Indiana’s publicly traded retailers will limp into the new year hoping to shake off the results of a disappointing shopping season.
Indianapolis-based sports apparel seller Finsh Line Inc. and electronics and home products chain HHGregg Inc. have been hammered on Wall Street since early November, with double-digit decreases in share price during the most important selling season of the year. The same holds true for Evansville-based Shoe Carnival Inc. and Fort Wayne-based accessories maker Vera Bradley Inc.
The tepid holiday shopping season appears to be a major contributing factor. Major U.S. retailers including Abercrombie & Fitch, Sears Holdings, Urban Outfitters, Limited Brands, Nike and Gap were all down in Wednesday trading. Handbag maker Coach, a bellwether of the luxury market, plummeted $3.13, to $54.40. It lost more than 5 percent of its value, more than any other company in the S&P 500. Amazon.com, which helps analysts get a read on the entire retail market, was down 4 percent, losing $10.24, to $248.38.
ShopperTrak, which analyzes customer traffic at U.S. stores, cut its holiday sales forecast, expecting growth of 2.5 percent, down from a 3.3-percent projection issued in September. A report that tracks spending on popular holiday goods, the MasterCard Advisors SpendingPulse, said Tuesday that sales in the two months before Christmas increased 0.7 percent from last year. Many analysts had expected holiday sales to grow 3 to 4 percent.
“Consumers just aren't confident,” said Jeff Sica, president and chief investment officer of SICA Wealth Management in Morristown, N.J. “They don't feel a sense of security that they're going to be able to maintain their job or their income or their savings.”
Shares of Finish Line Inc. are down about 12 percent since early November. One analyst has downgraded the stock to “hold."
Canadian investment firm Canaccord Genuity attributed the downgrade to Finish Line’s inability to raise prices during a still uncertain economy, coupled with problems its website experienced during the shopping season.
The Motley Fool advised Finish Line investors to be grateful Canaccord didn’t downgrade the stock to “sell,” because “that’s the rating Finish Line really deserves,” the investment advisory service said recently.
Finish Line is set Jan. 4 to report fiscal third-quarter earnings, which will include Black Friday sales and give investors a clearer glimpse of the company’s performance. Shares of Finish Line were trading Thursday morning at $18.58 each after a 2 percent drop on Wednesday.
Indianapolis-based electronics and appliance retailer HHGregg Inc. is faring equally poorly, as its shares are down 14 percent since early November.
Zacks Investment Research in Chicago earlier this month maintained its “neutral” rating on the company. The investment firm said it was encouraged by HHGregg’s efforts to drive additional traffic and increase sales. However, the company has been experiencing disappointing results in the video category due to lower-than-expected margins across all flat-screen television models.
“We do not expect the company to find the right mix of gross margin rate and market share in the next few quarters,” Zacks said in its report.
Shares of HHGregg were fetching $7.01 Thursday morning, down 2.6 percent after a 6.2 percent drop on Wednesday.
Zacks, however, is even more bearish on rival Best Buy Co. Inc., which it rates as a “strong sell.”
Shares of Shoe Carnival Inc. are down 18 percent since early November, and those of Vera Bradley Inc. have declined 14 percent in the same period.
Plodding retail sales are a concern because roughly 70 percent of the U.S. economy depends on consumer spending. Slow spending tends to depress company earnings, which in turn pushes down stock performance.