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Apparel Industry Stocks Continue to Lag Market in October

The Dow Jones Industrial Average was flat in the four weeks ending October 26, bringing the year-to-date rise to 7.3%. Industry stocks did even worse. Retail stocks fell by 0.9%, and the manufacturer/wholesale index plunged 3.6%, despite having turned in a year-to-date increase that beat the market. It looks like investors have soured, relatively speaking, on the apparel industry.

Stock Averages

Month

YTD

Dow

0.1%

7.3%

Retail

-0.9%

15.8%

Whsale/Mfg

-3.6%

9.5%

 

Oct Stock 1

Retail Gainers and Losers

 

Month/YTD

10/26/2012

YTD

Retail

Symbol

% Chg

Price

%Chg

Alco Stores

ALCS

46.0

10.19

22.3

BonTon Stores

BONT

29.1

12.26

263.8

Stage Stores

SSI

16.3

24.50

76.4

Sears Holdings

SHLD

12.9

62.67

97.2

Walking Co

WALK.PK

12.9

7.90

119.4

Express

EXPR

-24.9

11.13

-44.2

Aeropostale

ARO

-11.7

11.95

-21.6

Abercrombie

ANF

-9.8

30.58

-37.4

Zumiez

ZUMZ

-8.7

25.32

-8.8

Finish Line

FINL

-8.4

20.81

7.9

 

Alco Stores (ALCS) was the top performing retail stock for the month, jumping 46% to $10.19 per share after the retailer announced it would buy back 460K or about 12% of outstanding share, in a transaction with a major stockholder. September same-store sales fell 3.8%, but the company maintains that its revised marketing, merchandising and expense strategies have it well-positioned for slower economic growth.
BonTon Stores (BONT) gained 29.1% to $12.26 after posting a slight sales increase for September, with same-store sales up .6%. Total sales grew .7% to $288.9 million.
Stage Stores (SSI) gained 16.3% to $24.50 after reporting a 13.7% total sales increase for September. Comparable store sales rose 11.1%. The department store retailer added AutoZone SVP of Marketing Lisa Kranc and Brooks Brothers President and COO Diane Ellis to its Board of Directors.
Express (EXPR) was the biggest retail loser in June, plunging 24.9% to $11.13. The company announced that David Kornberg, formerly chief menswear merchant and a 12-year veteran of the company, will become its new President.
Aeropostale (ARO) dropped 11.7% to $11.95, and Abercrombie (ARO) fell 9.8% to $30.58 during the month. Aeropostale had a great back-to-school season, but its sales have subsequently slowed. Abercombie’s preppy styling has failed to keep pace with teen tastes, which are tending toward edgier styles.
Zumiez (ZUMZ) lost 8.7% to $25.32 after September same-store sales growth came in lower than expected, and several analysts pared their earnings forecasts for the action-sports retailer.
Finish Line (FINL) dipped 8.4% to $20.81. The footwear retailer will open athletic shoe shops in more than 450 Macy’s locations and on its website, making Finish Line the exclusive athletic footwear partner of the department store chain.

Wholesale Gainers and Losers

Month/YTD

10/26/2012

YTD

Wholesale

Symbol

% Chg

Price

%Chg

Warnaco WRC

36.0

70.58

41.0

True Religion TRLG

20.3

25.65

-25.8

Phllips-Van Heusen PVH

17.4

109.99

56.0

Delta-Galil DELTY.PK

13.7

10.30

53.7

Delta Apparel DLA

9.9

15.14

-20.7

Crocs CROX

-22.3

12.60

-14.7

Deckers Outdoor DECK

-21.9

28.63

-62.1

Skechers SKX

-18.6

16.60

37.0

Genesco GCO

-14.1

57.30

-7.2

Fifth & Pacific FNP

-14.1

10.98

27.2

Warnaco (WRC) rose 36% to $70.58, even before the company announced that it would be acquired by Calvin Klein and Tommy Hilfiger owner Phillips-Van Heusen for $2.9 billion in cash and stock, which makes one wonder whether or not rumors were afloat even before news of the deal broke.
True Religion (TRLG) jumped 20.3% to $25.65, and got lots and lots of ink in the business and financial press in October, after announcing it was forming a special committee of its board to explore ”strategic alternatives” including the possible sale of the company. Will be interesting to see if their prayers get answered!
Phillips-Van Heusen (PVH) gained 17.4% to $109.99, a 52-week high, after raising its full-year earnings forecast by about five cents per share, to between $6.32 and $6.37 per share. Big jump over only a nickel a share — again, maybe word got out about the Warnaco deal.
Delta-Galil (DELTY.PK) climbed 13.7% to $10.30 after posting record sales of $234 million in the third quarter, up 27% from the prior year period. Net income excluding a one-time gain was $10 million, up 29% from the previous year’s quarter. The innerwear and knitwear manufacturer announced a dividend of 8.4 cents per share and a stock buyback program of up to $2.5 million in common stock.
Delta Apparel (DLA) rose 9.9% to $15.14 after it too reported record revenue, of $130 million, in its fiscal first quarter ending September 30. The owner of apparel brands Junk Food, Soffee and The Game earned $3.6 million, or $.41 per diluted share, down from $4.4 million, or $.50 per diluted share, in the first quarter of last year. Earnings were impacted by a one-time charge of $1.2 million. Without that, the company would have posted record earnings, thanks to strong growth and improved margins in both basic and branded segments and a decline in cotton prices.
Some key footwear stocks got trounced last month. Crocs (CROX) plunged 22.3% to $12.60 after the company’s fourth quarter outlook failed to meet analyst expectations. Although net income rose 49% in the third quarter, slowing demand in Asian markets is dragging future sales growth.
Deckers Outdoor (DECK) dropped 21.9% to $28.60. The company delivered an UGG-ly outlook for the rest of the year as price cuts have failed to boost sales of those ubiquitous sheepskin boots in light of changing style trends and unseasonably warm weather. Revenue fell 9% to $376 million in the third quarter, below analyst expectations, and is expected to drop by even more over the next few months. Although earnings slumped 31% to 43.1 million, or $1.018 per share, they beat Wall Street estimates of $1.05 per share. Full-year earnings are now expected to fall by a third from last year.
Skechers (SKX) fell 18.6% to $16.60 after third-quarter net income failed to meet expectations. However, the company remains upbeat about fourth-quarter prospects on the positive response it has received to new products.
Genesco (GCO) declined 14.1% to $57.30. BB&T upgraded the stock from Hold to Buy, seeing particular promise in the company’s successful mall-based Journeys teen footwear division.
Fifth & Pacific (FNP) dipped 14.1% to $10.98 after the company formerly known as Liz Claiborne cut its third-quarter and full-year guidance due to weak sales at its largest division, Juicy Coutuer, despite better-than-anticipated results at Kate Spade and Lucky Brand.

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