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Indiana retailers in dumps after tepid holiday sales

 IBJ Staff and Associated Press
December 27, 2012
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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.
 

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  • Hat World also struggling
    IBJ should add Indy based Hat World (Lids) to its local retailer watch list. The shopping mall based hat retailer is also sliding. FY2013 Q2 = -10% comp over LY and in FY2013 Q3 they were -5% overall, 13% worse than Q3 LY. Through three fiscal quarters this year Hat World is 0% compared to being +12% at the same time a year ago. After its parent company's (Genesco Inc) Q3 earnings report on Oct 27, GCO stock plummetted more than 20% in a single day.
  • CK is right
    This has nothing to do with government...everything to do with stores having the ability to compete on and off line. Shame on the retailers for ignoring customer needs over constant growth expected from wall street. you're listening to the wrong group!
  • Did people actually shop in retail stores?
    I, and most of the people I know, shopped via the Internet. I am sure that Amazon did a great business. I know I bought 2 small items that I had to get locally and everything else came from the Internet (95% Amazon).
  • reply
    Great post ramont1
  • poor sales
    Just like people said. A good union state go's right to work for less, well then the people will buy less. There has never been a state that it people have been better off when it went Right to Work for Less. Never. As they said Indiana is now in a race to the bottem.
  • who cares
    greedy companies want american public to feel sorry for them since they did'nt make the millions they thought we're supposed to fall in their hands.lower prices,pay a decent wage and maybe we'll let you have some of our hard earned dollars until then thank you for teaching us to save our money.
    • Years in the Making
      Lets see, for years commodities have risen like an out of control freight train, and corporations don't pay us dick! corporate america is at fault on this one. when you decide not to pay your employees, yet hoard trillions of dollars of cash only to take out more loans to pay for outrageous dividends that will benefit the rich.....this is what happens. maybe the corporate executives should wake up and realize there won't be an economy if this keeps up. spending more and more on food/gas/necessities yet no increase in wages....mmmm....it's not rocket science, unfortunately our gov't caters to the rich and corporations at the expense of the rest of us. things will only get worse bc these rich cronies dont get it.
    • crap
      maybe if they quit raisng prices in such economic times and employers actually paid employee's a decent wage maybe they would'nt be in these predicaments.but i'm sure they'll fix it by raising prices.i feel no pity for any of these companies.
    • No Money
      People are just taking things instead of buying. Right before Christmas Eve someone took 2 kayaks from our backyard by Eagle Creek. My son bought them with his own money and I can't afford to replace them.
    • Takes 2 to compromise
      So, it's all Boehner's and the republican house's fault????? Ha Ha Ha Ha Ha Ha Ha Oh man, another blind follower. What do you suggest? The Republicans just roll over and do it the Dem's way? Obama has been handed a plan proposed originally by Nancy (socialist) Pelosi and HE turned it down. Oh man.... Ha Ha Ha. That was a good one! Please post more jokes. I could use the laugh because Obama has us headed for a time that will be no laughing matter.
    • That's Crazy
      Sure everything is government's fault. Retail is very competitive. Consumers are extremely savvy; using stores as "showrooms" and finding a better deal on-line. There is opportunity everywhere. Company's blaming consumer confidence for their problems is simply a cop-out. They have poor strategies to deal with the new competitiveness and they are failing. They need to get their acts together because this environment is the new normal and they need to deal with it or they will go away.
    • Fiscal Cliff
      Could the lack of confidence be due to the REPUBLICAN controlled House of Reps who - led(?) by John Boehner - can not reach any decision on the fiscal cliff fiasco. Hard to believe the House is not in session this week...
    • Of course...
      THANKS PRESIDENT OBAMA!!! “Consumers just aren't confident" “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.” TOO BAD it will be that way for another FOUR years!!

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