Retail stocks and equity markets in general declined Wednesday as consumers used less credit and Federal Reserve chairman Ben Bernanke said the economy was not “out of the woods.”
Standard & Poor’s raised its corporate credit rating on J.C. Penney Co. Inc. to “BB-plus” from “BB,” and predicted the company’s performance would “improve modestly over the near term and that credit metrics will benefit as it pays down its balance sheet.” The debt watchdog also put its “BB” rating on Macy’s Inc. on CreditWatch with positive implications, reflecting stronger sales trends and debt repayments.
On the other side of the ledger, S&P lowered its corporate credit rating on Phillips-Van Heusen Corp. in light of its $3 billion deal to acquire Tommy Hilfiger. The firm’s rating was cut to “BB-plus” from “BBB-minus,” a fall to speculative or “junk” territory from investment grade. The outlook on the rating is negative.
“The lowering of the corporate credit rating to speculative grade reflects PVH’s more aggressive financial policy, the execution challenges of acquiring a company of the same size with international operations and the deterioration of its credit metrics,” said S&P analyst Linda Phelps.
PVH’s proposed $2.45 billion credit facility to fund the deal was given a rating of “BBB,” higher than the general corporate rating because the banks lending the money would be among the first to get paid in the event of a default.
Shares of Penney’s declined 1.3 percent to $32.79 in trading Wednesday while Macy’s shares were off 0.7 percent to $22.46. PVH’s stock fell 0.3 percent to $59.93 after hitting a 52-week high of $60.48 in intraday trading.
The S&P Retail Index slipped 0.1 percent, or 0.30 points, to 460.15. The Dow Jones Industrial Average fell 0.7 percent, or 72.47 points, to 10,897.52. Of the 172 stocks tracked by WWD, Zale Corp. led the pack with a 22.9 percent rise to $3.60 on speculation that the jeweler was nearing a deal to sell a stake to a private equity player.
In February, Zale said it would review a range of financing alternatives with the help of investment bank Peter J. Solomon Co. Matt Appel, executive vice president and chief financial officer of Zale, said that review, which was to take about three months, was on track. “The process is going well and it’s not complete,” he said.
Appel also said the company was keeping up with its bills after running into trouble with vendors last year.
“There are no suppliers that I know of who we’re overdue with or who we don’t enjoy a great relationship with,” Appel said. “All that stuff from last year, that’s a thing of the past.”
Bernanke tried to strike a similar tone during a speech in Dallas.
“The financial crisis looks to be mostly behind us, and the economy seems to have stabilized and is beginning to grow again,” the Fed chairman said.
But he was clear about the challenges facing the economy — from one in 10 workers being unemployed to weak bank lending. “We are far from being out of the woods,” he said.
Bernanke is pushing for financial reform that would curb excessive risk taking on Wall Street and prevent firms from becoming “too big to fail.”
In a monthly report, the Fed said consumer credit fell at an annual rate of 5.6 percent from January to February as shoppers took a more cautious tack.
“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