Fears about the international credit crisis yielded to anxiety about corporate earnings on Wednesday, pushing down retail shares sharply as stores entered the final phase of their fiscal third quarters.
Even after a rebound in the final minutes of the session, the Standard & Poor’s Retail Index shrank 15.54 points, or 5.6 percent, to 260.25. The percentage drop was the seventh highest since the refixing of the index in June 2002. All seven of these declines have come since the historic drop of Black Wednesday on Sept. 17, when the credit crisis arrived on Wall Street in earnest. At one point in the final hour of trading, the S&P Retail barometer was less than 4 points above its 52-week low of 248.77.
The Dow Jones Industrial Average slid 514.45 points, or 5.7 percent, to 8,519.21 as concern about third-quarter profits and fourth-quarter outlooks intensified. Wachovia’s fourth-quarter loss of nearly $24 billion and Merck’s plan to cut 7,200 jobs set the stage for a tense session, which ended with Amazon.com forecasting fourth-quarter revenues below initial expectations. The discouraging words on the economy helped push the S&P 500 to a sub-900 close of 896.78, a decline of 58.27 points, or 6.1 percent.
Retailers’ third quarters generally run from August through October and incorporate back-to-school and fall selling. While hardly as critical as the fourth quarter, the period serves as a bridge to the end of the year and, so far, it’s been a big disappointment for most firms. Earlier this month, most companies reporting monthly sales checked in with same-store sales declines, and retailers including J.C. Penney Co. Inc., Saks Inc. and Nordstrom Inc. used the occasion to issue downward earnings revisions for the quarter.
While single-digit percentage declines were widespread among European fashion stocks on Wednesday, some U.S. retail issues registered double-digit dips during the course of the day, which exacted a particular toll on department stores. Gottschalks Inc. dropped 21.4 percent to 92 cents and Dillard’sInc. was down 17.8 percent to $5.07, just 21.6 percent of the 52-week high of $23.44 it hit last Oct. 30. Macy’s Inc. fell 10.4 percent to $9.13, and Retail Ventures Inc. was off 14.8 percent to $2.19. The Bon-Ton Stores Inc. ran counter to the general trend with a 4.7 percent improvement to $2.
Charming Shoppes Inc.’s struggles continued as it was down 15.9 percent to $1.38, establishing a new low for the year of $1.30 on its way to the close, while New York & Company Inc. dropped 12.7 percent to $2.89.
Target Corp. established a new 52-week low of $32.39 on its way to a $33.41 close, a drop of 11.4 percent. Guess logged a 10.3 percent decline to close at $20.77.
Among vendors, Quiksilver Inc. contracted 12.9 percent to close at $2.57 and Liz Claiborne Inc.’s drop-off for the day came to 12.6 percent as it closed at $8.15. Hanesbrands Inc. was off 10.7 percent at $14.09.
Overseas markets took a beating earlier in the day, beginning with a 631.56 point, or 6.8 percent, swoon on Tokyo’s Nikkei 225, to 8,674.69, and the Hang Seng Index’s 774.57 point, or 5.2 percent, contraction in Hong Kong. The selling pressure remained fierce in Europe, where London’s FTSE was down 188.84 points, or 4.5 percent, to 4,040.89, and Paris’ CAC 40 dropped 177.22 points, or 5.1 percent, to 3,298.18.
Nearly all European fashion and retail issues sustained losses, with some of the heaviest landing on PPR (down 7.7 percent) and LVMH Moët Hennessy Louis Vuitton (down 6.7 percent). Compagnie Financière Richemont, which had seen its shares spike Tuesday immediately following the spin-off of its non-luxury holdings, closed down 6.3 percent on the Swiss Stock Exchange.
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)
@heriethpaul and @gracebol have a moment on the @victoriassecret fashion show 2017. See every look from the runway on WWD.com. Link in bio. (📷: @giovanni_giannoni_photo) #wwdfashion #victoriassecret #VSFashionShow
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia