Retail Stock Losers: Chico's, Office Depot

NEW YORK ( TheStreet) -- Retail stocks are in the red after consumer confidence hits a new five-month low.

The S&P Retail index is tumbling 1.7% to 408.57, as the Conference Board's consumer confidence index dropped to 50.4 in July from 54.3 in June, missing economists' estimates of 51.

Office Depot ( ODP) is leading the pack, selling off 6.3% to $4.43 in afternoon trading. The office supply retailer reported this morning a narrower first-quarter loss to $18.7 million, or 7 cents a share, compared with a loss of $82.6 million, or 31 cents, in the year-ago period. Analysts were calling for a loss of 17 cents a share.

While EPS topped forecasts, sales fell short of expectations, as demand both domestically and internationally remained weak. Sales declined 4.3% to $2.7 billion, while same-store sales slipped 1%.

Women's apparel retailer Chico's ( CHS) is plunging 9.4% to $9.36, hitting a new 52-week low earlier in the afternoon, a day after Goldman Sachs added it to its conviction sell list.

Chico's "has been through a major turnaround since early 2009 thanks to new management that has capitalized on big cost, process and product opportunities," analyst Michelle Tan wrote in a note. "However as these improvements are being lapped, we see notable risk that momentum slows faster than investors anticipate."

Teen retailer rue21 ( RUE) is sinking 5.6% to $29.93 ahead of its second-quarter earnings report due out after the close. Analysts are calling for earnings of 26 cents a share on revenue of $152.6 million.

But amid the stains of red, there are several retail winners. Costco Wholesale ( COST) is rising 2.5% to $57.31 after its upgraded to buy from hold.

Stifel Nicolaus analyst David Schick said the warehouse club can both play defense and offense when it comes to changes in the national health care policy. Its business in California, where it has about 38% of its stores, has also improved, while warm weather is boosting sales of appliances like air conditioners, which have a high profit margin.

Rite Aid ( RAD) agreed on Tuesday to pay $1 million to settle potential privacy disclosure violations. The Department of Health alleged the drugstore violated the Health Insurance Portability and Accountability Act of 1996. Rite Aid also said it signed a consent order with the Federal Trade Commission to settle potential violations of the FTC Act.

The allegations arose from videotapes that revealed pharmacies disposing of prescriptions and labeled pill bottles containing patients' information in industrial trash containers that were accessible to the public.

-- Reported by Jeanine Poggi in New York.

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