Stocks closed higher on Friday after several key economic reports came in better than expected, boosting investor confidence in the economy's overall health.
The Commerce Department reported a better-than-forecast rise in the rate of July new home sales, which rose 2.8 percent above June on a seasonally adjusted annual basis. Year-over-year, however, July 2007 new home sales fell 10.2 percent.
The Dow Jones Industrial Average rose 1.1 percent to 13,378.87; the S&P 500 added 1.2 percent to 1,479.37; the New York Stock Exchange gained 1.4 percent to 9,607.04, and the Nasdaq increased 1.4 percent to 2,576.69.
The S&P Retail Index closed last week up 2 percent to 481.54, buoyed by retailers' solid second-quarter results because of strong sales gains on summer clearance and back-to-school promotions.
Looking forward, some analysts see tough times for some retailers because of challenging year-over-year comparisons and potential consumer spending pressures — but pointed to company-specific positives that will help ease the impact.
Brean Murray Carret & Co. analyst Eric Beder noted that, despite posting in-line earnings, Aéropostale Inc. guided below consensus estimates for the company's 2007 third quarter based on expected tempered margin gains.
"We believe it will become increasingly more difficult for the Aéro apologists to pitch ARO as a superior growth story, especially with store growth prospects shrinking and no new concepts on the horizon to whet investor hype," Beder said in a research note.
Needham & Co. analyst Christine Chen disagreed and reiterated her "buy" rating of Aéropostale shares. Chen sees a new growth phase marked by more sophisticated product, inventory planning and promotions for Aéropostale.
"Incorporating fashion basics and veneer has improved the store experience and brand image; investing in key categories within a more edited assortment has led to better inventory control and enabled ARO to utilize its promotional muscle selectively," Chen said in a note. "We think b-t-s merchandise is fashion-right and believe that strong sales momentum and margin expansion should continue during FY07."
Limited Brands Inc. brought in positive reviews after the retailer doubled its second-quarter income and said it was "comfortable" with consensus estimates for the rest of 2007.CL KingCQ & Assoc. analyst Mark K. Montagna noted that the company can now focus on Victoria's Secret, LaSenza and Bath & Body Works as it completed its capital and operational restructuring.
"We expect that the late floor sets just before Christmas will aid Q4 EPS — last year, the company's sales tanked just before Christmas," Montagna wrote in a note. "A key component will be the pre-Christmas delivery of spring product, which we believe is necessary for any retailer to be successful this holiday season."
Lazard Capital Markets analyst Todd Slater said Limited is emerging as a leaner, higher-margin growth company.
"We believe there is no better time to enter this stock than now, in front of a major transformation, a low multiple, easy compares in 2008 and another in a series of stock repurchase programs," Slater said.
Companies set to report earnings this week include Brown Shoe Co., Chico's FAS Inc., Citi Trends, Coldwater Creek Inc., Delia's Inc., Gottschalks Inc., Fred's Jo-Anne Stores Inc. and Payless Shoe Source.
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye