Retail Shares Dip 0.7 Percent Monday

Ackman apologizes for Target losses.

Retail stocks treaded water Monday, finally slipping 0.7 percent as investors took a wait-and-see approach to the economic stimulus plan being hammered out in Washington.

This story first appeared in the February 10, 2009 issue of WWD.  Subscribe Today.

The S&P Retail Index declined 2.03 points to 277.46. The Dow Jones Industrial Average dropped 0.1 percent, or 9.72 points, to 8,270.87.

In a letter to investors, hedge fund manager William Ackman apologized for the performance of his fund that invests in Target Corp., as the stock has lost 51.6 percent of its value since his initial investment was made public in July 2007. Shares of Target dipped 0.9 percent to $32.73 Monday.

Referring to the Pershing Square IV fund that holds Target shares, Ackman wrote: “I am deeply disappointed by PSIV’s dreadful performance and I apologize profusely for the fund’s results to date.”

Ackman’s Pershing Square Capital Management beneficially owned 72.9 million shares of Target’s common stock on Friday, or about 9.7 percent of the 752.8 million outstanding as of Dec. 3, according to a filing with the Securities and Exchange Commission. In August, Ackman held 73.9 million shares of the firm, or about 9.5 percent of those outstanding at that time.

Ackman and Pershing Square continue “to believe in their fundamental investment case for Target and that the company’s common stock is undervalued at current market prices,” the filing said.

Even so, Ackman offered investors in his Pershing Square IV fund an opportunity to either add additional capital or cash out, as well as a way to ameliorate losses by waiving certain fees in the firm’s other funds.

Ackman presented his strategy for Target in October, which included spinning off the land under the firm’s stores and forming the country’s largest real estate investment trust. The retailer rejected the plan.

The recession has focused the attention of many investors and companies on the importance of having cash on hand.

To wit, Developers Diversified Realty Corp. said Monday that it closed on deals to sell five former Mervyns sites to Kohl’s Corp. and is using the proceeds to pay down debt. The sale included stores at Northridge Plaza in Northridge, Calif.; College Grove Shopping Center in San Diego; Nellis Crossing in Las Vegas; Pear Tree Center in Ukiah, Calif., and Grand Canyon Shopping Center in Las Vegas.

Developers Diversified, which owns and manages about 720 retail properties, said it also closed on the sale of its Ormond Town Square in Ormond Beach, Fla., last month, generating $22 million, prior to closing costs. The Cleveland-based developer has more than $100 million in assets that are under contract for sale or subject to letter of intent.