News Column

Retail weakness roughs up stocks

May 20, 2014

By Matt Krantz and David Carrig, USA TODAY

Stocks stumbled Tuesday after a raft of retailers disappointed investors with weaker-than-expected earnings, showing the consumer isn't exactly in a buying mood.

Investors were hoping key retailers could buck the nasty weather that hit the nation earlier in the year. But earnings misses by retailers ranging from Staples to Urban Outfitters and Dick's Sporting Goods were not encouraging.

The Dow Jones industrial average fell 138 points, or 0.8% to 16,374, along with declines in the broader Standard & Poor's 500 index and tech-heavy Nasdaq composite index.

"There's broad concern about the retail sector. Retail is having a tough time," says S&P Capital IQ analyst Efraim Levy.

Among Tuesday's hardest hit:

Dick's Sporting Goods. The sports gear seller was the worst-performing stock in the S&P Retail Select index, falling 18% to $43.60. Investors pummeled it after the company warned weak sales of hunting and golfing gear would result in the company's earnings for the fiscal year to total $2.85 a share, missing a previous forecast by about 7%.

Staples. The office supply store's shares tanked nearly 13% to $11.71 after reporting a quarterly adjusted profit of 18 cents a share, falling short of analysts' forecasts by 14%. Worse yet, Staples said revenue would fall in the second quarter. Weak results at office supply stores are a reflection of the slow comeback in growth of office jobs, says Levy. "If no one is in the office, who needs the supplies?"

Urban Outfitters. The seller of trendy apparel dropped 8.8% to $32.98. Investors were displeased with the company's statement Monday that revenue at stores open at least a year was flat in the just-finished quarter.

Meanwhile, shares of discounter TJX, parent company of T.J. Maxx and Marshalls, fell more than 7% to $53.96 after reporting weak sales.

Contributing: The Associated Press

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Source: USA Today