Red-hot equity markets on both sides of the Atlantic took a break today as major U.S. and European indices fell.
The S&P 500 Retailing Industry Group was down for the second straight day as it declined 0.3 percent to 916.64. The Dow Jones Industrial Average was off 0.1 percent to 15,967.03 and, for the second consecutive session, broke the 16,000 barrier but failed to close above it. The S&P 500 was down 0.2 percent to 1,787.87 but failed to hit the 1,800 level, as it had on Monday.
The day’s few fashion gainers were led by Aéropostale Inc., shares of which rose 3.9 percent to $9.51. After the markets closed, Hirzel Capital Management LLC, a Dallas-based investment fund led by Zac Hirzel, said in a Securities and Exchange Commission filing that it had acquired about 4.8 million shares of the retailer, constituting a 6 percent stake, for $44.6 million.
In the filing, it said it made the purchases for investment purposes and not to acquire control of the specialty store group. However, it expects to “have discussions with management” based on its belief that Aéropostale’s shares are “undervalued and represented an attractive investment opportunity.”
The steepest losses among retail, fashion and beauty firms tracked by WWD were in the specialty store sector, led by Delia’s Inc.’s 8.8 percent drop to $1.45, Coldwater Creek Inc.’s 7.4 percent decline to 93 cents and Cache Inc.’s 5.8 percent fall to $5.01.
American Apparel Inc. ended the day down 5.7 percent to $1.15. Moody’s Investors Service downgraded American Apparel's credit rating, already in noninvestment territory, one notch to “Caa2” following disclosure that the company had failed to comply with the performance requirements of its revolving loan facility with Capital One and required a waiver to avoid a default. The retailer doesn’t expect to be in compliance with fixed charge coverage and maximum leverage ratios of the agreement until the fourth quarter of 2014, at the earliest.
European markets ended the day down. The FTSE MIB fell the furthest, by 1.8 percent to 18,766.78, while the CAC 40 dropped 1.1 percent to 4,272.29, and both London’s FTSE 100 and Frankfurt’s DAX lost 0.4 percent, to 6,698.01 and 9,193.29, respectively.
The euro traded at $1.35 against the dollar and the pound was worth $1.61.
Retail and luxury stocks were mostly down, with the day’s biggest fallers including Inditex and Mulberry, which both lost 2.2 percent to 115.75 euros and 10.49 pounds, respectively. Ferragamo dropped 2.4 percent to 25.21 euros.
Among the shares gaining ground were Hermès and Safilo, which both rose 1.9 percent, to 252.65 euros and 17.28 euros, respectively. Gemfields jumped 8.1 percent to 0.39 pounds after strong results from its rough emerald and beryl auction in Lusaka.
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Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
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