Wider second-quarter losses at Saks Inc., the attendant sell-off in the company’s shares and weakness at other retailers just added to the market’s woes Tuesday. Continued troubles among financial firms, signs of renewed inflation pressures and an 11 percent drop in housing starts from June to July all conspired to push the Dow Jones Industrial Average down 1.1 percent, or 130.84 points, to 11,348.55, as the broader S&P 500 dipped 0.9 percent, or 11.91 points, to 1,266.69. The S&P Retail Index fell a steeper 2.7 percent, or 10.62 points, to 383.12 points.
This story first appeared in the August 20, 2008 issue of WWD. Subscribe Today.
The impact of one of the worst consumer economies in a generation is coming into sharper focus with second-quarter results, and it seems to have hit department stores particularly hard. Saks isn’t the only stock falling out of investors’ favor. Other decliners for the day included Macy’s, Dillard’s, Bon-Ton and J.C. Penney, which last week reported a 35.7 percent drop in second-quarter earnings as well as plans to adjust some of the product and pricing of its American Living brand made by Polo Ralph Lauren.
For the most part, vendors were unable to dodge the downturn with Perry Ellis International, Phillips-Van Heusen, Kenneth Cole Productions, Jones Apparel Group and Polo Ralph Lauren all losing market capitalization. On the other side of the pond, shares of Marks & Spencer fell 6.1 percent while Hermès was off 5.8 percent.
* Editor’s note: European stocks are quoted in the currency of their principal exchanges. Shares on the London Stock Exchange are quoted in pence, Richemont and The Swatch Group are quoted in Swiss francs and Hennes & Mauritz is quoted in Swedish kronor. All other European stocks are in euros.