Retail stocks sobered up Friday, a day after better than expected June same-store sales spurred a rally that prompted the broader markets to post record gains. The results bettered Wall Street's low expectations based on consumer spending concerns because of high gas prices and a slowdown in the housing market.
The S&P Retail Index ended the trading week up at 528.54, rising 0.29 percent.
The U.S. Department of Commerce on Friday said June retail and food sales fell to $373.9 billion, down 0.9 percent from May, but up 3.8 percent from the year-earlier period.
"We view [Thursday's] strength in retail equities as more of a temporary rally than the beginning of a more constructive move, given the high degree of pessimism that had been built into expectations," Jefferies & Co. Inc. analyst Timothy Allen wrote in a research note. "While the backdrop for equities in general remains favorable, we see a greater probability of disappointing consumer-related data in coming months."
Allen noted that while retailers are reporting "pockets of strength," the general outlook for July same-store sales remains mixed because of the recent rise in interest rates, a more stringent lending environment and the housing market's correction.
But Telsey Advisory Group's Dana Telsey painted a more optimistic picture for the July comps period, citing "healthy" June results and expected strength in fall merchandise, both of which she said had tempered concerns for now.
"Retailers should benefit from the calendar shift resulting from the 53rd week last year, 23 tax-free days versus eight last year, and a mix of wear-now and new back-to-school product," Telsey wrote in a note.
Citigroup analyst Deborah Weinswig also pointed to the calendar shift to support her expectation that July will be a "very strong month."
"Specifically, retailers had a week of clearance moving into June and will have a week of back-to-school moving into July," Weinswig wrote.
But Jefferies' Allen warned that potential erosion in consumer-relevant data might take several months to be felt.
"A year ago, when interest rates on 10-year bonds and 30-year mortgages rose to similar levels as today during the April/June time frame, the negative affect was not fully seen until a few months later," said Allen, who noted that weakness in housing turnover, as well as consumer spending and confidence, was seen in June following peak rates.Bear Stearns analyst Randal Konik listed five reasons to avoid shares of Urban Outfitters Inc.: business model concerns, unrealistic long-term growth and margin expectations, near-term earnings risk, overly positive analyst sentiment and valuation. "Despite being down 20 percent in the past 45 days, we think there is still room for another 20 percent correction," wrote Konik.
At Susquehanna Financial Group, analyst Thomas Filandro noted that negative traffic continued to hamper Gap Inc.'s performance and wrote that with no fall TV advertising campaign planned at the Gap division, "we remain concerned that shopper traffic will remain muted."
Robert W. Baird & Co. analyst Mitch Kummetz noted that Pacific Sunwear of California Inc. was on track to report mid-single-digit comps for the quarter after good, but promotion-driven, June same-store sales numbers. "We don't doubt that the company's business is getting better, but the shares aren't inexpensive unless there is a lot of upside to the numbers, which we don't happen to believe to be the case," Kummetz wrote.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)