly competitive promotional environment this holiday season. Management also said Thanksgiving week sales did not meet its expectations, and that same-store sales will be in the low single digits for the current quarter.
Reporting earnings after the bell, Aeropostale (AROPQ) shares fell 4% after a 4% drop during regular trading. The teen retailer has had a forgettable 2013, and it only got worse with today's report as it delivered a per-share loss of $0.29, below estimates of a $0.24 loss. Revenues dropped 15.1% to $514.6 million, missing the consensus at $519.8 million, and comparable sales fell 15%, in line with the trend for the year. CEO Thomas Johnson said, "We were disappointed in our overall performance as customer adoption is occurring more slowly than we would like against the backdrop of a challenging retail environment." Fourth-quarter guidance was similarly terrible as the retailer sees a per-share loss of $0.24-$0.32. Aeropostale is in the midst of closing some stores and repositioning itself, but it's hard to believe in the turnaround at this point.
