Retail Stocks Bounce After Earnings Selloff

By Dean Seal

Retail stocks are unexpectedly rebounding after a punishing earnings season selloff that aroused concerns about the state of the consumer and the longevity of ongoing supply chain headaches.

The SPDR S&P Retail exchange-traded fund, which tracks an equal-weighted index of stocks in the retail industry, rose 6.7% on Wednesday, a bump up from a 30% decline since the start of the year.

Department stores and big-box chains have been reporting drops in first-quarter sales as consumers, who can't fall back on government stimulus like last year, tighten their belts in response to historic inflation.

Even retail giants, including Walmart Inc. and Target Corp., that posted higher first-quarter sales have been caught up in the wider selloff. After Target missed Wall Street earnings estimates a week ago, its shares dropped 26% to a 52-week low in the first half hour of trading and continued to slide.

But Target shares advanced 4.3% to $156.51 on Wednesday as part of the larger lift across the retail industry that managed to miss shares of Walmart, which ticked down.

Apparel companies are seeing some of the biggest gains of the pack. Shares of Abercrombie & Fitch Co., after tumbling 31% to open at a 52-week low of $18.31 the day before, climbed 16.7% to $22.29 on Wednesday. Abercombie's Tuesday decline dragged shares of rival American Eagle Outfitters Inc. down as well, but American Eagle soared back up 12% to $13.57 on Wednesday.

After Express Inc. bucked industry trends and raised its annual sales forecast on Wednesday, its shares fell to a 52-week low of $2.30 in early trading before regaining 11.3% to hit $2.65. Shares of Gap Inc., which are down 40% this year, increased 11.8% to $10.60. Shares of Urban Outfitters Inc., which sank 8% to $17.99 on Tuesday after missing Wall Street earnings expectations, rose 14.6% to $20.63 Wednesday.

Department stores are big winners in the retail bounce as well. Dillard's Inc. shares are up for the year after climbing 12.6% to $265.45 on Wednesday, as are shares of Nordstrom Inc. after a 13.1% gain to $23.39. Shares of Kohl's Corp. rallied 12.8% to $40.79 on grumblings of refreshed buyout bids. Shares of Big Lots Inc., down 34% this year, rose 13.9% to $29.87.

Among electronics stores, shares of GameStop Corp. jumped 25.4% to $111.70 on heavier-than-usual volume for the frequently volatile stock. Shares of Best Buy Co., down 23% this year, rose 8.6% to $79.80.

Other big gainers included Dick's Sporting Goods Inc. shares, which rose 9.5% to $78.01 after the company said sales declined in the first quarter and that it would cut its annual earnings outlook. Shares of Bath & Body Works Inc. increased 9.2% to $39.49.

Write to Dean Seal at [e-mail]

(END) Dow Jones Newswires

May 25, 2022 15:23 ET (19:23 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.