Retail Stocks Fall; Black Friday Spending Seen Lower

Shares of retailers' stocks sank on Monday, after consumers swarmed stores on "Black Friday," the day after Thanksgiving, but focused on hunting for discounts.

Wachovia Capital Markets analyst Ralph Jean said in a client note on Monday that traffic increased during the "Black Friday" weekend but average spending declined about 3.5 percent compared with last year.

"Contributing to the decline in the average spend, in our opinion, was less frenzied purchasing of higher ticket high-definition televisions, which were aggressively promoted last year due to excess supplies of plasma high-definition TVs," he wrote. "We believe consumers were more focused on doorbuster deals for clothing, accessories, books, CDs, DVDs, video games and consumer electronics." Lazard Capital Markets analyst Todd Slater said in a note Monday that purchases were skewed toward electronics purchases, such as flat-screen TVs, and promotionally priced items such as cashmere sweaters.

"Most discount and specialty retail stores we visited were disappointed with traffic and conversion relative to last year," Slater wrote. "Saturday was even weaker than Friday, in our view. Given the positive move in retail stocks on Friday followed by bullish sentiment from mall developers and sales tracking services over the weekend, we think the trade is to sell the group into possible strength today."

Banc of America analyst Robert F. Ohmes was a bit more positive in a note on Monday but said Friday shopping was more like a brisk Saturday at the mall than a strong "Black Friday." Ohmes said increased promotions and extended morning hours likely helped drive traffic, but heavier inventory and deeper markdowns - particularly within sweaters and outerwear categories - likely put pressure on all apparel retailers.

Shares fell across the sector.

Wal-Mart Stores fell 60 cents to $45.13 during morning trading, while Target fell $1.62, or 2.8 percent.

Limited Brands shares fell 64 cents, or 3.4 percent, to $18.15, and Talbots fell 57 cents, or 4.1 percent, to $13.29.

TJX shares fell $1.04, or 3.7 percent, to $27.49, while Big Lots shares fell 47 cents, or 2.3 percent to $20.40.

Kohl's shares fell 62 cents to $48.10, while Macy's fell $1.16, or 3.9 percent, to $28.87.

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