U.S. investors appeared to look past concerns of a global swine flu pandemic and focused instead on the continuing saga in the auto sector and the recession Monday as retail shares fell 1.7 percent.
Forty cases of the swine flu were confirmed in the U.S., including 28 in New York, according to the Centers for Disease Control and Prevention.
So far more than 100 people have died in Mexico from the disease, the symptoms of which mimic seasonal influenza and include fever and coughing. The outbreak prompted the European Union’s health commissioner to warn against traveling to either the U.S. or Mexico, according to published reports, and it did weigh on markets in Mexico, which also suffered an earthquake Monday, and those in Hong Kong, but didn’t affect U.S. equities to any great degree.
Although it seems to be business as usual so far, infectious diseases can wreak havoc on fashion. The 2003 outbreak of SARS, or severe acute respiratory syndrome, clamped down on travel to Asia, twisted up business plans for months and complicated sourcing.
For now, Wall Street seems more focused on the health of the economy. The S&P Retail Index fell 5.57 points to 332.66 Monday as the Dow Jones Industrial Average slid 0.6 percent, or 51.29 points, to 8,025. The Dow benefited from a more than 20 percent rise at General Motors after the carmaker said its Pontiac brand would be phased out and more workers would be laid off in its bid to survive.
Among the retailers losing ground were J.C. Penney Co. Inc., down 2.4 percent to $27.48; Target Corp., 1.7 percent to $39.39, and Kohl’s Corp., 1.3 percent to $44.86.
However, Citigroup analyst Deborah Weinswig singled out these three companies as potential beneficiaries of the deflationary pressures bearing down on apparel producers.
“The current global economic crisis has spurred a significant decline in orders, which has created excess factory capacity,” said Weinswig in a research note Friday. “As a result, factories and suppliers have become quite willing to reduce their pricing in order to try to keep their factories open.”
Companies carrying a higher proportion of private label goods should be able to benefit more, she said, noting Penney’s had a private label concentration of 45 percent last year, while private label accounted for 38 percent of Target’s nonfood business and 28 percent overall at Kohl’s.
“Because retailers have only recently begun to receive more favorable pricing during their negotiations with suppliers, we believe product cost deflation benefits have not been fully embedded into the retailers’ annual guidance,” Weinswig said.
The analyst predicted product costs on apparel, footwear and home goods would fall 5 to 7 percent in the second half of the current year.
“Retailers are likely to keep some of the cost savings to enhance their margins, and invest the remainder back into delivering greater value…through quality improvements,” Weinswig said.
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
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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
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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