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.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
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)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews