By and  on January 23, 2014

Retail stocks rallied as trading wound down on Wall Street today, but were unable to make up for morning and early afternoon declines.

Still, the 0.1 percent decline in the S&P 500 Retailing Industry Group, to 908.82, was modest in comparison to the Dow Jones Industrial Average's 176 point, or 1.1 percent, drop to 16,197.35 and the S&P 500’s 16.40 point, or 0.9 percent, descent to 1,828.46.

The decline for the retail index extended its losing streak to six consecutive trading days. Retail stocks have advanced just four days of the 15 in which U.S. markets have been open this year.

Yet today's damage could have worse as the index moved as low as 905 before rallying late in the day.

Stocks in the U.S. and Europe fell victim to a series of economic potholes, including the uncertain prospects for fourth-quarter profits and a reading on manufacturing in China that was both weaker than expected and down for the first time in six months.

Among U.S. retail, fashion and beauty issues tracked by WWD, American Eagle Outfitters Inc. registered the largest decline, falling 7.8 percent to $13.19, after word late Wednesday that Robert Hanson, chief executive officer, would leave the Pittsburgh-based teen retailer and be succeeded by chairman Jay Schottenstein on an interim basis. The move surprised analysts and investors as Hanson, the former global president of Levi Strauss & Co.’s Levi’s brand, had been seen as making progress in differentiating AEO’s merchandising and marketing in the troubled teen sector.

Stifel Nicolaus analyst Richard Jaffe downgraded the stock to “hold” from “buy” based on the uncertainty created by the executive shake-up. “Finding a qualified ceo replacement will take time – the search for ex-ceo Hanson took nearly a year – and once a replacement is found, impact by the new ceo will take time to materialize,” Jaffe wrote in a research note.

Although the transition at AEO was viewed as positive news for its competitors in youth retailing, only Tilly’s Inc. saw its shares rise, picking up 1.9 percent to close at $11.60. The Wet Seal Inc. was flat, at $2.45, while Abercrombie & Fitch Co. fell 0.1 percent to $35.34, Pacific Sunwear of California declined 0.3 percent, The Buckle Inc. dropped 0.8 percent to $45.34, Urban Outfitters Inc. was down 1 percent to $36.52 and Aéropostale Inc. was off 1.1 percent to $7.54.

Among the gainers were J.C. Penney Co. Inc., up 1.3 percent to $6.84, and Dillard’s Inc.’s, 1.1 percent to $90.69.

Shares of American Apparel Inc. managed a 0.9 percent rise to $1.14 after it extended the deadline for exchange of its senior secured notes due 2020 to Feb. 11 from Jan. 22.

As in the U.S., Europe’s markets all ended the day down.

The CAC 40 in Paris fell the most, dipping 1 percent to 4,280.96, followed by the DAX in Frankfurt, down 0.9 percent to 9,631.04. The FTSE 100 in London fell 0.8 percent to 6,773.28, while the FTSE MIB in Milan was down 0.7 percent to 19,814.55.

The declines came after word that HSBC’s flash China manufacturing purchasing managers’ index fell to 49.6 in January from 50.5 in December.

It was a mostly negative day for fashion, luxury and retail stocks, although there were a few bright spots.

Shares of Marks & Spencer rose 2.6 percent to 4.93 pounds, after a research note from Exane BNP Paribas Thursday raised the stock’s rating to “outperform.” Mulberry also rose 3.1 percent to 9.28 pounds, while French Connection gained 0.7 percent to 0.36 pounds.

The decliners included, which lost 6.7 percent to 63.67 pounds after both Goldman Sachs and BNP Exane Paribas downgraded its stock, with the latter cutting’s rating to “neutral” from “outperform.” Online retailer Yoox also fell, by 2.7 percent to 28.45 euros, while Safilo Group dipped 4.9 percent to 17.29 euros.

The euro traded for $1.36 against the U.S. dollar, while the pound traded for $1.65.

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