Retail Apparel Stocks Beat Dow in January

Apparel retail stocks dipped by 2.1% in January, outperforming the Dow Jones Industrial Average, which sank by 3.7%.

A few standout retailers surpassed the sector average in the month, though, admittedly, a couple of them did so from very low prices:

Bebe Stores (BEBE) skyrocketed 63.5% to $3.58. The specialty retailer’s stock was upgraded by Janney from “neutral” to “buy” amid expectations that it would beat earnings estimates in its next quarterly report.

Tillys (TLYS) gained 41.8% to $13.74 after the teen retailer raised its fourth-quarter earnings outlook to between $0.21 and $0.23 per share on strong holiday sales, above analyst estimates of $0.18 per share.

Pacific Sunwear gained 26.1% to $2.75 after Brean Capital upgraded the retailer’s stock from “hold” to “buy.”

Lululemon jumped 61 percent to $111.62 after raising its revenue and profit forecasts for the fourth quarter due to strong holiday season sales. It now expects revenue of around $600 million, up from the prior estimate of $585 million. Earnings per share are now estimated at $0.71 – $0.73 per share, up from $0.65 to $0.69. William Blair upgraded the athletic apparel retailer to “outperform.” The firm said it was increasing its estimates based on strong expected holiday sales and profit performance. Lululemon named former J. Crew CFO and EVP, Stuart C. Haselden, as its new CFO.

The worst-performing industry stocks were those that reported quarterly earnings reports that missed expectations:

Deckers Outdoors (DECK) was the perfomer in the month, plunging by 27.45% to $66.10 after a disappointing third-quarter earnings report that missed estimates on both the top and bottom lines. Earnings of $4.50 missed the consensus estimate by a couple of cents, and net sales of $785 million fell short of the $811 million expected by analysts due primarily to sluggish October and November sales. Although the maker of UGG, Teva, and other footwear brands saw its stock upgraded by Goldman Sachs from “neutral” to “buy” based on the company’s investments in supply chain, distribution and product development, the target price was lowered due to risks such as weather and seasonality.

BonTon Stores dropped 26 percent to $5.50. Although comparable sales for the holiday season increased by 5.3% and total sales rose 3.8% to $796.4 million, the highly promotional sales environment took a bite out of margins, causing the department store retailer to trim its full-year earnings guidance by $10 million.

Five Below (FIVE) lost 18.4% to $33.30 after holiday sales rose by only 24.5% to $230.7 million, missing analyst expectations of $265.75 million. Earnings per share of $0.60 missed consensus estimates by a penny. Several class action lawsuits have been initiated by law firms on behalf of shareholders who sustained significant losses on the stock when the company allegedly failed to disclose key information about company management move, discounting and operating expenses.

Crocs (CROX) fell by 15.1% to $10.60. Former Spanx CEO Gregg Ribatt has joined the footwear company as CEO. Prior to Spanx, Ribatt was president and CEO of Collective Brands Performance & Lifestyle Group, which included the Saucony, Sperry, Keds and Stride-Rite brands.

PVH (PVH) declined by almost 14 percent to $110.30 on news that the company would shutter its 120-store Izod retail division, resulting in a combined $40 million in charges and write-downs. Twenty of the stores will be converted to Calvin Klein and Tommy Hilfiger brand stores. The apparel manufacturer was downgraded to “neutral” from “buy” by Citi.

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