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Retail Shares Down 1.7% on Wall Street

Poor earnings outlooks put investors in bearish mood.

U.S. retail stocks suffered their worst session of the new year today as investors continued to wrestle with ominous signs about retailers’ fourth-quarter profits.

The S&P 500 Retailing Industry Group dropped 1.7 percent to 915.55, putting the retail index 2.6 percent below the 939.80 mark at which it closed 2013.

The Dow Jones Industrial Average was off 1.1 percent, to 16,257.94, while the S&P 500 gave up 1.3 percent to 1,819.20.

Investors were troubled by reduced fourth-quarter profit guidance from companies including Lululemon Athletica Inc., Ascena Retail Group Inc., Stage Stores Inc. and Express Inc., all of which presented at the ICR Xchange in Orlando Monday or will present on Tuesday.

Lululemon’s shares fell the most of all fashion, retail and beauty issues tracked by WWD, descending 16.6 percent to $49.70. Ascena shares were off 7.2 percent to $20.36, Stage pulled back 5.8 percent to $19.89 and Express trended down 4.6 percent to $18.15.

The Bon-Ton Stores Inc., which said on Friday that it might suffer a loss for the full year following difficult weather conditions last month, saw its shares descend 13.5 percent to $13.41.

Among those headed the other direction were New York & Co. Inc. and Christopher & Banks Corp., which rose 5.2 percent and 4.9 percent, respectively, to $4.62 and $7.77. New York & Co. reported a 1 percent increase in same-store sales for November and December and narrowed its EPS guidance to the upper half of its previous projection. Christopher & Banks said its same-store sales would be flat to slightly ahead for the quarter but that a decrease in promotions would allow it to increase its gross margin percentage more than initially expected.

The ongoing battle between The Men’s Wearhouse Inc. and Jos. A. Bank Clothiers Inc. intensified as Eminence Capital, owners of shares of both companies, backed MW’s most recent offer to buy Jos. A. Bank for $1.61 billion. Eminence sued Bank in Delaware state court to prevent the retailer from making an acquisition that could complicate a possible transaction.  Shares of Bank rose 0.7 percent to $56.41 while Men’s Wearhouse’s were down 1.4 percent to $50.39.

Europe’s markets all made gains for the day.

The FTSE MIB in Milan rose the most, climbing 0.7 percent to 19,697.25, followed by the DAX in Frankfurt, which rose 0.4 percent to 9,510.17. The CAC 40 in Paris gained 0.3 percent to 4,263.27, as did the FTSE 100 in London, rising 0.3 percent to 6,757.15.

Banking stocks continued to lead the rises during the day, with Commerzbank AG and Deutsche Bank AG among Frankfurt’s top performers along with Royal Bank of Scotland and Barclays in London. The rises followed a relaxing of regulations concerning bank’s leverage ratios in a ruling from the Basel Committee for Banking Supervision Sunday.

It was a mixed day for fashion, luxury and retail stocks. Those that managed to rise included Aeffe, up 3.8 percent to 0.87 euros; Safilo Group, which rose 3.5 percent to 18.69 euros, and Metro, which gained 2.6 percent to 35.85 euros.

Metro’s shares rose even after the firm said its sales fell 3.3 percent to 18.7 billion euros, or $25.45 billion, during the three months ended Dec. 31.

Meanwhile, Debenhams ended the day up 5 percent to 85 pence after the department store said that activewear retailer Sports Direct had taken a 4.6 percent stake in the business.

Those in the sector that fell included Hugo Boss, down 0.9 percent to 97.53 euros; Hermès, which slipped 0.9 percent to 247.25 euros, and Tod’s, which fell 0.5 percent to 110.10 euros.

The euro traded for $1.37 against the U.S. dollar, while the pound traded for $1.65.