By Andria Cheng
Retail shares headed higher early Wednesday with Big Lots Inc.
(BIG) shares getting a boost after an upgrade from J.P. Morgan.
Staples Inc. (SPLS) shares dropped after the office supplies
retailer's fourth-quarter profit excluding items missed analysts'
estimates and the retailer said it's not giving any profit
forecasts for the first quarter or the full year.
The S&P Retail Index rose 1.1% to 249.21 in early trading,
in line with the broader markets, after a rally in the financial
sector.
Staples shares rose 1.4% to $15.96, erasing an earlier decline
as the markets headed higher. The retailer said fourth-quarter
profit dropped 14% after the recession and the worst jobless rate
in over a quarter of a century led to lower demand for
bigger-ticket items such as computers and furniture. The
Framingham, Mass.-based company also said it's not providing profit
and sales forecasts for the first quarter and for the full fiscal
year as it expects weak economic climate to continue throughout
2009.
Big Lots shares jumped 9.1%. J.P. Morgan analyst Charles Grom
raised his rating on the discount closeout retailer to overweight
from neutral. "We believe (Big Lots) remains the best positioned
retailer we cover to take advantage of the soft consumer backdrop,
and the company continues to see more deals today than at any point
in recent history," he wrote.
American Eagle Outfitters Inc. (AEO) shares rose 6.6% to $10.20.
The teen clothing retailer said Wednesday that its fourth-quarter
net income fell to $32.7 million, or 16 cents a share, from $140.5
million, or 66 cents, a year earlier. Excluding store impairment
charges and other items, the company said it would have earned 19
cents a share. Sales fell 9% to $905.7 million from $995.4 million.
Comparable-store sales declined 16%. The retailer forecast
first-quarter profit of 4 cents to 7 cents a share, excluding the
possibility of additional losses related to investment securities.
Analysts, on average, estimated profit of 20 cents a share in the
fourth quarter and 8 cents in the first quarter.
J. Crew Group Inc. (JCG) shares jumped 12% to $10.89 after it
posted a smaller-than-expected fourth-quarter loss.
-Andria Cheng; 415-439-6400; AskNewswires@dowjones.com