MW: Retail stocks drop, pressured by oil price, home data
By Andria Cheng, MarketWatch
NEW YORK (MarketWatch) — Retail stocks fell on Wednesday after oil prices moved above $105 a barrel, raising concerns about the impact on consumer spending.
Adding to the market pressure, sales of new single-family homes unexpectedly declined in February, the Commerce Department reported, as a combination of high unemployment, tumbling prices and a glut of cheaper alternatives brought activity to a near-standstill. Read more about new-home sales.
Home-improvement retailers Home Depot Inc. (HD 36.18, -0.11, -0.30%) and Lowe’s Cos. (LOW 26.40, -0.06, -0.21%) both headed lower.
The S&P Retail Index (RLX 498.84, -2.41, -0.48%) fell 0.7% with oil prices extending gains as air attacks against the regime of Libyan leader Col. Gadhafi continued. Read more about oil prices.
Discounter Wal-Mart Stores Inc. (WMT 51.51, -0.49, -0.94%) fell 0.6%. The company has said that rising gasoline prices would pressure its low-income shoppers. Dollar-store chain Dollar General Corp. shares dipped 0.1%. The company said Tuesday that it’s watching rising oil prices closely. See story on Dollar General’s profit.
Wal-Mart’s No. 2 discount rival Target Corp. (TGT 50.18, -0.32, -0.63%) also dipped 0.5% after Credit Suisse lowered its profit estimates on the company, citing concerns that its planned entry to Canada may lead to several years of sluggish profit growth. Analyst Michael Exstein cut its 2012 per-share profit estimate on Target to $4.10 from $4.30 a share.
“We expect additional expenses related to Canada will be incurred in 2013 as it opens the first wave of new stores,” the analyst said. “With the potential loss of income from its credit business and incremental opening expenses, we are concerned (Target) may not be able to accelerate (per-share profit) growth until 2014.”
Barnes & Noble Inc. (BKS 9.11, -0.14, -1.51%) shares fell 1.3% after Bloomberg News, citing people familiar with the situation, said the U.S. bookstore chain is likely to end its search for a buyer without a sale of the company.
The chain, which hired Lazard Ltd. last year to explore a sale, has seen interest from at least seven potential buyers waning after the first round of bidding as they were concerned about how long it might take the retailer to generate more digital sales, Bloomberg News reported, citing unidentified sources.
