While the stock markets continued to gyrate wildly this week in response to the credit news and the Fed easing, many investors small and large looked to find places to put their money. And while some went to the sidelines, some are beginning to pick up bargains in battered sectors already. Whether these are short-covering moves, fast trades – simply institutional window dressing or day trading moves, or long-term commitments will only be clear in the days, weeks and months ahead, but some buyers found something to like. One such sector that has had a slight uptick—it can’t even be properly called a rebound yet—is the bruised and bloodied retail sector.
Many retail stocks have already seen declines of 50% or more from their previous highs, and with recession talk and consumer fears factored into their stock prices, some have wondered if the sector has reached a bottom. One such stock Collective Brands, Inc. (NYSE: PSS), which has the massive Payless Shoe Source franchise, has seen its stock tumble from 37 earlier this year down to 14 (a decline of more than 150%), with a slight crawl already back over the $16 a share mark. The discount-price shoe retailer, headquartered in Topeka, Kansas, with more than 4,000 stores, reported earnings of 51 cents per share in December, handily beating the 31 cent analysts’ projections.
The stock price had suffered prior to the general market slump from the perception that the acquisition of the Stride Rite footwear brand last year would weigh on earnings in the near future. The first quarter projections are for -$0.25 a share, against a $0.16 per share positive earnings in the previous year’s same quarter. Earnings are eventually expected to be accretive from the Stride Rite acquisition, the company said, in the coming year. 2009 estimates project a full year’s earnings of $1.92 vs. $1.68 full year of 2008. Analysts have praised the Collective Brands’ strategy of re-positioning itself to offer not only discount but middle market branding in the footwear space.
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