Retailers Recovering After Weak End Of Summer
Begrudging students may not be the only ones disappointed about the back-to-school season.
Retailers, and especially office retailers like Framingham-based Staples Corp., are still recovering from an end-of-the summer drop in their stock prices.
Some analysts say the stock drop could have been triggered by weak back-to-school shopping sales and continued disappointing news on unemployment figures and economic growth.
“Unemployment is still high and business confidence is still lagging,” said Stephen Chick, a retail analyst with FBR Capital Markets in New York. “Add on top of that concern about back-to-school trends, and you’ve got some pretty strong headwinds.”
Staples’ stock (SPLS) hit a 52-week low on Aug. 30, dropping to $17.64, which is down 31 percent from its 2010 high of $25.93 in February.
Industry Trends
Other office supply retailers saw similar trends. Office Depot (ODP) stock fell 60 percent from an April high to $3.41 on Aug. 31, a 52-week low. Meanwhile, Office Max (OMX) gave back about 47 percent from its May high to hit a 52-week low in late August of $9.74 per share.
Since then, Office Depot, based in Naperville, Ill., has rebounded by about 30 percent to trading around $4.60 per share in late October and Office Depot, of Boca Raton, Fla., is up 31 percent since the end of the summer, trading around $12 per share. Staples, meanwhile, has only gained back about 10 percent of its value and was trading in the third week of October in the low $20 range.
Office retailers were not alone in seeing the stock drop at the end of the summer. A Standard & Poors Retail Index exchange traded fund, which indexes a variety of retail stocks, gave back 20 percent from its high in April until the end of August. TJX Cos. Inc., also based in Framingham, dropped from around $48 per share in April, down to $40.89 on Aug. 31 and is now trading around $44 per share.
The overall market didn’t suffer as poorly. The Dow Jones Industrial Average dropped to 10,009 on Aug. 30, 10 percent off of its 52-week high of 11,205 on April 26. Since then the Dow has been hovering around 11,000.
Chick said it’s hard to say exactly how large of a factor back-to-school sales had on the retail industry. There will be a much better idea when third quarter earnings are announced for retailers in mid- November.
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