Retail Winners & Losers: The Madoff Bounce

(Update: Revises stocks throughout to reflect closing prices.)

Bernie Madoff's sentence of 150 years in prison appeared to send a wave of relief throughout the investment community -- and the retail world was no exception.

The S&P Retail Index was up 1% in afternoon trading, led up by one big winner: Rite Aid(RAD Quote).

The drugstore soared 17% to close at $1.45 after it announced that it had completed refinancing most of the debt that was set to come due in September 2010. Rite Aid had a $145 million loan and $1.75 billion credit facility maturing in September 2010. Due to the refinancing, it said its only significant debts due before 2012 are its borrowings under its accounts receivable securitization programs. Those borrowings are due in September.

Other winners included J.C. Penney(JCP Quote) and Chico's FAS(CHS Quote), both of which were upgraded by analysts earlier in the day.

Morgan Stanley analyst Michelle Clark upgraded J.C. Penney to overweight from equal-weight, citing an appealing stock price and its potential to top gross-margin expectations.

Clark said that while the department store sector is limited, J.C. Penney is one of the best ways to tap into the group. She lifted her target price to $33 from $28.

Shares of the department store jumped almost 2% to close at $28.89.

Chico's gained more than 4% to close at $9.51, after a Sterne Agee analyst said a turnaround is underway at the women's apparel retailer.

Analyst Margaret Whitfield affirmed her buy rating and raised her fourth-quarter earnings estimate to break-even per share, from a loss of 7 cents per share.