urbn

The conventional wisdom is that consumer spending is what drives the U.S. economy. And consumer spending arises out of consumer confidence. Unfortunately, the signals along the road to economic recovery are mixed, what with the rising GDP growth and the dismal unemployment numbers. Its enough to leave investors scratching their heads. What barometers of consumer confidence will the coming week bring?

The TIPP Economic Optimism Index for November is scheduled for Tuesday, and the University of Michigan Consumer Sentiment Index for November is due out Friday.

"Stocks have struggled lately after their huge recovery; still, I continue to see opportunities, and I especially like Urban Outfitters (NASDAQ: URBN)," says Mark Skousen in The Turnaround Alert.

"Urban Outfitters, the apparel retailer, after it beat Wall Street analysts' estimates. Two years ago, the stock was selling for $37 a share.

"But today, it's selling for nearly half that. During the deep recession, retailers have seen sales drop as consumers cut back on spending for clothing and other discretionary purchases. As a result, retail apparel stocks fell sharply.

"Stocks have struggled lately after their huge recovery; still, I continue to see opportunities in the market, and I especially like Urban Outfitters (NASDAQ: URBN)," says Mark Skousen in The Turnaround Alert.

"Urban Outfitters, the apparel retailer, after it beat Wall Street analysts' estimates. Two years ago, the stock was selling for $37 a share.

"But today, it's selling for nearly half that. During the deep recession, retailers have seen sales drop as consumers cut back on spending for clothing and other discretionary purchases. As a result, retail apparel stocks fell sharply.

Analyst upgrades:

• Jefferies upgraded Cytec Industries (NYSE: CYT) to Buy from Hold on valuation and believes liquidity concerns are overdone. The firm raised its target on the stock to $27 from $20.
  
• Morgan Stanley upgraded Intel (NASDAQ: INTC) to Overweight from Equal Weight and raised its price target to $19 from $15. Morgan Stanley's survey indicates positive trends in the business supply chain and the analysts expects estimates to move higher from increased server MPU sales and growth in Windows 7.
  
• Pali upgraded Urban Outfitters (NASDAQ: URBN) to Buy from Neutral on valuation and believes the company's tough Q2 compares are already priced into the stock. The firm has a $25 target on shares.
• Research in Motion (NASDAQ: RIMM) was upgraded to Conviction Buy from Buy at Goldman.
  
• MasterCard (NYSE: MA) was lifted to Buy from Hold at Deutsche Bank.
  
• Burger King (NYSE: BKC) was raised to Buy from Neutral at Banc of America/Merrill.

Analyst upgrades:

• Citigroup upgraded Patriot Coal (NYSE: PCX) to Hold from Sell on easing credit and liquidity concerns following the company's guidance. The firm raised its target on the stock to $7.50 from $4.
  
• UBS upgraded Research In Motion (NASDAQ: RIMM) to Buy from Neutral and raised their target to $90 from $65 as they expect pent-up replacement demand in enterprise to drive 2010 estimates higher and for the consumer smartphone opportunity to grow in 2009 and 2010.
  
• Goldman upgraded Suncor (NYSE: SU) to Conviction Buy from Sell and raised their target to $33 from $25 citing their bullish view on crude oil for 2H09 and 2010 and in the company's ability to lower operating and capital costs in the oil sands region.
• Canadian National (CNI) was raised to Overweight from Neutral at JP Morgan.
  
• Applied Micro Circuits (NASDAQ: AMCC) was lifted at Oppenheimer to Overweight from Neutral.
  
• QLogic (NASDAQ: QLGC) was upgraded to Outperform from Neutral at Baird.

Analyst upgrades:

• Citigroup upgraded Expedia (NASDAQ: EXPE) to Buy from Hold as they believe the company's fee elimination coupled with 2009 industry trends could lead to market share gains and that the valuation is compelling at current levels. Citigroup raised its price target to $14 from $9 on EXPE shares.
  
• Credit Suisse upgraded Lukoil (OTC: LUKOY) to Outperform from Neutral as it believes lower taxes and the ruble's decline will increase profitability.
  
