Shares of discount chains Stein Mart, Tuesday Morning fall on downgrades
03.09.2009, 08:12
Stein Mart, which is based in Jacksonville, Fla., sells brand-name clothing at discount prices.
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Tuesday Morning, Dallas, is a closeout retailer of name-brand merchandise.
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"It's a little insensitive to tell someone to buy Stein Mart right now with a $28 price target when the economy has so many headwinds against it," said Robin Murchison, an analyst with SunTrust Robinson Humphrey, who cut her rating on both stocks to "neutral" from "buy."
Stein Mart shares ended down $4.12, or 18 percent, at $18.54 on the Nasdaq Stock Market. Tuesday Morning shares fell $1.91, or 6.9 percent, to close at $25.84.
In both cases, Murchison said the companies appear to be executing well but are being hit by the same factors as many other retailers, namely high energy prices and flagging consumer confidence. With the ratings changes, she now carries "neutral" ratings on all the retailers she covers.
"I think if you look at the holidays this year versus the holidays last year, there are some different things going on," she said, noting the even greater increases in heating-oil prices expected this year as well as higher prices at the gas pump.
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In addition, overall concerns exist about the economy's vitality. She pointed to the latest increase in interest rates as well as the effects of hurricanes Katrina and Rita.