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.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty