Retail stocks and the major indices edged higher Thursday as investors weighed unexpectedly downbeat news about retail sales and jobs against signs, such as those issued Wednesday by the Federal Reserve, that the economy is stabilizing.
This story first appeared in the August 14, 2009 issue of WWD. Subscribe Today.
Although retail sales fell 0.1 percent in July and new unemployment claims rose to 558,000, both worse than analysts had expected, the S&P Retail Index picked up 0.3 percent to 367.91 as Wal-Mart Stores Inc. and other major stores reported better results than forecast. The Dow Jones Industrial Average rose 0.4 percent to 9,398.19 while the S&P 500 was up 0.7 percent to 1,012.73.
Shares of CIT Group Inc. spiked 13.3 percent to close at $1.45 after the company and the Federal Reserve Bank said they’d agreed for CIT to provide a capital plan on how it will maintain sufficient funds for its Utah-based bank and bank holding company.
CIT has agreed to submit details within 15 days on how it will improve the management of its liquidity position. Within 60 days, it is required to address credit risk management, such as allowances for loan and lease losses. The final task, due within 75 days, will be to outline a business plan addressing management and corporate governance.
Separately, CIT said its board adopted a rights plan to prevent shareholders or groups of shareholders from becoming owners of more than 5 percent of the firm’s stock. Although often devised to prevent takeovers, CIT said its program is designed to protect the firm’s “ability to utilize its net operating losses and other tax assets.”
Charming Shoppes Inc.’s shares jumped 11.4 percent to close at $5.65 after the specialty apparel retailer said it will sell its private label credit card program to Alliance Data Systems Corp. for a consideration totaling $110 million. The two parties signed a long-term operating agreement in which Alliance Data will service the private label credit card program.