Retail Stocks Surged over Upbeat 3Q15 Pre-Holiday Results

The energy and material sectors

The Energy Select Sector SPDR ETF (XLE) lost 1.1% on November 20, 2015. The energy sector was the biggest drag on the SPDR S&P 500 ETF (SPY) due to the fall in oil prices.

The falling demand for commodities such as industrial and precious metals led to the fall in the material and mining sectors. Low energy and fuel prices tend to benefit the consumer discretionary sector by boosting retail sales.

Retail Stocks Surged over Upbeat 3Q15 Pre-Holiday Results

Consumer discretionary sector led SPY as retail stocks soared

The consumer discretionary sector led SPY, with the Consumer Discretionary Select Sector SPDR ETF (XLY) climbing 1.2% on November 20. Retail stocks pushed the consumer discretionary sector as these companies registered upbeat corporate earnings results for the quarter.

The above graph compares the stock price performances of Abercrombie & Fitch (ANF) and Ross Stores (ROST) with the SPDR S&P Retail ETF (XRT) since October 2015. XRT gained 2.0% while ANF gained 25.0% on November 20.

Retailers report

Abercrombie & Fitch (ANF) reported sales of $878.6 million for 3Q15, compared to the estimated forecast of $862.8 million. The adjusted earnings per share (or EPS) came in at $0.48, compared to the expected $0.22.

Ross Stores (ROST) posted sales of $2,782.9 million, compared to the estimated $2,765 million. The company’s EPS reported for 3Q15 was $0.53 per share, compared to an estimated $0.50. Apparel retailers Gap Inc. (GPS) and Foot Locker (FL) gained 7.5% and 5.7%, respectively, on November 20 after they beat their respective quarterly estimated results.

Gap Inc. (GPS) met earnings expectations as it reported EPS of $0.63, compared to its estimated EPS of $0.63. However, the company missed on the revenue front. The company posted revenue of $3.86 billion, compared to estimated revenue of $3.875 billion.

Foot Locker’s (FL) 3Q15 earnings results exceeded expectations. The company posted EPS of $1.00 per share and revenues of $1.79 billion for the quarter ended October 31, compared with its estimated earnings of $0.95 per share and revenues of $1.78 billion.

In the next article, we’ll look at Nike’s performance, as well as SPY’s key stocks as of November 20.