Retail stocks suffered their biggest sell-off of the year, shedding 3 percent of their value, as weak same-store sales results exacerbated investor concerns about the condition of consumer spending.
The S&P 500 Retailing Industry Group dropped 26.40 points, or 3 percent, to end the difficult session at 860.66. The Nasdaq dropped 3.1 percent to 4,054.11 and the Dow Jones Industrial Average and S&P 500 indices did only marginally better, dropped 1.6 percent to 16,170.22 and 2.1 percent to to 1,833.08.
The drop in retail came as the small sample of retailers still reporting same-store sales on a monthly basis reported declines which, while smaller than analysts had expected in many cases, showed signs of pressure beyond those attributable to the shift in Easter’s timing, which is expected to benefit April sales.
Costco Wholesale Corp. and Stein Mart Inc. were the only two retailers to report increases, with Costco up 6 percent in the U.S. excluding fuel, and Stein Mart ticking up 0.9 percent, less than the 3.5 percent advance expected. Stein Mart shares dropped 7 percent to 12.79 while Costco surrendered 0.9 percent to close at $112.08.
Reporting after the markets closed, Gap’s comparable sales last month fell 6 percent, with both Gap and Old Navy down 7 percent. Gap had been expected to fall 4.7 percent, according to the analysts’ estimate compiled by Thomson Reuters. Shares were off 1.7 percent to $16.70 but fell an addition 2.5 percent in the early moments of after-hours trading following the release of the numbers at 4 p.m.
Zumiez Inc. was one of only a handful of retail issues to gain ground, adding 2.5 percent to close at $25.51 after reporting a 2.9 percent drop in March comps versus the 4.4 percent decline expected. The Buckle Inc. also dropped less than expected, down 1.8 percent versus an expected decline of 3.2 percent, and its shares lost 1.1 percent to close at $45.18.
L Brands shares were off 5.2 percent to $55.83 following a 1 percent decline in its comps, matching the drop at its Victoria’s Secret unit.
The poor showing, even judged against low expectations and the anticipation of a compensatory lift in April, deepened concerns about gross margin and inventory levels as stores began the final three weeks of retailers’ fiscal first quarter.
Europe’s stock markets were down more modestly.
The FTSE MIB in Milan slipped 1.3 percent to 21,429.09, followed by the CAC 40 in Paris, down 0.7 percent to 4,413.49 and the DAX in Frankfurt, which fell 0.5 percent to 9,454.54. Only the FTSE 100 in London gained, edging up 0.1 percent to 6,641.97.
Fashion, luxury and retail stocks had a varied day.
On the rise were LVMH Moët Hennessy Louis Vuitton, which gained 3.2 percent to 140.85 euros, after reporting a 4 percent rise in first-quarter sales to 7.2 billion euros, or $9.9 billion, late Wednesday; Mulberry, up 3.4 percent to 7.34 pounds; Boohoo, up 4.9 percent to 54 pence, and Gemfields, which gained 6.3 percent to 42 pence.
Those that fell included Geox, down 4.9 percent to 3.09 euros; Asos, which dipped 2.8 percent to 46.42 pounds, and Marks & Spencer, which dropped 3.1 percent to 4.42 pounds, after M&S reported a 1.9 percent rise in its fourth-quarter sales Thursday. Same-store general merchandise sales at M&S, however, fell 0.6 percent.
The euro traded for $1.38 against the U.S. dollar while the pound went for $1.67.