• Soleil upgraded Jo Ann Stores (NYSE: JAS) to Buy from Hold as it believes the company's sales results in the first half of 2009 could top expectations. The firm raised its target price to $20 from $16.
• Johnson & Johnson (NYSE: JNJ) was upgraded to Buy from Neutral at UBS.
  
• Bayer AG (OTC: BAYRY) was lifted to Buy from Neutral at Banc of America/Merrill.
  
• ManTech (NASDAQ: MANT) was raised at Wachovia to Outperform from Market Perform.

American Eagle Outfitters (NYSE: AEO), whose mall colleagues include Gap (NYSE: GPS), Abercrombie & Fitch (NYSE: ANF), and Urban Outfitters (NASDAQ: URBN), posted Q4 earnings on Wednesday.

The Christmas season was a difficult one for the chain. Sales decreased 9%, and same-store sales declined a whopping 16%. Ouch, sorry to hear that, American Eagle. Earnings came in at 19 cents per share, meeting analysts expectations.

It's the same old story: to move merchandise, things had to be marked down. And that affected profits. Big time.

It is tough to be a retailer in this climate. It's especially tough to be a retailer like J. Crew Group, Inc. (NYSE: JCG). After all, if you're a Wal-Mart Stores, Inc. (NYSE: WMT) or a Family Dollar Stores (NYSE: FDO), at least you can entice consumers with your low prices, and at least you stock things that people need. Not so with J. Crew. It's a fashion retailer that you don't have to visit during the recession. Apparently, many people indeed haven't been visiting lately. That's why shareholders will most likely be nervous when fourth-quarter numbers are issued after the bell on Tuesday, March 10.

According to this source, J. Crew should report an earnings loss of $0.27 per share. How ugly! This compares to a profit of $0.41 per share in the year-ago period. I expect to hear the same stuff that we've been hearing from retailers such as Urban Outfitters (NASDAQ: URBN) and Kohl's (NYSE: KSS): things are tough, the rest of the year is going to be a huge challenge, we're doing everything we can to navigate the business through the treacherous times, etc. Such rhetoric probably won't be comforting to shareholders, especially considering that J. Crew's stock isn't too far from a 52-week low.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• American International Group Inc. (NYS: AIG) posted a record loss even as it asks for more taxpayer funds.
• AnnTaylor Stores Corp. (NYSE: ANN) shares sank after it missed Q4 expectations by a wide margin.
• AutoZone Inc. (NYSE: AZO) reported strong Q2 results, sending shares upward toward its 52-week high.
• Big Lots Inc. (NYSE: BIG) shares soared after it reported better-than-expected numbers for Q4.
• Chico's FAS Inc. (NYSE: CHS) Q4 loss widened on impairment charges and severance costs.

Ann Taylor (NYSE: ANN) is not the darling of Wall Street today. As I write this, the retailer's shares have lost 30% of their value. Trading volume is heavy. The company missed Wall Street's estimates by a pretty wide margin.

The call, was for an adjusted loss of $0.55 per share in the fourth quarter. According to the press release, Ann Taylor lost $1.03 per share on an adjusted basis. Last year at this time, there was a profit of $0.19 per share. What a difference a year makes. By the way, if you include all the GAAP stuff in the current Q4, Ann Taylor lost an amount equal to the mark of the beast. I don't even want to write the evil number out, but it begins with a 6 if you want a hint.

Urban Outfitters (NASDAQ: URBN), as one might have expected, didn't report a great fourth quarter. It's a fashionable retailer, so you can imagine that consumers, who aren't in the mood to spend top dollar on clothes and accessories, forced the company to do a lot of discounting.

Sales, though, were healthy. The top line increased by 9%, and same-store sales at the Urban Outfitters brand rose 3%. Unfortunately, Q4 wasn't so kind to the Anthropologie and Free People brands. Their comps were down 6% and 13%, respectively. And the company missed earnings estimates. The call was for 28 cents per share, but the retailer was only able to deliver 24 cents per share.

