Retail stocks are bumbling along with the market amid earnings reports and deal announcements.
A news release states that TD Bank (NYSE:TD) will be buying Target’s (NYSE:TGT) $5.9 billion consumer credit portfolio. Investors seem initially turned off by the idea, with shares of TD dropping as much as 1.5 percent in early-afternoon trading. The move is part of a plan to “significantly expand our presence in the North American credit card business and will establish TD as a key player in the space,” according to CEO Ed Clark. Meanwhile, Target expects third-quarter earnings to show a pre-tax gain around $150 million for the deal.
American Eagle Outfitters (NYSE:AEO) have slid nearly 7 percent in the early afternoon. The company has announced plans to close poorly performing stores in favor of seeking out more profitable locations. Shares have gained over 30 percent in value this year to date, meaning negative reaction could be due to a modest reality juxtaposed against high expectations.
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According to an 8-K filing, Guess (NYSE:GES) “has received tax audit reports from the Italian tax authority regarding its ongoing audit of one of the Company’s Italian subsidiaries for the 2008 and 2009 fiscal years.” The total tax assessment came in at about $12 million, roughly in line with an estimated $11 million. The company dropped as much as 2 percent in early afternoon trading. The company pulls about 40 percent of sales from Europe, primarily in Italy and France, and has seen sales decline for the last six quarters.
Meanwhile, Coach (NYSE:COH) soars over 8 percent after it posts first quarter earnings per share of $0.77, compared to $0.73 a year ago. The company also announced that it will buy back as much as $1.5 billion in common stock by June 2015. The strong quarterly results have eased concerns about the company, which has seen its shares bleed value this year to date, particularly in the last six months.
“We were pleased with our results this quarter, highlighted by double-digit top line growth, with strong comparable store sales — most notably in North America and China.” Although Europe was not mentioned in the press release, the region was reportedly indicated as an area for expansion in the earnings call, despite the economic conditions there presenting difficulty for other retailers.