Why Retail Stocks Are All Over the Map Friday - November 18, 2022 at 10:00AM

Stock markets moved higher in early trading on Friday, with investors continuing to encounter volatility as they try to assess the likely path of monetary policy from the Federal Reserve. With so much uncertainty about whether interest rate increases will continue at their recent pace or begin to slow, it’s hard for financial markets more broadly to find any clear direction.

Nowhere was that uncertainty more evident than in the performance of companies in the retail sector. A host of retailers announced their latest results, and even though many of them shared common themes, their stock-price movements following their reports varied considerably.

On one hand, several retailers posted sharp gains on Friday morning. Gap (NYSE: GPS) saw its stock jump 10%, as the apparel retailer’s fiscal third-quarter results for the period ending Oct. 29 included a 2% rise in revenue on a 1% gain in comparable sales. Shareholders were particularly happy to see the company reverse a year-ago loss with earnings of $0.77 per share for the period. However, Gap did project that its fourth-quarter sales could be down by a mid-single-digit percentage compared to last year’s holiday period. Moreover, it plans to take aggressive action to reduce inventory levels and clear out its pipelines to meet new demand trends.