By  on June 17, 2009

Retail shares continued their slide Tuesday, falling 3.1 percent as a mixed bag of economic reports foreshadowed at the least a staggered and difficult slog back from the depths of the recession.

The S&P Retail Index retreated 10.15 points to 317.39, marking a 4.4 percent decline for the week so far and the fourth down session in five. The Dow Jones Industrial Average fell a milder 1.3 percent, or 107.46 points, to 8,504.67 Tuesday and is down 3.3 percent over the last two trading sessions.

U.S. industrial production fell 1.1 percent in May as capacity utilization dipped to 68.3 percent — well below the 80.9 percent average since 1972, according to government figures. The utilization figure, and the idle factories and lost jobs it represents, is illustrative of the challenge facing consumers, who are suffering from an unemployment rate of 9.4 percent. On a more encouraging note, the government said May housing starts rose 17.2 percent from April.

For retailers, the end result of various economic forces pushing and pulling consumers is lower revenues.

Same-store sales slid 0.6 percent last week from the preceding week, according to the International Council of Shopping Centers and Goldman Sachs & Co. Excluding Wal-Mart Stores Inc., the ICSC expects June sales to fall 5 percent from a year earlier.

“Sales is still the big picture,” said Tiffany Co, a debt analyst at Fitch Ratings. “Sales declines haven’t stabilized.”

And just as the stock market has rebounded in recent months, the debt markets also have improved despite continued weakness in business fundamentals.

“There is an appetite for high-yield issues right now,” Co said, noting Limited Brands Inc.’s recent move to issue $500 million in bonds to repay other debt. “There’s a lot of cash that needs to be invested, so there’s investor appetite for these issues now, whereas a couple of months ago, the high-yield market was pretty much shot.” High-yield debt is generally speculative in nature.

In the equity markets Tuesday, The Bon-Ton Stores Inc. weathered the most dramatic retail decline, falling 12.5 percent to $3.91. Other decliners included AnnTaylor Stores Corp., off 8 percent to $6.64; J. Crew Group, 7.7 percent to $23.04; Saks Inc., 7.2 percent to $4.02; Nordstrom Inc., 6.8 percent to $18.99; J.C. Penney Co. Inc., 6.3 percent to $26.38, and Limited Brands Inc., 5.4 percent to $11.83. In Hong Kong, the Hang Seng Index was off 1.8 percent, while European markets were mixed, with the CAC 40 down 0.2 percent in Paris and the FTSE 100 ahead 0.1 percent in London.

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