Fashion and retail stocks were on the rise Monday and Liz Claiborne Inc., long a victim of the bear market, led the pack with a 31.3 percent jump following an upgrade from Goldman Sachs Group.
The Estée Lauder Cos. Inc. also charged ahead with an 18.5 percent rise to $36.88 after the beauty firm’s adjusted third-quarter earnings of 16 cents a share beat analysts’ expectations by 11 cents.
The S&P Retail Index climbed 2.8 percent, or 9.4 points, to 341.06 as the Dow Jones Industrial Average advanced 2.6 percent, or 214.33 points, to 8,426.74. Last week, retail stocks slid 2 percent, marking their first weekly decrease in two months. Monday also saw the S&P 500 climb 29.72, or 3.4 percent, to 907.24, its first close above 900 since the first week of the year.
Claiborne’s stock rose $1.50 to $6.30 — and traded as high as $6.46 — after Benjamin Rowbotham, a Goldman equity analyst, upgraded the stock to “buy” from “neutral,” with a target price of $7.20. The stock has traded as low as $1.46 and as high as $20.14 over the last year.
“We believe fundamental change is afoot and we feel [first-quarter] results could mark a positive inflection point,” Rowbotham said.
The analyst noted Claiborne has tightened its inventory controls and relaunched its namesake brand under the direction of Isaac Mizrahi and will benefit from easier sales comparisons and a reduced debt load.
Changes continued at Claiborne, which in February chose Li & Fung Ltd. to be its primary global apparel and accessories sourcing agent. On Monday, the company named Peter Warner as senior vice president of global sourcing and operations. Warner, who will relocate to New York from Hong Kong, will work with each of the firm’s brand presidents and chief executive officers to develop and execute sourcing and operations strategies, in addition to managing Claiborne’s overall Li & Fung partnership. Claiborne’s corporate logistics and distribution teams will now report to Warner, who reports to chief executive officer William L. McComb.
“Peter will play the role of an internal consultant and adviser to the business units — challenging the cost structures, the speed, the compliance profiles and the production standards of all our products,” McComb said. Warner joined Claiborne in June 2008 as senior vice president of global sourcing and moved to Hong Kong in August.
Overall, investors were buoyed by signs of life in the beleaguered construction sector Monday. March construction spending rose a seasonally adjusted 0.3 percent versus February, but was still 11.1 percent below a year earlier, according to the Commerce Department.
This week, Wall Street will also be closely watching April same-store sales tallies and results of the government’s stress test for banks, both of which are due out Thursday. On Friday, the Labor Department releases its monthly report on employment.
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