Signs of a slow recovery for the housing market and a decline in September wholesale prices tossed cold water on stocks Tuesday, pushing retail issues down 1.7 percent.
And even though the recent wave of winterlike weather seemed to put some in a shopping mood, retail executives are still crossing their fingers and approaching the holiday season cautiously after price cuts to move goods exacted a heavy toll last year.
The S&P Retail Index slid 6.59 points to 390.86 Tuesday as it retreated from the 400 mark with which it flirted last week. While the Dow Jones Industrial Average has managed to stay above 10,000, it dipped 0.5 percent, or 50.71 points, to 10,041.48. Stocks are still very close to their highs for the year.
Among the fashion decliners were Caché Inc., down 9 percent to $4.87; Perry Ellis International Inc., 6.4 percent to $17.44; Zale Corp., 4.9 percent to $7.80, and Saks Inc., 3.2 percent to $6.35.
While the equity markets have been quick to climb up from their depths, other parts of the economy have been slow to recover from the recession and credit crisis.
September housing starts rose 0.5 percent from August to a seasonally adjusted annual rate of 590,000, lower than the 610,000 economists were looking for and well below the rate of 822,000 registered a year ago.
Many shoppers are hesitant to pull the trigger on purchases, as the weak housing market has eroded their net worths, and widespread layoffs have either sapped their purchasing power or put their paychecks at risk. But shoppers are not in the spending freeze they were a year ago, and they are being enticed by more than just price cuts.
“With temperatures drastically lower than historical norms, retailers offering compelling seasonal product are finding wallets opened a little wider than in the recent past,” said Adrienne Tennant, specialty store analyst at FBR Capital Markets.
Tennant said she continued to see strong full-priced selling at J. Crew Group Inc., Chico’s FAS Inc. and The Talbots Inc. in recent store checks.
The analyst said inventories were “exceptionally lean” throughout the mall, but noted some stores could be expected to begin building back inventories in the fourth quarter as comparable-store sales improve.
Wholesale prices for U.S.-manufactured apparel decreased 0.1 percent in September compared with August, but increased 0.4 percent from a year earlier, the Labor Department said Tuesday.
Women’s and girls’ apparel prices dropped 0.1 percent in September and were up 0.9 percent year-to-year, according to the Labor Department’s Producer Price Index. Men’s apparel declined 0.3 percent month-to-month but rose 0.6 percent in 12-month comparisons.
Prices for all U.S.-made goods declined 0.6 percent in September, after rising 1.7 percent in August and falling 0.9 percent in July. In 12-month comparisons, wholesale prices decreased 4.8 percent, the 10th consecutive month of year-over-year declines, the Labor Department said.
“The bottom line that jumps out from September’s numbers is that the majority of markets remain extremely competitive, and producers continue to offer an incredible range of discounts and financial incentives,” said Brian Bethune, chief U.S. economist for IHS Global Insight.
Domestic prices for women’s knit shirts and blouses were flat compared with a month earlier and increased 0.5 percent year-to-year. Woven shirts and blouses declined 0.6 percent and 2.4 percent in 12-month comparisons. Dresses decreased 0.6 percent in September and 0.5 percent compared with a year earlier. Jeans and slacks increased 0.5 percent and 0.7 percent year-over-year.
Men’s and boys’ domestic work clothing prices declined 0.1 percent month-to-month, but rose 5.1 percent compared with a year ago. Men’s and boys’ knit shirts increased 0.3 percent and were down 2.9 percent compared with last year. Prices for suits were flat in Septemberbut increased 1.8 percent in 12-month comparisons. Woven shirts were flat and declined 0.7 percent from a year ago.
Apparel fabric prices rose 0.2 percent and declined 2.3 percent compared with a year earlier. Prices for goods from textile product mills, primarily home furnishing and industrial fabrics, rose 0.3 percent and 1.5 percent year-over-year.
Deeper in the pipeline, synthetic fiber prices rose 2.3 percent in September compared with the previous month and fell 6.4 percent versus a year ago. Yarn rose 1 percent but fell 5.2 percent year-to-year. Greige fabrics advanced 0.6 percent and 0.2 percent year-over-year. Finished fabrics prices rose 0.2 percent in September but fell 1.4 percent compared with a year earlier
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