Retail Stocks Fail to Keep Pace with Market in October

Retail apparel stocks edged up by an average of 1.7% in October, well below the overall market increase, due to sluggish industry sales and earnings growth and the anticipation of a lackluster Holiday season. The Dow Jones Industrial Average gained 8.5%, finishing the month at 17,663.

For the first 10 months of 2015, the average price of an apparel share fell by 8 percent, compared to the Dow’s almost 1 percent year-to-date decline.

Here’s what happened at the big winners and losers last month:

Vince Holdings (VNCE) soared 32.7% to $4.55 after the company announced that former BonTon Stores CEO Brendan Hoffman was named CEO to replace Jill Granoff, who resigned amid a flurry of top management departures two months ago.

Amazon (AMZN) jumped 22.3% to $625.90 after the e-commerce giant reported a surprise third-quarter profit on better-than-expected sales. Revenue rose 23.2% to $25.36 billion from the prior year quarter. Gross margin expanded 500 basis points to 33.9%. Net income swung from a loss of $92 million last year to a profit of $79 million this year. The $0.17 per share profit blew past analyst estimates of a 10 cent per share loss, powered by its technology provider division Amazon Web Services, representing 8 percent of revenue, whose operating margin expanded dramatically over the year-ago period. The stock has more than doubled this year.

Cherokee (CHKE) gained 16.9% to $18.15 after the brand licensing firm announced its acquisition of Flip Flop Shops, a 90-unit global chain of franchised retailer of branded casual footwear and accessories. The company has an additional 100 additional retail shops in development worldwide that will carry flip flops and other merchandise from Reef, Havaianas, SANUK and others.

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Francesca’s Holdings (FRAN) rose 16.2% to $14.21 after the specialty retailer appointed former Kohl’s SVP DMM Laurie Hummel as EVP and Chief Merchandising Officer, reporting to chairman and CEO Michael W. Barnes.

Cititrends (CTRN) increased 13.6% to $26.57 after catching the eye of analysts who gave favorable reviews to the retailer’s better-than-expected second quarter results, discount strategy, improving comps, and inviting store formats.

Skechers (SKX) stumbled and fell 30.2% to $31.20 after the casual footwear maker reported third-quarter sales that fell short of Wall Street estimates despite delivering better-than-expected earnings. Sales were $856.2 million, below consensus of $868 million, and a 27 percent increase from the prior year period, compared to a 36.4% and 40.5% sales increase in the second and first quarters, respectively. Earnings per share were $0.58, more than 7 percent above the $0.54 anticipated. Skechers CEO Robert Greenberg sold a total of 500,000 shares of his company stock at near-record-high prices in August and September for a total of $74 million, midway through the quarter during which the company underperformed.

Crocs Inc. (CROX) fell 16.4% to $10.80, after the footwear company lowered its third-quarter revenue guidance by $10 million to $270 million – $280 million. Piper Jaffray cut its rating on the stock from “overweight” to “neutral” and reduced its price target by $5 to $12.

Wolverine Worldwide (WWW) lost 14.2% to $18.57 after the Rockford, Michigan-based footwear company and maker of Hush Puppies, Merrell, Sperry, Saucony and other brands missed third-quarter revenue estimates by a couple of million but met earnings expectations. Total revenue in the period was $678.9 million, short of the hoped-for $681 million. Net income fell by 20 percent to $45.8 million, or $0.44 per share from $57.9 million, or $0.54 per share, last year.

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Cabela’s (CAB) climbed down 14.1% to $39.17 after the company missed its third-quarter sales and earnings estimates for the second consecutive quarter and trimmed its full fiscal year view. Retail store revenue increased 6.5% to $637.8 million, while comps dropped 4.2%. Earnings per share were $0.71, off by a couple of cents from Wall Street estimates and 12.3% below prior year levels. The outdoor retailer blamed the sluggish growth on poor fall apparel and footwear sales, which were only partially offset by strength in hardline categories like powersports, firearms and ammunition, and disappointing performance in new U.S. stores opened this year. It now plans to open only seven stores in 2016, half the number previously targeted.

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