Consumer confidence teeters, burdening market

FashionUnited Top 100 Index closed Wednesday at 1,234.28,

down by 5.29 points and drained by tumbling consumer confidence rates. Consumer confidence fell in November as households fretted about the general economy and their finances over the next 12 months, data released yesterday showed.

In a rather slow session once in US soil, American Eagle is slated to release third-quarter earnings results on Wednesday, after the market closes. The New York-based company now expects net earnings of approximately $0.62 per share for the quarter, including a charge of about $3.9 million or $0.04 per share. Previously, the company projected earnings of $0.61 to $0.63 per share, and reiterated its midpoint while announcing the October monthly sales in early November. With such a promising prospectus, AEO was falling by 1.02% in the FU Top 100 by the midday trading period across The Pond.

Among other teen clothing retailers, American Eagle Outfitters, Inc. in mid November reported a 44% drop in profit for the third quarter, hurt by a significant loss from the sale of investment securities. However, adjusted earnings rose from last year, helped by strong sales and expanded margins. Comparable store sales grew 1% for the quarter. The company, which would discontinue its monthly sales reporting beginning fiscal 2011, will provide earnings forecast for the fourth quarter along with November sales results, citing thanksgiving weekend importance.

Meanwhile, Urban Outfitters Inc. posted a 17% rise in third-quarter profit, helped by 13% rise in net sales. The Philadelphia, Pennsylvania-based company's comparable retail segment net sales, which includes direct-to-consumer channels, improved 6% for the quarter, while comparable store net sales grew 1%.

The latest trends indicate that the holiday-season sales are off to an encouraging start. For the pre-season period from October 31 through November 13, total apparel sales were up 9.7%, higher than October growth of 8.2% for the category, and further builds on the 7 out of 10 months' year-over-year gains for the sector in 2010, according to MasterCard Advisors' SpendingPulse, which tracks US retail and service sales.

Michael McNamara, vice president, Research and Analysis for SpendingPulse, observed, "We are now beginning to see sharper increases in key holiday categories, indicating a solid start to the holiday season. For now at least, we are seeing some decent growth numbers and while levels are not yet back to 2007, the year-over-year growth stats are helping to get the holiday season off to an encouraging start."

Nordstrom, which was one of yesterday's notable stocks on the rise, up 1% to $43.01 while the S&P was trading 0.7% lower to 1,180 and the Dow Jones Industrial Average was trading 0.5% lower to 11,001, has descended to the worst performance of Wednesday's session, with an average drop over 2%.

Finally, and looking to another interesting stock, turn comes to talk about Guess, which is increasingly becoming a globally recognized brand. Ten years ago, only 6% of revenue came from outside of North America – now it’s almost 50%. Guess recently reported another positive earnings surprise driven by solid top-line growth in Europe and Asia. Management also raised its guidance for 2011, prompting analysts to revise their estimates significantly higher. This propelled the stock to a Zacks #1 Rank as a “strong buy.” On November 23, Guess reported earnings per share of 75 cents for the third quarter of 2011 and just one week afterwards, the fashion-forward brand lost more than 5% within the FU Top 100.