It’s been a challenging year for many fashion retail and related stocks.
Over the past 12 months, 52 stocks in the WWD Global Stock Tracker have declined, while 48 have advanced. And of the decliners, 35 have experienced drops in share value of 20 percent or more. They include companies that have suffered fashion missteps, lost market share to competitors, experienced leadership changes and have been negatively impacted by a strong dollar and shifts in consumer spending patterns.
The steepest decliners include: Iconix Brand Group Inc. with an 82 percent drop in its share price to $6.93; Vince Holding Corp. with an 80 percent drop to $5.83; and The Bon-Ton Stores Inc. with a 68 percent decline to $2.21. Other notable decliners include Avon Products Inc., which is down 58 percent to $3.99, and The Men’s Wearhouse Inc., which is off 55 percent to $20.31.
For its part, leadership at the companies suffering some of the steepest declines are working to right the ship, although longer-term changes can take their toll in the short term. Men’s Wearhouse, for example, is repositioning the company and trying to wean shoppers off of the steep, regular markdowns at its Jos. A. Banks unit, which was acquired last year. At Vince, challenging market conditions have forced a series of moves to improve business, including bringing back its founders to serve as consultants and hiring a new merchandise executive.
Today, Richard Jaffe, equities analyst at Stifel Securities, reiterated a “hold” rating on the stock noting that “given the recent leadership changes, weak results over the past few quarters and cautious guidance for 2015, we believe [Vince] will continue to struggle in the near term,” he said.
“In addition, with operating margin contraction and slower wholesale growth likely, we believe the reward potential is limited near term, and risk, given the current fashion, merchandising, and retail consumer challenges, remains significant,” Jaffe added.
Separately, Avon could be in the midst of a takeover, which help push up its stock on Thursday.
For the 12-month period, the WWD tracker is up 0.9 percent to 108.79, but it is 7.4 percent below its 52-week high of 117.43. The declines this year follow a period in 2014 when the tracker had experienced a gain of just over 8 percent. The steepest drop this year occurred in August when the Greek debt crisis peaked and China’s stock market collapsed. But even as those issues subsided, concerns over the impact on business on a rate hike by the Federal Reserve put downward pressure on stocks. Analysts later said that many stocks across retail and financial services had values that took into account a rate hike — even though one was not expected until this month.
The lackluster 1 percent increase over the past year compares to an 11 percent gain in the consumer discretionary sector of Standard & Poor’s 500, which includes retail, specialty apparel and beauty stocks.
It’s noteworthy that the consumer discretionary sector’s 11 percent gain is heavily offset by a 78 percent year-to-date gain in the share prices of the catalog and online retail segment, which includes online retailers that are not listed in the specialty, general merchandise and department store segment as well as TV home shopping retailers and so-called “door-to-door” retailers. Specific companies in this segment includes companies such as the recently listed Duluth Holdings Inc., E Commerce China Dangdang Inc., Blue Nile Inc. and Priceline Group Inc., among others.
Here are the leading 10 decliners in the WWD Global Stock Tracker for past 12 months:
1. Inconix Brand Group Inc. 82%
2. Vince Holding Crop. 80%
3. The Bon-Ton Stores Inc. 68%
4. Fossil Group Inc. 64%
5. Avon Products Inc. 58%
6. The Men’s Wearhouse Inc. 55%
7. Prada SpA 46%
8. Michael Kors Holdings Ltd. 44%
9. Sears Holdings Corp. 42%
10. Chow Tai Fook Jewellry Group 41%