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Retail Stocks Drop 5.7 Percent

Investors give back election day gains.

Wall Street responded to President-elect Barack Obama’s historic victory by showing anxiety over the nation’s economic woes, which pushed down retail stocks 5.7 percent.

This story first appeared in the November 6, 2008 issue of WWD.  Subscribe Today.

The Standard & Poor’s Retail Index fell 17.01 points to 283.24, giving back the 10.53 gain the index registered before the polls closed on Tuesday.

The Dow Jones Industrial Average dropped 5.1 percent, or 486.01 points, to 9,139.27, surrendering all of Tuesday’s 305.45-point rally.

From the perspective of investors in fashion stocks, there is little Obama can do to help soothe shoppers for the holiday season or ease the pain of what is expected to be a weak October same-store sales report today.

“October was fairly dreadful for most retailers,” said Jennifer Black, analyst and president of Jennifer Black & Associates. “The U.S. consumer will likely not be a vast reservoir of economic stimulus for the global economy. Rather, the U.S. consumer is part of the contingency that will be paying down the $700 billion bailout well into the future. The global engine will likely slowly move toward such developing countries as China, Brazil and India.”

In addition, the ICSC-Goldman Sachs Holiday Survey found that 37 percent of consumers were likely to scale back on their gifts and other holiday-related expenditures this year. Spending for the holidays is expected to average $1,154 per household, with $533 of that going directly to gifts, exclusive of gift cards.

Among the broadline players losing ground were Dillard’s Inc., down 9.6 percent to $4.99; Saks Inc., 9 percent to $5.45; Target Corp., 8.7 percent to $37.75; Macy’s Inc., 7.4 percent to $10.85; Nordstrom Inc., 5.4 percent to $16.01; J.C. Penney Co. Inc., 4.1 percent to $22.23, and Wal-Mart Stores Inc., 3.6 percent to $54.13.

Specialty stores that saw their shares heading south included Chico’s FAS Inc., off 12.1 percent to $2.77; Urban Outfitters Inc., 9.8 percent to $20.13; Talbots Inc., 8.7 percent to $7.54; J. Crew Group Inc., 7.1 percent to $17.77; Aéropostale Inc., 6.7 percent to $22.18; Limited Brands Inc., 5.7 percent to $11.51, and American Eagle Outfitters, 3.8 percent to $10.17.

Vendors with declining market capitalization included Fossil Inc., down 13.3 percent to $16.48; Jones Apparel Group Inc., 7.8 percent to $9.71; Warnaco Group Inc., 6.2 percent to $25.63; Nike Inc., 6.1 percent to $52.78, and Liz Claiborne Inc., 5.1 percent to $7.05.

One retailer that seemed to buck the trend was Hot Topic Inc., which on Wednesday said October comparable-store sales jumped 8.3 percent at its namesake stores, exceeding analyst projections. Comps at its Torrid locations rose by 7.8 percent.