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U.S. Retail Stocks Up in Post-Sandy Trading

Sector rises 0.6 percent, PVH and Warnaco show big gains.

U.S. retail stocks rose and outperformed the market on their first day back after Hurricane Sandy imposed an unscheduled four-day weekend on Wall Street.

The S&P 500 Retailing Industry Group rose 0.6 percent, or 3.79 point, 643.90 as the Dow Jones Industrial Average slipped 0.1 percent, or 10.59 points, to 13,096.62. Lowe’s Cos. Inc. and The Home Depot Inc. were both up more than 2 percent as people in the Northeast began to gauge the damage left by Sandy.

In the fashion world, PVH Corp. and The Warnaco Group Inc. saw the day’s most dramatic gains. After years of on-and-off negotiations, PVH agreed to buy Warnaco in a $2.9 billion cash and stock deal that will bring together the main Calvin Klein businesses under one corporate roof. Investors liked the deal on both sides and Warnaco’s shares shot up 38.7 percent to $70.58 as PVH’s stock gained 20.2 percent to $109.99.

On the other hand, J.C. Penney Co. Inc.’s stock fell 5.7 percent to $24.01 after Deutsche Bank analyst  Charles Grom said a recent promotional offer for 30 percent off all clearance goods might undermine the company’s two-tier pricing strategy.

“On the heels of a $10 in-store coupon provided earlier this month, free haircuts for kids, and free family photos to begin later this week, we believe [Penney’s] is backtracking on its no promotion strategy, confusing customers, and we, therefore, remain skeptical of near-term improvement in business trends,” Grom said.

A spokeswoman for J.C. Penney said: “We are not changing our pricing strategy. [J.C. Penney] still has two kinds of pricing, every day low prices and clearance.  We utilized a temporary percentage off clearance, as is common in the industry, to help reduce inventory levels at the end of the season.”

In Europe, markets ended on a slight downturn.

London’s FTSE 100 fell 1.2 percent to 5,782.70 and Paris’ CAC 40 dropped 0.9 percent to 3,429.27 while the DAX in Frankfurt slowed 0.3 percent to 7,260.63. The FTSE MIB in Milan edged slightly up 0.1 percent to 15,539.71.

 

Retail and luxury stocks were largely down as investors waited to gauge the fallout from Hurricane Sandy. Among the day’s decliners were Asos.com, down 2.8 percent to 22.76 pounds; Ferragamo, 1.3 percent to 15.67 euros; Unilever, down three percent to 27.75 euros; LVMH Moët Hennessey Louis Vuitton, 1.1 percent to 125.40 euros, and Burberry, 1.2 percent to 11.66 pounds.

Stocks gaining ground included Brunello Cucinelli, up 1.9 percent to 13.65 euros, and Safilo, 1.1 percent to 6.51 euros.

The pound traded at $1.61 versus the dollar and the euro traded at $1.29.