Retail shares excelled as Wall Street on Wednesday finally managed to reclaim some of the ground lost earlier in the week.
This story first appeared in the March 5, 2009 issue of WWD. Subscribe Today.
The end of a weeklong slump saw the S&P Retail Index pull off a 6.26 point, or 2.7 percent, gain to end the day at 241.55 after two straight down sessions. The day’s close put it less than 1 point ahead of its 241.05 finish on Monday, but more than 10 points below the 251.79 level of last Friday.
The percentage gain at retail exceeded those for the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite, all of which broke five-day losing streaks. Even if short-lived, the return of the bulls on Wednesday put the major indices back above their recent lows.
The Dow was up 149.82 points, or 2.2 percent, to close at 6,875.84, reclaiming the 6,800 mark, but falling short of the 6,900 and 7,000 barriers surrendered on Monday. The S&P 500 picked up 16.54, or 2.4 percent, to retake the ground of 700 and close at 712.87. The Nasdaq moved up 32.73, or 2.5 percent, to end the day at 1,353.74.
Strong retail performers for the day included Caché Inc., which, on the first day after reporting a larger-than-expected fourth-quarter loss, saw its shares bound 24.2 percent to $1.85; American Apparel Inc., up 16.5 percent to $1.98; Citi Trends Inc., 15.9 percent to $12.82; Frederick’s of Hollywood Group Inc., 14.3 percent to 16 cents; Tween Brands Inc., 9.4 percent to $1.17, and Dress Barn Inc., 9.2 percent.
Among broadline retailers, J.C. Penney Co. Inc. was up 8.2 percent to $15.34, Nordstrom Inc. up 5.3 percent to $13.59, and Dillard’s Inc. up 3.9 percent to $3.47. Saks Inc. was off 5.8 percent to $2.12 but still well above the 52-week low of $1.50 hit on Feb. 20.
Among the few decliners were Liz Claiborne Inc., down 11.4 percent to $2.50 after reporting a slightly lower loss than expected, and Gildan Activewear Inc., down 7 percent to $6.15.
Although Brown Shoe Co., Maidenform Brands Inc. and a number of other firms reported quarterly results on Wednesday that exceeded modest expectations, the upward movement of retail shares didn’t appear to be driven by any specific news but rather by the belief that the market’s downward movement had perhaps put it below levels suggested by performance metrics.
While many U.S. retailers will report February sales results today, the Federal Reserve’s Beige Book, released in Washington on Wednesday, provided further evidence that overall consumer spending was lackluster in January and February despite some regional bright spots, including some in apparel, after a grueling holiday season.
The report cited a “slight firming” in many districts, “particularly compared with holiday-season sales that were very disappointing.”
Richmond, St. Louis and Philadelphia all reported that apparel sales had picked up since the holidays. A manager at a sporting goods store in Richmond said severe winter weather boosted apparel sales, but total sales volume declined.
Merchants in Philadelphia said sales of basic apparel and household items have been steady or rising, but other sales were weak.
“The consumer is focused on the basics, and sales of big ticket items are still falling,” said one Philadelphia retailer. Despite declining sales of big-ticket purchases, sales of some apparel items were up in the region. Sources in Philadelphia said they thought consumer spending could recover if employment conditions improved. Apparel items were also strong sellers in St. Louis, according to reports, despite a general decline.
San Francisco said sales were “anemic” overall while New York said the “steep” pace of declines in December slowed in January and February.