Retail stocks fall on holiday shopping worries

Mon Dec 1, 2008 2:28pm EST
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By Martinne Geller

NEW YORK (Reuters) - Key retail stocks fell on Monday as investors feared that deep discounts offered by U.S. stores during the year's first holiday shopping weekend could sap profits and would not save a bleak season.

Department store operators were badly hurt, with shares of Macy's Inc down 8.8 percent, Saks Inc down 10.7 percent and JC Penney Co Inc down 6 percent.

Apparel chains also suffered, with Abercrombie & Fitch Co down 7.7 percent, Aeropostale Inc down 7.9 percent, and Urban Outfitters Inc down 5.3 percent.

Best Buy Co Inc was down 5.7 percent despite signs that shoppers bought electronics over the "Black Friday" weekend, which kicks off the U.S. holiday shopping season.

Even shares of discounters Wal-Mart Stores Inc, Big Lots Inc and Target Corp fell, though analysts have said they may come out ahead this season as cash-strapped consumers look for bargains.

The Standard & Poor's Retail Index .RLX> slid 5 percent, while the wider stock market, as measured by the S&P 500 Index .SPX>, was down 5.4 percent on manufacturing data that bolstered fears of a deep recession.

"Retail stocks are not looking like they're going to be a particularly desirable place to be if the economy moves from the mild recession that we've probably been in since the beginning of this year," said Barry Ritholtz, CEO and director of equity research at Fusion IQ.

"Now we're in a deeper recession, and the danger is this becomes an even deeper and more prolonged recession," he said.   Continued...

<p>Shoppers make their way through Roosevelt Field Mall during "Black Friday" in Garden City, New York November 28, 2008. REUTERS/Shannon Stapleton</p>