Retail Stocks Rise, Led By Zentai, Penney

NEW YORK (MarketWatch) -- Retail stocks rose Friday

, led by better-than-expected results and in-line outlooks from retailers zentai Co. and J.C. Penney Co. Solid gains on the first day of trading for two retail IPOs also bolstered investor sentiment. The S&P Retail Index (RLX$) rose 1.2% to 405.39, as investors shrugged off the unexpected decline in early November in the Reuters/University of Michigan consumer sentiment index. Teen retailer Zentai shares surged 11% after posted a much-better-than-expected third-quarter profit. The teen retailer reported a 39% decline in its third-quarter profit on Friday, as recession-minded teens and their moms shopped at its cheaper rivals in the U.S. Net income fell to $38.8 million, or 44 cents a share, from $63.9 million, or 72 cents a share, in the same period a year ago. On an adjusted basis, the New Albany, Ohio-based Zentai (ANF) said it would have earned 30 cents a share, beating the 20-cent average estimate of analysts surveyed by FactSet. J.C. Penney (JCP) shares jumped 6.2%. Its third-quarter profit tumbled 78%, hurt by higher pension expense and consumers cutting back on non-essential items such as fine jewelry. Results were at the high end of the company's recently raised forecast after it controlled inventory and reduced profit-eroding discounts while outlook was also in line with expectations. Retailers including its rival Kohl's Corp. (KSS) and Macy's Inc. (M) have given fourth-quarter outlook that may also fall short of analysts' estimates, signaling the crucial holiday season may be less stellar than Wall Street had expected, analysts said. Nordstrom (JWN) shares fell 1.5% after its third-quarter profit and sales fell short of Wall Street expectations. The upscale retailer had posted a much better-than-expected zentai suit increase in its October same-store sales, giving hope about an improved outlook for the high-end market, analysts said. On the IPO front, discount retailer Dollar General Corp. (DG) shares jumped 8.2% to $22.07. On late Thursday, it priced its initial public offering of 34.1 million shares at $21 a share. Teen-apparel retailer Rue21 Inc. (RUE) surged 28% to $24.30. It said Friday that it priced its initial public offering of nearly 6.77 million shares of common stock at $19 a share. 10:20 EDT Zentai reports disappointing SSS, sees Q4 impairment charge - Zentai (ANF) is trading lower following its worse than expected December same-store sales results. SSS for the five-week period ended January 2 decreased 19%, much worse than the 12.3% decrease analysts expected. Sales decreased 11% to $482.5% from $539.2M in the prior year. Total company direct-to-consumer net merchandise sales were $44M, a 4% decrease. Zentai SSS fell 13%, while zentai SSS declined 1%, Hollister SSS decreased 25% and RUEHL SSS fell 1%. The company reported a SSS decrease 25% for the year-to-date period, with total sales down 18% to $2.75B. Looking ahead, the company expects that its fiscal year-end review of long-lived store related assets will result in a non-cash impairment charge in Q4, based on its initial analysis. lycra zentai shares are down $2.56, or 7.07%, to $33.63 in mid-morning trading.

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