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Retail Stocks Eke Out Increase for the Week

Shares survive soft same-store sales trends, fears about fall.

Retail stocks treaded water for most of the week, but wound up with a small gain despite weak same-store sales results on Thursday and concerns about the fall season.

The S&P Retail Index closed Friday at 309.62, down 0.6 percent for the day but ahead 0.2 percent for the week and 10.9 percent for the year.

In contrast, the major indices all finished in negative territory for the week. A 0.5 percent decline Friday left the Dow Jones Industrial Average at 8,146.52, down 1.6 percent for the week and 7.2 percent for the year. The S&P 500 concluded the week at 879.13, off 0.4 percent on Friday, 1.9 percent for the five days and 2.7 percent in 2009.

The Nasdaq is up 11.4 percent for the year after a 2.3 percent decline for the week and a 0.2 percent advance on Friday to 1,756.03.

Phillips-Van Heusen Corp. on Friday rose 19 cents, or 0.7 percent, to $26.61, 4.1 percent behind its close before the extended July 4 weekend but up 32.2 percent on the year.

On Thursday, Standard & Poor’s Ratings Services revised its outlook for PVH to “negative” from “stable” but left its corporate credit rating at “BBB-minus.”

Although PVH is expected to benefit from cost-saving initiatives, including the paring down of its retail portfolio, and higher margins in its Calvin Klein licensing business, S&P credit analyst Bea Chiem noted operating results will be under pressure because of weakness at retail, where the ratings agency doesn’t expect improvement until 2010.

PVH’s credit rating could be lowered if its leverage ratio moves above 3.5, S&P said, estimating that it moved up to 3 from 2.3 in the year ended May 3.

While other retailers were reporting same-store sales for June on Thursday, Bebe Stores Inc. flew slightly under the radar when it reported its comparable-store sales for the fourth quarter ended July 4 had slipped 29.2 percent and earnings per share for the period would be “at or below” the low end of its previous guidance of 2 to 10 cents a share. Shares ended the week at $5.90, 9.4 percent below their week-ago level.

Last Tuesday, Charles & Colvard Ltd., the developer and manufacturer of the man-made jewel moissanite, suffered the worst decline of all stocks tracked by WWD — a 28.2 percent drop to 42 cents — after ending its management services agreement with Bird Capital Group Inc. and beginning a search for a chief executive officer to succeed Richard Bird. However, shares rebounded slightly and finished the week down 11.5 percent at 46 cents.

Bird and his firm were retained in February. However, C&C said the agreement was ended because of “mounting evidence that recovery of the depressed worldwide jewelry markets will be later and slower than previously expected” and the determination that its business model “must be modified to work within the current economic environment as a low-cost operation.”