By  on September 10, 2007

Stocks closed another week firmly in the red Friday after the U.S. Department of Labor posted a drop in August employment rates, the first since 2003.

The Department of Labor's Bureau of Labor Statistics said employment in manufacturing, construction and local government education declined, but job growth continued in the health care and food services sectors.

"Employment in retail trade was little changed in August," the bureau said in a press release. "A job gain in building material and garden supply stores was partially offset by a decline in general merchandise stores."

The Dow Jones Industrial Average fell 1.9 percent to 13,113.38, while the S&P 500 lost 1.7 percent to 1,453.55 and the New York Stock Exchange dropped 1.6 percent to 9,486.44. The Nasdaq declined 1.9 percent to 2,565.70.

The S&P Retail Index took a large hit, closing down 2.7 percent to 465.91.

Quiksilver Inc. and The Wet Seal Inc. were among the retail sector's sole gainers at market close Friday — thanks to major announcements the companies made late last week.

Shares of Quiksilver closed up 2.1 percent to $13.12 after the firm said it would launch a line for women under its namesake brand — garnering widespread Wall Street enthusiasm.

The line, targeted at women ages 18 to 24, older than the core base of its women's label Roxy, will compete with Urban Outfitter's Free People and casual women's designer Ella Moss, said CIBC World Markets analyst Dorothy Lakner, who rates Quiksilver shares at "sector performer."

"The one real void in its brand offerings, which span ages and genders from babies to older men, [is] women's, [which] has been the white space in Quiksilver's mix," Lakner said. "With more women taking up surfing, this seems like a natural for the company, the trick being to keep it separate from its highly successful juniors brand, Roxy."

Robert W. Baird & Co. analyst Mitch Kummetz rates Quiksilver shares at "neutral."

"We believe that ZQK is doing the right thing going after this consumer with its Quiksilver brand instead of a new brand, even as it will likely cannibalize the company's Roxy brand to some extent," Kummetz said.Meanwhile, shares of Wet Seal gained 2.5 percent to $4.49 after the retailer named Edmond Thomas as its chief executive officer, charged with leading its turnaround effort. Thomas previously worked at Wet Seal from 1992 to 2000 before taking his current role as co-ceo at surf chain Tilly's Inc.

Brean Murray Carret & Co. analyst Eric Beder reiterated his "buy" rating of Wet Seal shares on the news.

"We believe Mr. Thomas' hiring removes a key uncertainty for the company and should provide investors with even further confidence that Wet Seal has the management depth and experience to drive material top- and bottom-line expansion going forward," Beder said in a note.

Meanwhile, positive comment from CL King & Assoc. analyst Mark Montagna kept Dress Barn Inc. shares near breakeven. The stock closed up 0.1 percent to $16.70.

Montagna, who reiterated his "strong buy" rating of Dress Barn shares, said now is an opportune time to buy the stock, thanks to "compellingly low valuation and its relatively lower-risk future prospects."

"The recent addition of women's plus sizes and the removal of men's should boost productivity and profits at the Maurices division," Montagna said in a research note. "This creates a similar 'combo' store the Dress Barn division has operated so successfully for many years."

Dress Barn will report fourth-quarter earnings Sept. 19.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus