Retail stocks lost some steam Friday, falling 1.5 percent, but the sector gained 9.5 percent during a week when some dared to hope that stores’ shares have neared or reached their bottom.
The S&P Retail Index fell 4.64 points to 296.88 Friday, turning in a better result than the Dow Jones Industrial Average, which dropped 1.9 percent, or 148.38 points, to 7,776.18.
With last week’s almost 10 percent rise, retail stocks are up 6.3 percent for this year. The Dow gained 6.8 percent last week, but is down 11.4 percent in 2009.
The stock market has been buoyed this month by some positive news, including a 22.2 percent rise in February housing starts and a Treasury Department plan to relieve banks of possibly $1 trillion in toxic assets through a public-private partnership. Treasury Secretary Timothy Geithner has been making his case for “better, smarter, tougher regulation” of the financial sector.
But there is little unanimity on when the economy and consumer spending will rebound.
This week, investors will get new readouts on several economic vital signs, including the Conference Board’s consumer confidence index on Tuesday and the Labor Department’s employment report on Friday.
Economists predict the U.S. unemployment rate will rise to 8.5 percent this month, as another 660,000 jobs are lost. Unemployment hit 8.1 percent in February, when 651,000 jobs were lost. It has been 14 months since the U.S. economy added any jobs.
Given that employment backdrop, along with the credit crunch and housing implosion, retailers have continued to struggle, upticks in their stock prices notwithstanding.
Shares of most fashion companies are down at least 40 percent from their 52-week highs and are, in many cases, seen as oversold. Given their lower relative value, day-to-day swings tend to look more dramatic.
Some of the steeper declines came from Christopher & Banks Corp., which fell 27.4 percent to $3.97 after the company said it would post losses for the fourth quarter; Saks Inc., which was down 6.8 percent to $1.93; American Apparel Inc., down 6.7 percent to $3.35, and Limited Brands Inc., down 5 percent to $9.12.
Shares of Dillard’s Inc. fell 5.1 percent to $6.30 after Moody’s Investors Service said the firm had a greater likelihood of default, changing the probability of default rating to “B3” from “B2.” Debt given a rating in the “B” range is considered to be speculative and subject to high credit risk.
Moody’s said the downgrade reflected the firm’s operating losses last year and the expectation that its performance will remain weak given the consumer spending environment. The rating agency also affirmed Dillard’s corporate family rating at “B2,” given the retailer’s unencumbered real estate assets, which could be used to help pay off debt in a stressed situation.
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