The relief that accompanied last week’s deal to stem Europe’s debt crisis receded Monday as investors fretted over the implementation of the rescue plan and worried anew about the global economic outlook.
Commodity and banking stocks led market declines in both the U.S. and Europe as investors worried over slipping demand for commodities in China and increased borrowing costs for Italy, which is struggling with a heavy debt load.
The S&P Retail Index slipped 1.4 percent, or 7.36 points, to 534.53 as the Dow Jones Industrial Average dropped below 12,000, falling 2.3 percent, or 276.10 points, to 11,955.01, with a steep decline as the close approached. Among the decliners were Liz Claiborne Inc., down 5.4 percent to $8.01; Aéropostale Inc., 4.5 percent to $13.66; Macy’s Inc., 3 percent to $30.53, and J.C. Penney Co. Inc., 3 percent to $32.08.
In Europe, London’s FTSE 100 closed down 2.8 percent, Paris’ CAC 40 slipped 3.2 percent, Milan’s FTSE MIB fell 3.8 percent and Frankfurt’s DAX dropped 3.2 percent. Shares of Burberry dropped 4.7 percent, as LVMH Moët Hennessy Louis Vuitton fell 2.1 percent, Compagnie Financière Richemont dipped 4.3 percent and Mulberry fell 5.1 percent.
The International Labor Organization said the global economy “is on the verge of a new and deeper jobs recession that will further delay the global economic recovery and may ignite more social unrest in scores of countries.” The group said it would take at least five years for employment in advanced economies to return to pre-recession levels.
In the U.S., apparel retailers and vendors are looking at subdued growth at best even as higher cotton prices ease out of the supply chain.
Operating incomes at U.S.-based apparel producers are expected to rise by 2 percent to 4 percent next year, according to an analysis by Moody’s Investors Service debt analyst Scott Tuhy. Last week, the debt rating agency said U.S. retailers overall would see their operating incomes increase 2 percent to 3 percent, with apparel specialty stores underperforming the broader industry.
“The weak economy factors heavily into our outlook,” said Tuhy in his report on vendors. “We don’t expect that profit growth will meaningfully surpass U.S. economic growth. We also expect weaker economic growth in Europe, which will slow revenue growth for companies with sizable international businesses, such as Warnaco Group and Levi Strauss & Co.”
Cotton prices have fallen to about $1 a pound from $2 in April, but even while that gives producers some leeway, it doesn’t mean they’re likely to use the savings to pad their bottom lines.
“Apparel companies will pass on most of the lower costs to consumers in order to gain competitive ground, so the lift to profit margins will be limited,” Tuhy said. “The reversal in input costs should provide a hedge against downside risks for the global economy.”
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@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)