Retail shares bounced back on Tuesday, but managed to erase less than half of Monday’s record-setting decline.
This story first appeared in the December 3, 2008 issue of WWD. Subscribe Today.
The Standard & Poor’s Retail Index ended the day at 247.45, up 9.11 points, or 3.8 percent, following Monday’s 9.3 percent nosedive, the largest percentage decline since it was reset in June 2000. The retail index finished on a stronger note than the Dow Jones Industrial Average (up 3.3 percent to 8,419.09) but behind the S&P 500 (up 4 percent to 848.81).
While not the heart-stopper experienced on Monday, the session on Tuesday qualified as a nail-biter, as early afternoon gains were eradicated on the Dow, and nearly on the S&P Retail Index as well, only to rebound in the final hour of trading. The retail index ended just a hair down from its high for the day of 247.68.
Wild fluctuations have become the norm on Wall Street in recent months as investors anticipate or react to news developments, engage in short-term profit-taking or seek to limit their losses.
The second biggest advancer among the stocks tracked by WWD was specialty retailer Charming Shoppes Inc., whose shares rose 28.3 percent to $1.27, despite a downgrade from Standard & Poor’s.
The debt watchdog cut Charming Shoppes’ corporate credit rating to “B-minus” from “B” and the rating on the company’s senior unsecured debt to “CCC-plus” from “B-minus.” The rating outlook is stable.
A “CCC” rating indicates the debt is “currently vulnerable to nonpayment” and that the issuer is dependent on favorable business and economic conditions to meet its obligations, according to S&P’s rating scale.
“The downgrade is based on continued weak operating trends, which resulted in a sharp deterioration of credit metrics,” said Jackie Oberoi, S&P credit analyst. S&P also said merchandising missteps and “inadequate levels of new fashion” have hurt the Bensalem, Pa.-based retailer.
Last week, the company reported third-quarter losses of $93 million on a 7.8 percent drop in sales and unveiled additional store closures and plans to restructure operations.