Teen Retailers Mixed Today as Major Indexes Fall
Jan 2nd 2014 1:03PM
Updated Jan 2nd 2014 1:04PM
Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
After the wonderful 2013, 2014 is not off to a great start as all three of the major indexes are heading lower today. As of 1 p.m. EDT, the Dow Jones Industrial Average is down 124 points, or 0.75%. The S&P 500 is down 0.85% and the Nasdaq is off by 0.83%. While this may not be the start to the year that most investors would like to see, they need to remember that economic data was improving toward the end of 2013 and, more importantly, this is one day. Despite the Dow and S&P 500 finishing dramatically higher in 2013, they had a number of down days throughout the year. Today is not a sign of things to come, regardless of what some people will tell you.
Unlike the major indexes, a few teen retailers are mixed and moving more dramatically today. While shares of American Eagle Outfitters and Urban Outfitters are higher by 2.4% and 2.3%, respectively, Abercrombie & Fitch and Aeropostale are down 2.6% and 1.9%, respectively.
The moves come after analysts at Jefferies changed their ratings on the companies. American Eagle and Urban Outfitters were changed from a hold rating to a buy. Jefferies said these moves were made due to the fact that the companies performed well during a challenging time and in a retail environment that is constantly changing. Abercrombie & Fitch and Aeropostale were downgraded from buy to hold due to the analyst belief that the companies will have a long recovery period after their recent poor performances.
This industry and these particular companies are known for having boom and bust years as the public's fashion sense changes. We are clearly seeing the change happening, as two companies that were performing well no longer are and two that had struggled are now back on top. Buying into one of these retailers is risky because fashion trends change so rapidly, and these companies can get caught out in the cold if they don't stay diligent.
Another retailer doing well today is Crocs as shares are up 2.89%. Shares are now up more than 23% since trading began on Monday morning. Their wasn't one main catalyst for the move, but a bunch: the shoe company announced that the Blackstone Group was investing $200 million into Crocs, a few board seats will change, CEO John McCarvel will step down at the end of April, and the company plans a $350 million share buyback starting in January. All of these changes are seen as positives for the company by analysts, and they should be. The management and board changes should allow the company to start fresh with ideas, while the investment from Blackstone will allow the big share buyback and give Crocs management team a great business partner.
More Foolish insight
To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.
The article Teen Retailers Mixed Today as Major Indexes Fall originally appeared on Fool.com.Fool contributor Matt Thalman has no position in any stocks mentioned. Check back Monday through Friday as Matt explains what caused the Dow's winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter @mthalman5513 . The Motley Fool recommends Urban Outfitters. The Motley Fool owns shares of Crocs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.