The major indices tried, but ultimately failed, to make back some of the ground surrendered on Monday, but retail shares spent virtually the entire day in negative territory and finished down more than 2 percent.
The S&P Retail Index ended Tuesday trading at 235.29, down 5.76 or 2.4 percent, enduring a far greater slump than the broader, more closely watched indices. The Dow Jones Industrial Average was off 0.6 percent to 6,726.02, and the S&P 500 shed 0.6 percent to 696.33. Like the Dow’s historic sub-7,000 finish on Monday, the S&P 500’s fall below the 700 mark turned back the clock in a most unfortunate way for investors, putting it at a level not seen since October 1996.
The markets were again faced with the formidable task of mounting a comeback — after four consecutive losing sessions — without the benefit of a catalyst. While Federal Reserve chairman Ben Bernanke and Treasury Secretary Tim Geithner both faced Congressional scrutiny on Tuesday, troubling economic news came virtually without interruption, from word of still-deteriorating sales of existing homes and U.S. automobiles to reports that Blockbuster had hired bankruptcy counsel.
Underlying the market’s softness, however, is ongoing fear that, hundreds of billions of dollars into the government’s bailout of financial institutions, there are still no viable signs of stabilization. In fact, speaking of the latest bailout of American International Group, its fourth rescue parcel, Bernanke told members of the Senate Budget Committee Tuesday, “It’s a terrible situation, but we’re not doing this to bail out AIG or their shareholders. We’re doing this to protect our financial system and to avoid a much more severe crisis in our global economy.”
Bankrupt Gottschalks Inc. said it was continuing talks regarding “going concern offers” and had extended its auction date to March 30.
In the world of apparel retailing, Chico’s FAS Inc. and Cache Inc. both reported fourth-quarter losses, although both firms delivered better EPS results than had been expected. (See related story and more stock information, page 14.) Included in the weakest performers among the stocks tracked by WWD Tuesday was another misses’ specialist, Charming Shoppes Inc., whose shares fell 20 percent to close the day at 52 cents.
Among broadline retailers, declines were the rule. Saks Inc. declined 6.3 percent to $2.25, Target Corp. 5.2 percent to $25.95, J.C. Penney Co. Inc. 3.9 percent to $14.18, Macy’s Inc. 2.6 percent to $7.18 and Wal-Mart Stores Inc. 1.4 percent to $47.38.
Liz Claiborne Inc., which reports fourth-quarter results today, saw its shares advance 5.6 percent to $2.82, and Jones Apparel Group Inc. was up 4.1 percent to $2.81. However, decliners included Oxford Industries Inc., off 12.9 percent to $3.70; VF Corp., 3.2 percent to $47.88, and Phillips-Van Heusen Corp., 2.6 percent to $15.54.
But retail stocks have so far avoided the historic lows suffered by firms on the Dow and S&P 500, although the recalibration of the S&P Retail Index in June 2002 make such long-range comparisons impossible.
Still, the index hit its all-time low of 207.49 during intra-day trading on Nov. 21, and, although that trough could easily be tested in the days ahead, this year hasn’t dipped below the 240.36 low it hit on Feb. 23. Additionally, retail shares tend to be a leading, rather than lagging, indicator of market activity, so exposure to additional downturns may be limited.
In fact, the S&P Retail Index hit its all-time high of 538.50 more than two years ago, on Feb. 20, 2007.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion