By  on May 4, 2010

Retail shares tumbled to their second worst decline of the year on Tuesday as rising fears about the adequacy of the Greek debt bailout and the spread of the crisis sent stocks into a global tailspin.

The S&P Retail Index, which was within a point of 500 on April 26, closed at 469.20, down 14.15 points, or 2.9 percent, second only to the 3.2 percent sell-off on April 27. The Dow Jones Industrial Average declined 2 percent, a 225.06-point drop that pushed it under 11,000 to 10,926.77, the index’s most severe battering since Feb. 4. The S&P 500 surrendered the 1,200 mark, dropping 2.4 percent to 1,173.60.

At its peak of 499.91 last week, the S&P Retail Index was up 21.6 percent for the year. It has dropped 6.1 percent since then.

Declines were even worse in Europe as demonstrators took to the streets in Greece to protest the austerity plan tied to the bailout. In Germany, seen as the leader in the orchestration of the rescue, the DAX dropped 2.6 percent to 6,006.86. London’s FTSE 100 was off 2.6 percent to 5,411.11, but the CAC 40 in Paris was down more on a percentage basis, shedding 3.7 percent to 3,687.39.

In Greece, the Athex Composite Index gave up 123.87 points, or 6.7 percent, to close at 1,729.68. Markets in Spain and Portugal, two of the countries seen as most vulnerable to a Greek debt contagion, were off more than 5 percent.

The euro ended the day below $1.30 for the first time in more than a year.

One of the few retail issues in the U.S. to escape the carnage was AnnTaylor Stores Corp., which saw its shares move up $2.11, or 9.3 percent, to close at $24.76 after the retailer said first-quarter earnings would “significantly exceed expectations” and be “substantially better” than the 4-cent-a-share loss registered during the first quarter of 2009. The consensus among analysts polled by Yahoo Finance is for earnings per share of 17 cents.

Although it didn’t guide the market to a specific EPS figure, the company said first-quarter sales are expected to reach $475 million, up from the $445 million outlook provided on March 12, with same-store sales rising 11 percent — 15 percent at Ann Taylor and 9 percent at the Loft division. Gross margin is expected to rise to 59 percent versus the 56.5 percent forecast previously. Kay Krill, president and chief executive officer, said “strong full-price sales, our successful planned promotional strategy and our ongoing focus on carefully managing inventories” were among the factors responsible for the rosier outlook.

Shares of The Bon-Ton Stores Inc. fell 6.5 percent, to $16.62, despite an upgrade from Moody’s Investors Service, to “B3” from “Caa1,” based on its improving operating performance, much of it derived from stricter inventory management.

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