The Dow Jones Industrial Average closed down 1.1 percent to 13,851.08 Friday as investors cashed in profits after the exchange posted a record high just over 14,000 earlier in the week.
Wall Street also balked as earnings trickled in from several large companies, including Google Inc. and Dow component Caterpillar Inc., both of which posted lackluster second-quarter results, dragging the markets down as investors tasted their first disappointment of the second-quarter earnings season.
The S&P 500 Retail Index followed suit, shedding 1.3 percent to 515.52.
"I think the retailers are continuing to react to difficult business conditions," said A.G. Edwards analyst Robert Buchanan. "And it is a summer Friday, so you can get some pretty wild swings for no good reason."
Buchanan expects the retail sector to remain under pressure — as "negative psychology," after slides in consumer spending and same-store sales since spring, deepens its grip on consumers and investors alike.
"The group has been weak for a long time — and that is in reaction to weak consumer spending, which has been sliding for so long now there is a certain depressing aspect to it," Buchanan said.
Meanwhile, analysts are looking to this week, when retailers start to post second-quarter results. On deck are: Cache Inc., Columbia Sportswear Co., Hanesbrands Inc., Kenneth Cole Productions Inc., Luxottica Group SpA, Mothers Work Inc., Nike Inc. and Skechers USA Inc.
First Albany Capital analyst Paula Kalandiak expects Mother's Work to meet expectations for its third quarter, results of which will post on Tuesday. However, she believes the company could report bad news to come.
"We believe Mother's Work is being severely impacted by fashion trends that enable expecting mothers to purchase much of their maternity wardrobe from nonmaternity stores," said Kalandiak in a research note.
Skechers is also slated to report Tuesday. Wedbush Morgan Securities analyst Jeff Mintz, who noted the stock's 20 percent decline since its April 26 first-quarter report, said in a note that he expects Skechers results to beat estimates.Mintz noted Skechers is poised to increase its square footage presence in both its own retail stores, which it plans to open 33 of this year, and in department stores.
"We also believe the strength of the Skechers brand is causing major accounts such as Famous, Macy's and J.C. Penney to allocate more space to Skechers," said Mintz, who added that this allows the company to sell more merchandise as long as product remains trend-right.
Nollenberger Capital Partners analyst Ann Poole started coverage of Aeropostale Inc. with a "buy" rating and Pacific Sunwear of California Inc. with a "neutral."
Poole believes Aeropostale has effectively evolved its brand beyond a low-priced product and elevated its image through improved merchandise and marketing, which she sees translating into sales and earnings growth, especially in the back half of the year.
"We believe the new back-to-school assortment is significantly stronger than last year." Poole said in a note. "The assortment is more focused and offers a better variety of wear-now and fashion-appropriate merchandise as well as a stronger bottom collection."
Poole is less optimistic about Pacific Sunwear.
"We think the core PacSun concept is challenged to reestablish a niche in the competitive teen marketplace," Poole wrote. "While the company was founded to be a cool, authentic destination for surf and skate apparel, we believe the massive size of the retailer has compromised what once made the company so unique and successful."
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews