Retail Stock Winners: Zale, Lululemon

NEW YORK ( TheStreet) - Retailers are rallying as retailers get more optimistic about the fourth quarter.

Zale ( ZLC)is the biggest gainer, with its stock soaring 40.7% to $5.67, the most in two years, after the jeweler reported an increase in same-store sales in both November in December.

In November comparable sales jumped 11.4% and grew 7.4% in December. Total holiday sales rose 8% to $533.1 million.

This follows optimism out of rival Tiffany ( TIF), which raised its full-year guidance on Tuesday following better-than-expected holiday sales. The company now expects to earn between $2.83 and $2.88 a share for the year, from a prior outlook of $2.72 to $2.77 a share. It is also looking for revenue of $3.1 billion, better than the $3.05 billion Wall Street forecasts.

Lululemon Athletica ( LULU)is also rallying 8.9% to $73.20, after the yoga-inspired retailer upped its guidance for the remainder of the year.

The company now expects fourth-quarter earnings in the range of 55 cents to 57 cents a share, from prior outlook of 46 cents to 48 cents.

Lululemon also said it plans to open about 25 new stores in fiscal 2011.

Wet Seal ( WTSLA)is advancing 10.8% to $3.81, after the teen retailer announced it has appointed former American Eagle Outfitters executive as its CEO.

Susan McGalla will replace Edmond Thomas, who stepped down from the leadership post in October when his employment agreement expired. Thomas will remain at the company until Feb. 8 to assist in the transition.

AnnTaylor Stores ( ANN)is recovering after taking a hit on Tuesday. The women's apparel retailer saw its shares fall 6% on the woes of rival Talbots.

Talbots said comparable sales dropped 6% so far in the fourth quarter, as shoppers did not react favorably to its merchandise assortment. As a result, management was forced to cut prices during the last two weeks of the holiday season.

The company now expects a fourth-quarter loss between 15 cents and 19 cents a share, from its prior guidance of a loss of between 3 cents and 5 cents a share. Wall Street is looking for a much smaller loss of 2 cents.

But investors are realizing that Talbots issues should not be reflective of AnnTaylor, which has made a remarkable recovery over the past year. As a result, shares of AnnTaylor are up 6.2% to $24.04 in midday trading.

One of the only notable decliners today is Borders ( BGP), which is falling 8.3% to 79 cents, as it announced plans to shutter a distribution facility at lay off workers. This comes as the book seller struggles to make payments to publishers, some of which have threatened to stop shipping books, and is facing a credit crunch.

--Written by Jeanine Poggi in New York.

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