Strong unemployment numbers and takeover talk pushed retail stocks higher Friday as the July 4 holiday week came to a close.
The S&P Retail Index closed up 1.8 percent, at 528.35 Friday, after the U.S. Department of Labor reported the June unemployment rate remained unchanged from May at 4.5 percent. The U.S. added 132,000 nonfarm payroll jobs in June. (See story on page 20.)
Bear Stearns analyst Christine Augustine said the jobs report was in line with economists' expectations. "The job picture is reasonably healthy, so that has been continuing to support consumer spending in light of other headwinds," said Augustine, pointing to gas and housing prices.
Speculation swelled around a Sears Holdings Corp. buyout of Macy's Inc. and an investor activist forcing Target Corp. to sell its credit card business. (See story on page 2.)
At the same time, investors are looking to Thursday when retailers will report June same-store sales, which Wall Street expects to be little more than "decent."
"I don't think anyone expects June numbers to be great, so maybe some of that disappointment has already worked its way into the stocks," said Roth Capital Partners analyst Liz Pierce. "However, given the jobs report, maybe the theory is that the consumer isn't as broken as everyone has thought and that as the back-to-school season approaches, they will step back up."
Telsey Advisory Group's Dana Telsey said June was the second-quarter's most important month — when retailers pull in roughly 40 percent of quarterly sales. "Our channel checks revealed decent traffic patterns throughout the month, as warm weather coupled with discounts lured shoppers in for summer savings," Telsey wrote in a note. Telsey expects American Eagle Outfitters Inc., Kohl's Corp. and Saks Inc. to beat expectations, but thinks Abercrombie & Fitch Co., Hot Topic Inc. and Macy's Inc. will miss their marks.
Nollenberger Capital analyst Angelique Dab does not see strong comparisons for June due to summer's slow, promotional environment on a year-over-year basis. "I expect more of the same — better brands, better department stores and better operators to outperform," Dab said.
Shares of big-box darling Target shrugged off a downgrade from Goldman Sachs analyst Adrianne Shapira, who cut her rating to "neutral" from "buy" based on valuation. Shares of Target closed Friday up 6.1 percent, at $68.10. Shapira sees tougher near-term, top-line trends; planned, rising expenses, and slower earnings growth in the company's second fiscal half.Shares of Caché Inc. finished the week stronger, up 4.9 percent, to $15.10, despite lackluster street comment after the specialty retailer said it acquired privately held design and manufacturing company Adrienne Victoria Designs Inc. for $16 million.
First Albany Capital analyst Paula Kalandiak maintained her neutral rating of Caché shares despite expectations of seeing a more focused "point of view" from the dress retailer. Kalandiak estimated Adrienne merchandise would make up 75 percent of Caché's mix by October — but saw ongoing "merchandise assortment" issues hampering Caché's performance.
J.P. Morgan Chase & Co. started coverage of Caché at "neutral," pointing to recent fashion misses, increased expenses and overall malaise in the women's retail segment.
Also last week, CIBC World Markets analyst Dorothy Lakner reiterated her "sector outperformer" rating of Nordstrom Inc. shares, which fell after speculation the upscale department store would sell its Façonnable brand. The company's shares closed flat Friday, ending at $49.58.
"A sale would take away a small distraction and put capital to better use elsewhere, allowing [Nordstrom] to focus on its strategies to increase designer brands in its assortments and the ongoing recovery in its women's apparel business," said Lakner, who sees Nordstrom shares as "particularly attractive to us with the recent pullback."
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
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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