Just when it appears that the markets have completely written off specialty retail, and perhaps retail in general, we get a day such as Thursday. Led by strong earnings releases by Nordstrom Inc. (JWN) , Dick's Sporting Goods Inc. (DKS) and smaller Cato Corp. (CATO) , several other names rode their coattails.
At Home Group Inc. (HOME) (up 13%) still has a long way to go to get back to the $17.50 level it traded at prior to the June 6 release of first-quarter earnings, which included lowered guidance for the rest of the year. Shares fell all the way to the mid-$4 range, but have rallied 41% over the past week; that is meaningless to those who owned shares this time last year, when they were trading in the $36 range. There was some chatter last month that At Home might be in the process of being sold, but nothing has been substantiated yet.
Among apparel retailers, Fossil Group Inc. (FOSL) (up 7%), American Eagle Outfitters Inc. (AEO) (up 4.3%), Children's Place Inc. (PLCE) (up 7.7%), Citi Trends Inc. (CTRN) (up 13%), Gap Inc. (GPS) (up 4.7%), J. Jill Inc. (JLL) (up 4%), Tailored Brands Inc. (TLRD) (up 4.3%), Tilly's Inc. (TLYS) (up 8.4%) and Urban Outfitters Inc. (URBN) (up 6.8%) all enjoyed the tailwind, which may have been aided by fellow apparel name Cato.
Cato (up 18%) seemed to have reported a decent quarter, with revenue rising 2%, net income up 83% and same-store sales up increasing 4% over the same quarter last year. Interestingly, however, Cato currently garners no analyst coverage, so there are no earnings estimates. The balance sheet remained strong, with $233 million, or nearly $10 per share, in cash and short-term investments, a meaningful number when you consider that the stock closed Thursday at $16.36. CATO also yields 8.1%.
We'll see if retailers continue to rally on Friday, but early indications are mixed.
Hibbett Sports Inc. (HIBB) , which was up 5% Thursday, likely in sympathy with Dick's results, released second-quarter results here on Friday morning and is little changed in pre-market trading. It beat bottom-line estimates by three cents a share (a 13-cent loss vs. a 16-cent loss estimate) and narrowly missed on the top line ($252.4 million vs. $255.7 consensus).
However, in updating full-year guidance, Hibbett raised its same-store sales outlook from a range of 0.5% to 2% to a range of 1% to 2% and increased its EPS estimate from a range of $2.00 to $2.15 to a range of $2.15 to $2.25. Hibbett repurchased nearly 430,000 shares for $8.9 million during the quarter and expects to buy back $25 million to $30 million in stock the rest of the year, up from its previous repurchase guidance of $10 million to $15 million.
By contrast, Foot Locker Inc. (FL) , which rose 5% Thursday, was down around 12% before Friday's opening bell after reporting disappointing same-store sales (up 0.8% versus 3.3% estimate) and narrowly missing on both revenue ($1.77 billion vs. $1.83 billion) and earnings (66 cents a share vs. a 67-cent estimate). Foot Locker ended the quarter with $939 million, or about $8.50 per share, in cash and $123 million in debt, and bought back 2.9 million shares during the quarter.
Welcome to the twilight zone that is retail, where markets remain inefficient and stocks trade more like options.
