Market Wrap: Dillard’s Keeps Momentum As Most Arkansas Stocks Get Caught In Sell-Off

U.S. stocks took a hard fall in late trading on Friday as interest rate fears spooked the Dow Jones and S&P 500 indices, dragging down publicly-traded Arkansas concerns almost across the board.

Yet, out of Friday’s late market sell-off, Dillard’s again was one of the biggest Arkansas advancers, continuing its march upward following the Little Rock retailer’s robust fourth-quarter and full-year earnings report in late February. For the period ended Dec. 31, Dillard’s reported fourth-quarter and yearly profits of $130 million and $331 million, respectively.

A week ago, the Dillard’s board handed out a cash dividend of six cents per share, payable on May 4 to shareholders of record as of March 31, 2015. Since closing at $122.53 on Feb. 23, Dillard’s shares have gained 7.7% to close at $131.95 at Friday’s close.

Other winners in this week’s session included Arkansas’ regional banking rivals, Simmons First National, Bank of the Ozarks and Home Bancshares. Banking stocks rallied this week after 31 of the nation’s largest financial institutions passed the Federal Reserve’s so-called “stress test” that measures capital as a share of risk-weighted assets.

After Friday’s dip, still most banking stocks were back up in late trading Friday as several reports signaled that the Federal Reserve may raise interest rates between June and September.

ARCBEST LEADS DECLINERS FOLLOWING UNUSUAL MARKET BLIP
But Arkansas’ remaining publicly-traded concerns lost ground in this week’s choppy session. One of the biggest decliners was ArcBest Corp., which had an unusual blip in trading earlier in the week. The Fort Smith trucking company’s shares fell more than 7% in early trading on Tuesday, March 3, from a high of $43.59 at the opening bell to $39.35 by midday.

The trucker’s shares settled around the $40 mark for the remainder of the week, but company officials have given no explanation for the sudden four-hour disruption in its stock in the week’s earlier session. Incidentally, ArcBest President and CEO Judy McReynolds spoke to a group of institutional investors in Orlando, Fla., about the same time the company’s shares backed up seven percentage points on Tuesday.

Other decliners for the week were Wal-Mart, Murphy Oil, Murphy USA, J.B. Hunt, Acxiom, Carmart and Tyson Foods. Windstream, which recently spun off its network into a publicly-traded real estate investment trust (REIT), also lost ground in the weekly session, closing at a new 52-week low of $7.76.

Deltic Timber also failed to gain momentum as its shares fell from a high of $66.74 at Wednesday’s opening bell to $65 at Friday’s close. Deltic did have some insider activity as CEO Ray Dillon sold off nearly 9,000 of his shares in the El Dorado-based timber and real estate company.

BROADER MARKET
In the broader market, most of the major benchmarks closed lower on Friday, losing ground on Friday as investors’ took profits as strong employment figures stoked fears that the Fed will raise interest rates sooner than expected.

According to Reuters, the S&P 500 fell 1.6% while the Dow slid 1.5% and the Nasdaq dropped 0.7%. The S&P and the Dow both ended the day more than 2 percent lower than their March 2 records. The S&P saw its biggest percentage decline since early January on Friday.

The blue chip Dow Jones Industrial index includes market bellwether Wal-Mart and 29 of the nation’s largest public companies. Murphy Oil, Tyson and Windstream are all part of the broader S&P 500 index.

TARGET CUTTING JOBS, LUMBER LIQUIDATORS STUMBLES
In other market news, the recent shortcomings of Lumber Liquidators and Target bear watching if those slip-ups somehow trickle down to their operations in the Arkansas.

Target, which analysts once forecasted as a major rival to Bentonville-based retail behemoth Wal-Mart Stores, is now simply trying to regain its footing after several years of operational missteps, marketing gaffes and boardroom implosions.

New Target Chairman and CEO Brian Cornell, who took over as the Minneapolis, Minn.-based retailer’s top executive in July, has moved quickly to get Wall Street’s attention by announcing some drastic cost-cutting and downsizing during a “financial community meeting” webcast on March 3.

During the call, Cornell announced that the “Expect More, Pay Less” retailer plans to cut several thousands of jobs at its Target stores nationwide to help save up to $2 billion annually. Earlier this year, the Minnesota retailer announced that it plans to stop its expansion into Canada in hopes of saving another $2 billion.

At the same time, Cornell signaled that he plans to take a part of those savings to go toward expanding the nation’s fourth-largest retailer’s digital presence in the aftermath of a huge data breach that touched an astounding 70 million people.

The Arkansas backdrop is that Cornell is the former CEO of Wal-Mart’s Sam’s Club division. Once considered a possible CEO of Wal-Mart before Doug McMillon took over the reins just over a year ago. He left following a three-year stint in Bentonville in January of 2012 after he said he was homesick.

“My wife and I want to put down roots in the Northeast and live in the same ZIP code as our children — not just occasionally seeing them in hotels and restaurants,” Cornell said in a Wal-Mart news release announcing his decision.

Rosalind Brewer succeeded Cornell as CEO of Sam’s Club. As the first woman to lead one of Wal-Mart’s major business units, Brewer’s name was also in the rumor mill as a possible Target CEO candidate before Cornell got the job nearly a year ago.

No word yet on how the job cuts will affect employees at Targets’ nine Arkansas locations. Nationwide, Target has over 366,000 employees at its 1,795 retail stores and 38 distribution centers in the U.S.

Apparently, Cornell’s speech to the financial community did have a brief effect on Wall Street, causing the retailer’s stock to jump to a high of $78.76 during Wednesday’s opening session. The Wal-Mart rival closed Friday’s session at $77.21, only 39 cents off its weekly opening on Monday, March 2.

While not as big as Target, Lumber Liquidators’ did get its 15 minutes of infamy on Wall Street his week. Following a 60 Minutes’ report that said the hardwood floor retailer used a Chinese-made formaldehyde in the glues used to bind wood particles together to make the core boards in its popular laminate flooring, the company became the biggest story on Wall Street.

According to 60 Minutes and the dozens of class-action lawsuits that landed on Lumber Liquidator’s doorsteps this week, the home improvement retailer “deceptively manufactured, labeled and sold the toxic laminate flooring” that carry high levels of the cancer-causing carcinogen.

Besides losing nearly a quarter of its market share this week, Lumber Liquidators also wins the award for the best quote of the week as company officials responded to the financial and legal fallout.

“We stand by every single plank of wood and laminate we sell all around the country and will continue to deliver the best product at the best price to our growing base of valued customers,” the company said Monday in response to 60 Minutes’ report.

No word if any of those Chinese “planks” made their way to any of the company’s locations in Springdale and North Little Rock. Incidentally, the homepage of the Lumber Liquidator’s is advertising a two week special on hardwood floor. “Whether bamboo, laminate, vinyl blank or hardwood, you’ll love the look … and the INCREDIBLE DEALS!!!,” the company ad proclaims.