Walgreen rallies on stronger-than-forecast results
By Andria Cheng, MarketWatch
NEW YORK (MarketWatch) — Retail stocks rose Wednesday as the Commerce Department revised higher the rate of growth in the U.S. economy for the third quarter and as the National Association of Realtors said sales of existing homes rose 5.6% in November — reassuring signs of economic improvement.
Retail-sector sentiment also has been boosted as last-minute shoppers appear to have given another lift to holiday-season sales. Last-minute shoppers turning out for retailers.
The S&P Retail Index (RLX 512.35, +1.62, +0.32%) added 0.4% to 514.21.
Among the early gainers, Walgreen Co. (WAG 39.22, +2.39, +6.49%) shares jumped 8%, rallying as the drugstore chain reported a better-than-expected 19% increase in first-quarter profit. See full article on Walgreen’s results.
Oxford Industries Inc. (OXM 26.76, +4.59, +20.70%) shares surged 20% to $26.60 after the apparel company said late Tuesday that it’s bought Sugartown Worldwide, the owner of Lilly Pulitzer apparel brand, for an undisclosed price. Oxford Industries makes clothing sold under such brands as Tommy Bahama and Ben Sherman.
Among the decliners, Nike Inc. (NKE 87.09, -5.21, -5.64%) shares fell 4.8% as rival Under Armour Inc. (UA 55.26, -2.14, -3.72%) also traded lower.
Late Tuesday, sneaker and apparel giant Nike warned of higher labor, cotton and other pressures that are expected to eat into profit margins. See story on Nike.
Also lower, athletic-shoe retailer Finish Line Inc. (FINL 17.34, -1.45, -7.72%) shares fell 6%.
The company said third-quarter net profit fell to $4.1 million, or 8 cents a share, from $6.6 million, or 12 cents, a year earlier, when it had a $6.5 million in tax benefit. Quarterly sales increased 8.7% to $260.9 million with comparable-store sales increasing 10.1%.
Analysts surveyed by FactSet Research had been looking for profit of 5 cents a share on sales of $248.7 million in the most recent quarter.
Still, investors were concerned about the company’s 13% inventory growth and a potential slowdown in comparable sales as Finish Line faces increasingly tough comparison in the final weeks of December and for the fourth quarter, Morgan Stanley analyst Chi Lee said.
Shares of Foot Locker Inc. (FL 19.37, -0.44, -2.22%) , Finish Line’s larger rival, also traded lower, down 1.6%.
