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Apparel Retail Stocks Blow Past Overall Market in November

The approximately 100 U.S. industry stocks tracked by Sourcing Journal saw their average prices rise by 7.5% in November, three times the rate of growth of the Dow Jones Industrial Average, which advanced by 2.5%.

Most of the gains were due to third-quarter earnings reports that exceeded Wall Street expectations.

Perry Ellis International (PERY), Stage Stores (SSI), Target (TGT), and Kate Spade (KATE) were among the best performing retail apparel stocks in the month, while Belk (BLKIB), Abercrombie & Fitch (ANF) and BonTon (BONT) did relatively poorly.

Perry Ellis International (PERY) gained 30.8%, to $26.39, on news that it had been approached about a takeover by Sequential Brands Group. Earlier this year, activist investor Legion Partners Asset Management joined California State Teachers’ Retirement System to acquired an almost 6 percent stake in the company, and has been pressuring the company to review strategic alternatives. Sequential owns brands like William Rast, Heelys and Ellen Tracy. Perry Ellis, which owns the Perry Ellis, Original Penguin, C&C California, Jantzen and Callaway Golf brands, among others, posted a disappointing loss in the quarter ended Nov. 1 of $437,000, or $0.03 per share, narrowing from a year-earlier loss of $3 million, or $0.20 per share. Sales fell 5 percent to $211 million from $222 million in the prior year period. In an open letter to Perry Ellis shareholders, chairman and CEO George Feldenkreis defended the company’s track record and strategic plan.

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Stage Stores (SSI) saw its stock increase by 21.7%, to $20.49, after the retailer announced a fiscal third-quarter loss of $5.3 million, or $0.17 per share, beating Wall Street expectations of a $0.20 per share loss. The Houston-based department store operator posted revenue of $364.2 million in the period, also beating forecasts, which were $360.5 million. Telsey Advisory Group upgraded the stock from “underperform” to “market perform.”

Target (TGT) jumped 20 percent to $74.00, after posting third-quarter sales and earnings that beat analyst expectations. Net income was $352 million, or $0.54 per share, on revenue of $17.73 billion in the period, also topping Wall Street forecasts.

DSW (DSW) jumped 18.9% to $35.48, after reporting fiscal third-quarter earnings of $49.6 million, or $0.55 cents per share, surpassing investor expectations of $0.51 cents per share. The Columbus, Ohio-based footwear and accessories retailer posted revenue of $669.9 million in the period, also topping Wall Street forecasts. Analysts expected $665.7 million.

Kate Spade (KATE) advanced 15.5% to $32.03, after posting break-even earnings for the third quarter that were much better than last year’s loss, despite falling a bit short of Wall Street estimates.  Net sales rose 30 percent to $250.4 million, beating estimates of $244 million. Strong performance at the company’s Kate Spade division partly offset weak results at the Adelington Design Group jewelry unit. The company has raised its 2014 comparable sales guidance range to 19-21 percent from 15-17 percent.

Walmart (WMT) rose 15 percent to $87.54, after beating Wall Street estimates for third-quarter performance. Revenue of $119 billion exceeded analyst expectations of $118.35, and earnings were $3.71 billion, or $1.15 per share.

Abercrombie & Fitch (ANF) fell 12.6% to $28.85, after the company released a statement noting that declining store traffic took a toll on third-quarter sales and earnings. The company also said it is reducing its logo-adorned products because they no longer suit customers’ tastes, and that its beach-inspired Hollister chain is underperforming the retailer’s flagship brand.

BonTon Stores (BONT) dipped 5 percent to $8.42, on news that it had sustained a loss of $11 million, or $0.57 per share, in its fiscal third quarter. The company, based in York, Pa., posted revenue of $658.8 million in the period.

More leaders and laggards are shown in the chart below.