JD Sports' stock pays for Blacks' acquisition

Thursday saw a great deal of trading within the listed

apparel sector. The stock price for Under Armour, Inc. (NYSE:UA) has changed in value by 1.02% Thursday, while Dillard's, Inc. (NYSE:DDS) added 1.20%.

Elsewhere, Zacks Investment Analysis´ team recently downgraded “our long-term recommendation on American Eagle Outfitters Inc. (AEO), a specialty retailer of casual apparel, accessories, and footwear for men and women, based on timid fourth-quarter 2011 results.” The company’s fourth-quarter earnings declined 20.5% to 35 cents per share from the prior-period level, battered by higher input costs.

But the clear winner of the day was Gap. The largest U.S. apparel chain has surged 37 percent to $25.48 this year through yesterday and on March 26 hit a 10-year closing high, reported Bloomberg. Analysts are raising their price targets to levels -- $28 and higher -- not seen since one of the best-performing companies of the 1990s began to lose its footing in 2001. Although the company has “seen some real traction in its business and has been able to pull back on promotions at Gap Brand and Banana Republic,” it’s too early to say this is the start of a “long-awaited turnaround,” Paul Lejuez, an analyst at Nomura Securities International Inc. in a note on April 5.

In the UK, big news was JD Sports Fashion’s pre-tax profit fell by more than 14% last year as the business was hit by its acquisition of outdoor clothing retailer Blacks. Main loss can be explained with the acquisition of former rival Blacks. Due to this operation, in January, the company incurred a loss of £2.2m. JD said on buying the business Blacks was in a “very fractured state” and JD “inherited a limited and unbalanced stock position, with a particularly severe lack of stocks in many core high performing lines”. In its preliminary results for the 52 weeks to January 28 the group reported that pre-tax profit dropped 14.2% to £67.4m from £78.6m with operating profit dipping 4.3% to £76.5m from £79.9m the year before.