Retail stocks surged 2.7 percent Thursday, retaking ground not seen since October, as the Dow Jones Industrial Average broke through the 9,000 mark.
Investors were driven by some encouraging news on earnings, including eBay Inc.’s forecast for better-than-expected third-quarter profits, and word that existing home sales rose for the third consecutive month.
While the economy has shown some signs of improvement, with credit markets rebounding, the toll exacted by a 9.5 percent unemployment rate remains a big question mark for retail.
“Less bad is good enough right now [for investors],” said Marie Driscoll, equity analyst at Standard & Poor’s. “That may well change going forward.”
The S&P Retail Index advanced 9.29 points to 352.53, the first close over 350 since Oct. 1, when global markets were in free-fall and the credit crunch was worsening.
Retailers joining in the rush included New York & Company Inc., up 13.6 percent to $3.60; AnnTaylor Stores Corp., 11.9 percent to $9.60; Coldwater Creek Inc., 11.4 percent to $6.27; Charlotte Russe Holding Inc., 9.5 percent to $14.50; Dillard’s Inc., 9 percent to $9.05; Chico’s FAS Inc., 6.8 percent to $10.83; Nordstrom Inc., 6.3 percent to $25.79; Macy’s Inc., 4.8 percent to $13.28, and J.C. Penney Co. Inc., 0.5 percent to $29.42.
But even the good news supporting Thursday’s rally had a touches of gray.
June home sales did increase 3.6 percent from a year earlier, but the median home price fell 15.4 percent to $181,800, according to the National Association of Realtors.
Retailers now also have to contend with the possibility that Amazon.com will become a more aggressive player in the fashion world after reaching a deal to buy online shoe and apparel merchant Zappos.com.
“This acquisition could put Amazon on a competitive collision course with key department stores,” said Credit Suisse analyst Michael Exstein, pointing specifically to Nordstrom, Penney’s and Macy’s.
Zappos.com, which has sales of about $1 billion and is primarily a shoe seller, could also pressure companies with big footwear businesses, such as Jones Apparel Group Inc.
Pacific Sunwear of California Inc. was one of just a few apparel retailers to miss out on Thursday’s rally. Its shares slumped 10.3 percent to $3.05 after the firm said its second-quarter loss and same-store sales declines would be worse than projected.
The Anaheim, Calif.-based retailer now expects losses of 22 to 24 cents a share instead of the 11 to 17 cents anticipated in May. Comps, originally expected to drop 17 to 20 percent, are now expected to fall about 24 percent.
American Apparel Inc. shares rose 11 cents, or 3.1 percent, to $3.70 in trading Thursday, but the retailer said after the close of the markets that it would restate its 2008 consolidated financial statements, moving $33.4 million of $49.4 million borrowed under its revolving credit facility into current liabilities from the long-term debt category. It said the change to the balance sheet would not affect its previously reported cash position, profits or sales figures.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“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