The retail stock roller coaster hit another downward slope Tuesday with the sector falling 2 percent amid widespread selling in equities.
The S&P Retail Index lost 8.60 points to close at 415.82, well off its high for the year of 499.91.
Retailers hit that peak on April 26 as spring sales showed a strong rebound and the U.S. economy seemed to be fighting its way back. But the enthusiasm for retail stocks, which historically lead the economy out of recession, waned as the recovery seemed to falter and the debt crisis in Europe threatened global financial stability.
Stocks have remained particularly unsteady as investors grasp for clear signs on consumer spending and for a general sense of stability in markets. Since hitting their high nearly two months ago, retail stocks have seen 13 trading sessions that ended in swings of better than 2 percent — as many as the sector saw in the prior nine-and-a-half months.
All the commotion can make it harder for companies looking to raise money by issuing new shares or to use their stock to help fund a takeover of a competitor.
In part, retailers got caught in the downdraft Tuesday.
The Dow Jones Industrial Average fell 1.4 percent, or 148.89 points, to 10,293.52 as the energy sector tanked on uncertainty surrounding the six-month moratorium on new deepwater oil and gas drilling that was overturned by the courts, but is expected to be appealed.
International investors were also feeling dour.
The FTSE 100 slipped 1 percent to 5,246.98 in London as British officials laid out a tough new budget for the country. However, retailers there gained ground on news that an increase to the country’s value-added tax, or VAT, intended to help ease the budget deficit, would not come until Jan. 4, 2011, and would push the levy to 20 percent from 17.5 percent.
The new rate is expected to raise 13.5 billion pounds, or $20.03 billion at current exchange, annually by the 2014-15 fiscal year. VAT is charged on goods and services in the U.K., with exemptions such as children’s clothes, books, newspapers and most food items. While foreign tourists can claim a refund on VAT, they have to spend about 75 pounds, or $111, in each shop to qualify.
“It will hit jobs, consumer spending, the pace of recovery and add to inflation, but we accept the government has no choice or easy options,” said Stephen Robertson, director general of the British Retail Consortium. However, Caroline Gulliver, an analyst at investment bank Execution Noble, said the January start date means “retailers have a chance to plan their buying and cost control accordingly.” She also noted that a reduction in the main rate of corporation tax — a tax on the profits made by companies, to 24 percent from 28 percent — over the course of four years, starting in April, “is a benefit for all retailers.”
Shares of Asos increased 3.6 percent to 830 pence, or $12.31 at current exchange, and Marks & Spencer advanced 1.7 percent to 348.40 pence, or $5.17.
Elsewhere in Europe, the CAC 40 slipped 0.8 percent to 3,705.32 in Paris and the DAX fell 0.4 percent to 6,269.04 in Frankfurt.
Asian investors pushed the Nikkei 225 down 1.2 percent to 10,112.89 in Tokyo and the Hang Seng Index ebbed 0.5 percent to 20,819.08 in Hong Kong. •Zale-Citi Extension: Zale Corp. said in a regulatory filing with the Securities and Exchange Commission that it had paid Citibank $5.4 million due to the bank for a shortfall in credit sales, but the credit agreement between the two parties would be terminated in December unless Zale pays another $1.1 million on or before July 16. If payment is made by the deadline, the current credit agreement would remain in force until the original March expiration date. Negotiations to replace the original agreement have continued beyond the first deadline of June 16, but on a nonexclusive basis. Shares of Zale Tuesday fell 21 cents, or 9.2 percent, to close trading at $2.08.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye