Wal-Mart Stores Inc., under growing scrutiny from a bribery scandal tied to its Mexican unit, logged its steepest stock loss in more than three years today.
The stock fell 4.7 percent to $59.54 in heavy trading. That decline, combined with renewed fears about the financial stability of European nations, made for a bad day on Wall Street.
The U.S.-centric S&P Retail Index fell 1.1 percent, or 6.80 points, to 613.41, as the Dow Jones Industrial Average dropped back below 13,000, falling 0.8 percent, or 102.09 points, to 12,927.17.
Wal-Mart revealed in December that it was looking into its compliance with anti-bribery laws. But the issue took center stage when a New York Times report claimed the company covered up evidence that Wal-Mart executives in Mexico paid bribes to obtain building permits in 2005. The retailer said it does not have a “full explanation of what happened.”
The company’s problems appear to be multiplying, with two U.S. lawmakers launching an investigation into the bribery allegations.
Reps. Elijah E. Cummings (D., Md.), ranking member of the House Oversight and Government Reform Committee, and Henry Waxman (D., Calif.), ranking member of the House Energy and Commerce Committee, sent a letter to Wal-Mart chief executive officer Mike Duke requesting an in-person meeting with company officials to respond to allegations that retail giant covered up “a campaign of bribery” by company officials in Mexico.
Also losing ground for the day were Hanesbrands Inc., down 3.4 percent to$29; Urban Outfitters Inc., 2.8 percent to $28.14; Abercrombie & Fitch Co., 2.6 percent to $47.80; J.C. Penney Co. Inc., 2.2 percent to $32.76, and PVH Corp, 1.6 percent to $87.08.
After the market closed, PVH Corp. said it expected first-quarter and full-year earnings to be “at least at the high end” of the guidance range it provided when it reported fourth-quarter results on March 27. PVH said last month its adjusted earnings per share would range from $1.23 and $1.25 versus $1.23 in the comparable 2011 period. PVH noted that results for the quarter are expected to be most affected by higher product costs, with price pressure easing in the back half of the year.
European investors were jittery about the ability of Euro zone countries to spur growth and keep their debt piles under control.
The FTSE MIB in Milan led the slide, closing down 3.8 percent to 13,849.55, followed by the DAX in Frankfurt, which fell 3.4 percent to close at 6,523.00. The CAC 40 in Paris retreated 2.8 percent to 3,098.37, while the FTSE 100 in London sank 1.9 percent to 5,665.57.
Retail and luxury stocks fell along with the markets. Among the decliners were Yoox, which tumbled 5.1 percent to 10.30 euros; Ferragamo, 4.2 percent to 14.74 euros; Safilo Group, 5.1 percent to 4.57 euros, and Carrefour, 4.2 percent 14.58 euros.
The euro traded at $1.32 while the pound traded at $1.61.
The markets started their day on a down note, just hours after French presidential candidate Francois Hollande beat incumbent Nicolas Sarkozy in the first round of elections on Sunday, winning 28.6 percent of the vote, compared with his rival’s 27.1 percent.
Hollande has vowed to slap a 75 percent tax on those who earn more than 1 million euros, and is mulling higher taxes on luxury goods. He also believes that France should spend its way out of the economic slump rather than embrace austerity. The second round of voting takes place May 6.
Also, a preliminary report of Germany’s Purchasing Managers Index showed that manufacturing fell in April. In the Netherlands the government collapsed having failed to agree a package of austerity measures. And in Spain, the central bank estimated the economy shrank for the second quarter in a row, slipping back into recession.