In the News:
Kings of Customer Service: Keeping Customer Loyalty in a Recession
Business Week's annual list of customer service stars shows companies using creative strategies to retain customer loyalty in the recession. Topping the list this year is Amazon.com who are giving customers more choice. Other customer service champs include Lexus, Publix Supermarkets, Zappos.com, HP, Ace Hardware, USAA Insurance, Trader Joe's, Enterprise Rent-a-Car, Marriott and Charles Schwalb.
http://images.businessweek.com/ss/09/02/0219_customer_service/index.htm?technology+slideshows

Stimulus Package: What's in It For You
Find out how much you'll benefit from the government's big plan.
http://www.smartmoney.com/Spending/Deals/What-Does-the-Stimulus-Mean-for-You/

Urban Outfitters (NASDAQ: URBN - option chain) shares are headed higher today after the company announced this morning same-store sales that fell 1 percent in January and fourth-quarter same-store sales that rose 3 percent. With so many retail outlets showing declining sales, investors are responding favorably to any gains and even some moderate declines in sales. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on URBN.

Analyst upgrades:

• Oppenheimer upgraded OceanFreight (NASDAQ:OCNF) to Perform from Underperform on valuation and a lack of negative catalysts following the recent weakness.
  
• UBS raised Micron (NYSE:MU) to Buy from Neutral citing supply cuts which should improve prices. The target remains $5.
  
• Jesup & Lamont upgraded Atlas Air (NASDAQ:AAWW) to Buy from Hold is positive on the company's 20 year blocked space agreement with DHL and expects the stock to continue higher.
• AK Steel (NYSE:AKS) was added to Goldman's Conviction Buy List and upgraded to Buy from Neutral.
  
• Goldman also upgraded Northern Trust (NASDAQ:NTRS) to Buy from Neutral.
  
• Digital River (NASDAQ:DRIV) was upgraded to Hold from Sell at Stanford.

Analyst downgrades:

• Stephens downgraded shares of Titan Machinery (NASDAQ:TITN) after their survey of farmers indicated declining sales of agricultural equipment. The firm lowered their target to $19 but believes Titan Machinery's long-term growth story remains intact.
  
• Jefferies downgraded Helen of Troy (NASDAQ:HELE) and Blyth (NYSE:BTH) to Underperform from Hold as they believe the further deterioration in the U.S. consumer macro environment could pressure near-term results. The firm lowered its target on Helen of Troy to $13 from $16.50 and on Blyth to $5.50 from $8.
  
• UBS cut Indevus (NASDAQ:IDEV) to Neutral from Buy and lowered its target to $5.50 from $5 following the acquisition offer by Endo Pharmaceuticals (NASDAQ:ENDP).
• AECOM Tech (NYSE:ACM) was lowered to Equal Weight from Overweight at Morgan Stanley.
  
• Amerisafe (NYSE:AMSF) was downgraded at Oppenheimer to Perform from Outperform.
  
• Tractor Supply (NASDAQ:TSCO) was cut to Neutral from Buy at Piper Jaffray.

Analyst initiations:

• KeyBanc initiated Urban Outfitters (NASDAQ:URBN) with a Buy rating and $22 target. The firm believes the Urban Outfitters and Antropologie divisions are under penetrated and have visible growth.
  
• Kaufman Bros. started SuccessFactors (NASDAQ:SFSF) with a Hold rating and $7 target and believes the current demand backdrop could be worse than reflected in current consensus estimates.
  
• CarMax (NASDAQ:KMX) was initiated at Baird with a Neutral rating and $10 target. The firm is impressed with CarMax's business model but does not see a way around the near-term economic headwinds.
• Manulife Financial (NYSE:MFC) and Sunlife Financial (NYSE:SLF) were assumed with Equal Weight ratings at Morgan Stanley.
  
• Oppenheimer started Pacific Sunwear (NASDAQ:PSUN) with a Perform rating.
  
• Kite Realty Trust (NYSE:KRG) was initiated with a Buy rating at Janney Montgomery.