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Retail Stocks Break Losing Streak

S&P 500 Retailing Industry Group up for first time since Jan. 14.

Retail stocks followed the major U.S. and European indices into positive territory, breaking an eight-session losing skid in which the S&P 500 Retailing Industry Group lost 3.5 percent of its value.

Stocks in Europe were buoyed by a positive report on the U.K.’s gross domestic product and in the U.S. by an increase in The Conference Board’s Consumer Confidence Index, up for the second month in a row in January to 80.7 from a revised 77.5 in December.

The retail index was up 0.6 percent to 894.70 for only its fifth advance in 18 sessions so far this year, and the Dow Jones Industrial Average and S&P 500 advanced at the same pace to 15,928.56 and 1,792.50, respectively.

Some of the biggest advances among U.S. retail, fashion and beauty stocks came out of the beleaguered teen sector.

Abercrombie & Fitch Co. said that chief executive officer Michael Jeffries would relinquish the post of executive chairman, to be taken by former Sears ceo Arthur Martinez on a nonexecutive basis, with Martinez, Terry Burman and Charles Perrin joining A&F’s board as outside directors. The news, perceived by analysts as a sign of A&F starting to respond to the push by investors for greater transparency and flexibility, helped shares pick up 4.8 percent to $36.27.

Shares of American Eagle Outfitters Inc. also had a good day, adding 2.8 percent to $13.51 following the purchase of an additional 500,000 shares by Jay Schottenstein, chairman, who succeeded Robert Hanson of the teen chain as ceo on an interim basis last week. After investing about $6.4 million in AEO shares, Schottenstein’s holding are now about 13 million shares.

Both A&F and AEO received votes of confidence from asset management firm Blackrock Inc. which, in a series of filings with the Securities and Exchange Commission, reported that it had increased its equity in both retailers. Its holdings in American Eagle now represent 7.4 percent of shares outstanding, up from 6.5 percent, while its stake in A&F was lifted to 8.8 percent, from 5.2 percent.

It also reported that its stake in Aéropostale Inc., the third of the teen sectors “Three A’s,” had been cut to 8.6 percent from 10.2 percent. Shares receded 0.7 percent to $7.18.

BlackRock increased its stake in Ann Inc. to 9.4 percent from 8.3 percent and its holdings in Coach Inc. to 7.3 percent from 6.6 percent. It also reported that its holdings in Avon Products Inc. and The Bon-Ton Stores Inc. had surpassed the 5 percent threshold level that necessitates reporting ownership to the SEC. Its stake in Avon was reported at 5.1 percent and in Bon-Ton 7.2 percent. Morgan Stanley reported a reduced stake in Bon-Ton, down to 4.5 percent from 7.3 percent.

Advances outnumbered declines by about a two-to-one margin in the WWD sample with some of the larger decreases coming from Burlington Stores Inc., off 3.4 percent to $26.36, and Ann Inc., down 2.9 percent to $32.35.

Europe’s major markets all ended the day ahead, with the CAC 40 in Paris rising the most, adding 1 percent to hit 4,185.29, followed by Milan’s FTSE MIB, up 0.9 percent to 19,448.32. The DAX in Frankfurt rose 0.6 percent to 9,406.91.

London’s FTSE 100 ended the session up 0.3 percent to 6,572.33 after the U.K.’s Office of National Statistics reported 0.7 percent growth in Britain’s GDP for the fourth quarter of 2013, with growth for the year at 1.9 percent. The ONS said this was the fastest rate of GDP growth in the U.K. since 2007.

It was a largely positive day for fashion, luxury and retail stocks. Those that gained the most included Yoox, which shot up 11 percent, to 28.89 euros, after Bank of America raised its rating on the stock to “buy.” Burberry rose 2.4 percent to 14.73 pounds, while Tod’s climbed 2.9 percent to 111.30 euros.

The few stocks that lost ground included French Connection, which fell 3.4 percent to 36 pence; Metro, which dipped 0.8 percent to 31.90 euros, and Aeffe, down 1.6 percent to 0.75 euros.
 
The pound traded for $1.65 against the U.S. dollar, while the euro went for $1.37.