Retail Madness: Sweet 16 Stocks

TheStreet pairs up retailers for a March Madness same-store-sales challenge. Find out who won the tournament -- and
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NEW YORK (

TheStreet

) -- Retailers went head-to-head in

TheStreet's

March Madness tournament, with

Aeropostale

(ARO)

winning the title.

Looking at March retail sales results,

TheStreet

paired off stocks in its Sweet 16, which include:

Abercrombie & Fitch

(ANF) - Get Report

, Aeopostale,

American Eagle Outfitters

(AEO) - Get Report

,

Buckle

(BKE) - Get Report

,

Macy's

(M) - Get Report

,

J.C. Penney

(JCP) - Get Report

,

Nordstrom

(JWN) - Get Report

,

Saks

(SKS)

,

Target

(TGT) - Get Report

,

Fred's

(FRED)

,

Costco

(COST) - Get Report

,

BJ's Wholesale

(BJ) - Get Report

,

TJX

(TJX) - Get Report

,

Ross Stores

(ROST) - Get Report

,

Gap

(GPS) - Get Report

and

Limited Brands

(LTD)

.

Unsurprisingly, laggards like Abercrombie & Fitch and J.C. Penney were knocked out in the first round, as both failed to meet Wall Street's forecasts.

As much as it continues to slash prices, Abercrombie cannot compete on value against Aeropostale. And J.C. Penney, even with some new exclusive fashion lines, isn't seeing as much success as Macy's is with its "My Macy's" localization efforts, which tailors merchandise to each market.

Even so, J.C. Penney still upped its first-quarter guidance to a range of 20 cents to 24 cents a share, from prior outlook of 16 cents to 20 cents a share.

High-end department store Saks was also eliminated early on when pinned against Nordstrom, but still had a good showing, with same-store sales surging 12.7%, significantly better than the 8% forecast.

Gap's 1969 jeans are no match for Victoria Secret's Pink line. While Gap reported an impressive 11% climb in comparable sales, easily topping forecasts of 3.7%, it could not compete with Limited Brands' 15% spike, and fell off

TheStreet's

bracket in the first round.

Gap reported gains across all its divisions, with namesake stores growing 11%, Banana Republic rising 10% and Old Navy spiking 13%.

Shares of Gap are increasing 2.3% to $24.41 in morning trading.

Denim retailer Buckle, which has been a winner even amid the recession, surprisingly lost out American Eagle Outfitters, which saw a 15% surge in same-store sales.

Ross Stores proved to be the stronger off-price retailer in March, with a 10.6% gain compared with TJX's 10% jump.

Still, both Ross and TJX lifted their first-quarter guidance, and are seeing shares pick up steam in morning trading.

Target, which was one of the last retailers to begin to see a turnaround, reported a 10.3% same-store sales increase, as its apparel segment finally saw meaningful improvements. This is only the second consecutive month the discounter was able to post positive sales, but it was strong enough to allow Target to earn a spot in the final four.

Target expects first-quarter earnings to come in 10 cents higher than analysts' estimates. Wall Street is calling for earnings of about 85 cents a share.

Nordstrom also easily made it into the final four, with a 16.8% gain, and its average number of transactions rose for the seventh month in a row.

The upscale retailer said its strongest regions were the Northeast, Midwest and Mid-Atlantic, and while California stores were improving, they were still below average. Nordstrom saw the strongest sales in fashion jewelry, dresses and women's shoes.

The final faceoff came down to Aeropostale and Limited. While Limited ultimately lost out to Aeropostale, its turnaround has been noteworthy.

March is only Limited's second consecutive month of positive comparable sales. The specialty retailer saw strength at both Victoria's Secret and Bath & Body Works.

Shares of Limited are gaining 1% to $25.93 in morning trading.

Still, it's no surprise Aeropostale won the title, as this marks over two years of positive same-store sales.

Comparable sales shot up 19%, significantly higher than the 11.2% jump analysts predicted. The better-than-expected results prompted Aeropostale to up its first-quarter guidance. It now expects to earn 44 cents a share, compared with a prior outlook of 39 cents to 40 cents a share.

Typically Aeropostale isn't given enough credit for its successes, but this time the market is recognizing, sending shares gaining 2.8% to $30.16 in morning trading.

-- Reported by Jeanine Poggi in New York.

RELATED STORIES:

>>Retailers Rule March - But What About April?

>>Same-Store Sales By The Numbers

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