NEW YORK ( TheStreet) -- Retailers are giving up earlier gains after Citi released a disappointing second-half outlook.

Citi analyst Deborah Weinswig lowered her earnings estimates and price targets for Home Depot ( HD), J.C. Penney ( JCP), Kohl's ( KSS), Lowe's ( LOW), Nordstrom ( JWN), Macy's ( M), Saks ( SKS), Target ( TGT), and Wal-Mart ( WMT), to reflect a more conservative outlook.

"The consumer went on a shopping binge in the first quarter of 2010 and the subsequent hangover has set in," she wrote in a note. "A challenging macro environment, lack of fashion and difficult comparisons on the horizon will make this consumer hangover tough to kick."

As a result, the S&P Retail Index is giving up some of its morning gains, falling 0.5% to 383.99. This follows last week's plunge of 45% to close on Friday at 385.

But Weinswig did reassure that she doesn't think the economy is headed for a double-dip recession.

She recommends playing defensive stocks in the second-half of the year, like Dollar General ( DG), or Family Dollar Store ( FDO). Family Dollar is scheduled to report its third-quarter earnings on Wednesday before the bell.

Bebe ( BEBE) lost some of its momentum, but has still climbed 6.8% to $6.76. The specialty apparel retailer announced this morning that it plans to shutter its PH8 concept. The Bebe company will close or convert 48 PH8 stores, which will result in a pre-tax charge of $17 million. As a result, Bebe said it will be at the low-end of its fourth-quarter forecast.

Bebe also said it will pay a one-time special cash dividend of $1 a share on July 30 to shareholders of record July 21.
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Blockbuster ( BBI) is back in the red, falling 0.9% to 17 cents after being up nearly 10% earlier this morning.

The movie rental retailer warned last week that the New York Stock Exchange may delist its stock after shareholders failed to approve a recapitalization plan, which included combining Class A and Class B common stock or the option for a reverse stock split, which was necessary to comply with listing requirements.

The Big Board halted trading of Blockbuster temporarily last Thursday.

Blockbuster was also scheduled to pay $42.4 million last week, but at the eleventh hour the company said it entered into an agreement with its senior secured bondholders, providing it with more time and flexibility to find recapitalization opportunities.

Blockbuster now has until Aug. 13 to make the payment.

-- Reported by Jeanine Poggi in New York.

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