By Andria Cheng
U.S. retail stocks headed lower Tuesday as investors awaited the
traditional start of the first-quarter earnings season.
Pier 1 Imports Inc. (PIR) shares added 19% to 76 cents a share,
reversing an earlier decline, after the company said it is
terminating leases on 20 stores as a result of ongoing negotiations
with landlords to lower rent, and plans to shut two additional
locations. It said during a conference call that business is
showing some improvement, adding that it is buying more accurately
and more of what it buys is hitting the target.
Pier 1 swung to a fourth-quarter loss of $29.4 million, or 33
cents a share, from a profit of $13.7 million, or 16 cents a share,
in the year-earlier quarter. Same-store sales fell 9.7%, and the
weakening of the Canadian dollar contributed 1.5 percentage points
of the same-store sales drop. The company, which began the fiscal
year with 1,092 namesake stores in North America, estimates total
charges of approximately $6 million in cash and non-cash
termination charges related to the store closures, of which $4
million will be incurred in the first quarter of fiscal 2010.
Rival Bed Bath & Beyond Inc. (BBBY) shares fell 2.6% ahead
of its quarterly report after the close of trading.
The S&P Retail Index fell 2.9% to 301.05 in midafternoon
trading. The unofficial start of earnings season kicks off Tuesday
when Alcoa Inc. (AA) releases its first-quarter results, which
analysts expect at a loss, after the close of trading.
Retail-sector investors also were waiting for further signals on
the industry outlook and whether the worst may be behind the
sector. Retailers will report March same-store sales data
Thursday.
Chain-store sales for the week ended April 4 fell 0.3% from the
year-earlier period, according to a survey released Tuesday by the
International Council of Shopping Centers and Goldman Sachs. On a
week-over-week basis, sales rose 0.6%. "As the fiscal month wrapped
up, sales continued uneven by type of retail's segment with some
pullback at discounters, but dollar stores appeared stronger," said
Michael Niemira, ICSC chief economist. "Overall sales continued to
contract on a year-over-year basis, but showed some modest
improvement on a week-over-week basis." For March, ICSC Research
anticipates sales will be flat to down 1% on a year-over-year
basis, Niemira added.
Gap Inc.'s (GPS) shares fell 3.6%.
Chief Executive Glenn Murphy, who joined the largest U.S.
clothing chain in August 2007, last year had $5.3 million realized
income in salary, performance-based incentive bonus and all other
compensation. In detail, that included $1.5 million in salary,
which Murphy has volunteered to reduce by 15% to $1.275 million for
2009. His incentive bonus came to $3.02 million. All other
compensation of $834,434 included $211,244 in personal use of a
company airplane and relocation expense of about $477,000. His
total compensation came to $9.33 million, which included about $4
million in estimated compensation expenses for stock and option
awards that were granted when he was hired but which haven't yet
been realized, Gap said in a filing with the Securities and
Exchange Commission Tuesday. The San Francisco-based retailer's
profit last year grew 16% to $967 million as Murphy controlled
inventory and expenses while same-store sales declined 12%.
Phillips-Van Heusen Corp. (PVH) shares fell 3.3%. Citigroup
analyst Kate McShane maintained her buy rating on the stock. The
analyst, citing Chief Executive Emanuel Chirico, said business over
the past few weeks was better than the company expected even though
it was still down from the negative impact of Easter falling in
April this year instead of March. "Though management maintained a
cautious tone & outlet retail remains challenging, we were
encouraged by the absence of order cancellations since holiday and
(the company's) active stance on opening price point offerings and
earlier markdowns to stem heavier (promotional) activity later in
the season," the analyst said in a note.
-By Andria Cheng; 415-439-6400; AskNewswires@dowjones.com