Retail stocks dipped 1.1 percent Thursday as the Dow Jones Industrial Average fell more severely, closing below 12,000 for the first time since January.
Investors were spooked by continuing turmoil in the Middle East, a bigger-than-expected rise in weekly jobless claims, a credit downgrade for Spain and a rare trade deficit from China, where imports outweighed exports by $7.3 billion last month.
The number of first-time claims for unemployment benefits rose last week by 26,000 to 397,000, well ahead of the 380,000 economists expected.
The S&P Retail Index dropped 5.60 points to 504.70 Thursday as the Dow dropped 1.9 percent, or 228.48 points, to 11,984.61. On a percentage basis, it was the Dow’s steepest decline since a 2.5 percent contraction on Aug. 11.
Of the retailers weighing in with fourth-quarter results Thursday, shares of Aéropostale Inc. fell 1.2 percent to $24.63, as The Buckle Inc. gained 1 percent to $37.93 and Zumiez Inc. rose 2.4 percent to $28.18. Buckle’s results came before the opening of the equity markets while Aéropostale and Zumiez reported after the close.
While the majority of fourth-quarter retail results are now in, with retailers generally posting better profits, executives have been poked and prodded by analysts over the impact of higher gas prices on sales and, looking to the back half of the year, higher cotton and labor costs on future profits.
Beset with heavy holiday clearance activity and uncertain fashion direction, Aéropostale’s fourth-quarter profits slid 13.2 percent, below analysts’ estimates, and the teen retailer said it expects “inflationary pressures” to keep first-quarter and full-year earnings below Wall Street’s projections as well.
The New York-based firm said Thursday that it registered a profit of $83.8 million, or 95 cents a diluted share, for the period ended Jan. 29. This compared with analysts’ projections for earnings per share of 97 cents and year-ago income of $96.6 million, or 99 cents a share. Net sales rose 4.8 percent to $839.3 million, above estimates of $835.5 million, from $801.2 million a year earlier. Quarterly comparable-store sales fell 3 percent as gross margin slid to 35.5 percent of sales versus 38.8 percent a year ago.
“While we’re proud of our accomplishments for the year, we had two primary challenges,” said chief executive officer Thomas Johnson on an afternoon conference call. “First, the teen retail environment was highly promotional. Second, we did not fully deliver a cohesive women’s assortment either in terms of fashion or color.”
While Aéropostale struggled to find its footing late in the year, Zumiez appeared to gain momentum. The Everett, Wash.-based action sports apparel specialist reported double-digit comp increases throughout the holiday season and finished the fourth quarter with a 70.5 percent increase in profits, to $15 million, or 49 cents a share, well above the $8.8 million, or 29 cents, reported for the comparable 2009 period. EPS exceeded analysts’ consensus estimates by 1 cent.
Sales grew 17.9 percent, to $156.2 million from $132.4 million in the year-ago quarter, and were up 13 percent on a comp basis versus a 1.7 percent decrease in the final quarter of 2009. Gross margin rose to 39 percent of sales from 36.3 percent.
“We believe the actions we are taking by focusing on a wide selection of brands and strong customer service, combined with the people and infrastructure investments, have us well positioned to carry this momentum forward and pursue our growth initiatives,” said Rick Brooks, ceo.
Helped by a reduction in markdowns and a growing private label business, Buckle’s fourth-quarter profit rose 17.4 percent, to $49.5 million, or $1.05 a diluted share, from $42.1 million, or 90 cents, in the year-ago quarter. EPS was 5 cents above analysts’ estimates.
Sales grew 10.4 percent to $303.1 million, from $274.4 million in the 2009 quarter. Comps rose 6.3 percent while gross margin increased to 47.6 percent of sales from 47.2 percent.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast