Retail Stocks Rose As Target Beats Estimates

By Andria Cheng

Retail stocks rose Wednesday after Target Corp., BJ's Wholesale Club Inc. and other retailers posted better-than-expected first-quarter results, giving some hope of a turn for the better in the recession-battered industry.

Target (TGT) shares jumped 4.7% to $43.89. The No. 2 U.S. discount retailer said Wednesday that its first-quarter profit fell a much less-than-expected 13% after the company controlled expenses and inventory to offset declines in discretionary spending.

The results came at a time when Target is in the midst of an intense proxy contest with activist investor Bill Ackman of Pershing Square Capital Management. Top proxy-advisory firms RiskMetrics and Glass Lewis differed in their opinions Tuesday regarding how shareholders should vote.

BJ's (BJ) stock climbed 1% to $38.42. The wholesale club chain said net income rose to $24.3 million, or 45 cents a share, from $17.2 million, or 29 cents a share, in the year-earlier period. Revenue at the Natick, Mass.-based retailer rose 0.2% to $2.26 billion. Comparable club sales dropped 1.5% and would have risen by 7.5% without the impact of lower gasoline sales as a result of lower oil prices.

Analysts, on average, expected earnings of 41 cents a share on revenue of $2.29 billion, according to a survey by FactSet Research. For the year ending Jan. 30, 2010, BJ's forecast profit of $2.44 to $2.54 a share, ahead of its earlier view of $2.42 a share to $2.52 a share.

Women's clothing retailer Ann Taylor Stores Corp. (ANN) shares fell 0.5% to $8.91. It swung to a first-quarter loss of $2.31 million, or 4 cents a share, from profit of $25.9 million, or 43 cents, a year earlier. Sales fell to $426.7 million from $591.7 million. The company said it expects second-quarter sales to "again remain under significant pressure," primarily at its Ann Taylor chain. Analysts, on average, estimated the company to lose 15 cents a share on sales of $457.2 million, according to FactSet.

The S&P Retail Index (RLX) gained 1.6% to 332.93.

Sears Holdings Corp. (SHLD) rose 4.4%. The Circuit Court of Cook County, Illinois certified a plaintiff class in lawsuits alleging that customers' personal, private, and confidential financial information was disclosed for profit by Sears to certain third-party vendors contrary to the representations and obligations to its credit card holders.

-Andria Cheng; 415-439-6400; [e-mail]

Order free Annual Report for Sears Holdings

Visit http://djnewswires.ar.wilink.com/?link=SHLD or call 1-888-301-0513