Retail shares escaped the worst of another late-day swoon on Wall Street on Thursday but couldn’t get away unscathed after investors pulled back following Standard & Poor’s reduction of General Electric Co.’s outlook to “negative” from “stable.”
After spending most of the day in positive territory, the Standard & Poor’s Retail Index dropped 1.4 percent to 286.61. It fared better than the Dow Jones Industrial Average, which dropped 2.5 percent to 8,604.99, and the S&P 500, down 2.1 percent to 885.28. Both retreated quickly in the late afternoon after S&P lowered its outlooks on both General Electric Co. and its General Electric Capital Corp. (GECC) unit, based principally on concerns about GECC’s effect on GE’s gold-standard “AAA” long-term credit rating.
“GECC will account for about a third of GE’s earnings in 2009 — or less if worse-than-expected credit losses further reduce GECC’s earnings,” wrote S&P analyst Robert Schulz. “Even with its current stand-alone credit profile of ‘A-plus,’ GECC remains one of the world’s most profitable and highly rated financial institutions.”
However, he said, “fundamentals-based earnings and cash flow could decline sufficiently during the next two years to warrant a downgrade.”
GE’s commitment to the financial unit has been demonstrated in recent months by the infusion of $5 billion in equity into GECC and the reduction of GECC’s dividend payout to GE to 10 percent of net earnings from 40 percent.
The status of GECC is critical to the apparel and retail industries because it provides credit to consumers as well as retailers and wholesalers. It provided financing to Goody’s Family Clothing Inc. when the retailer entered bankruptcy in June and again when the firm exited Chapter 11 in October. Goody’s is reportedly running low on cash yet again. GE also extended financing to Steve & Barry’s prior to that company’s bankruptcy and subsequent liquidation and to the troubled Finlay Enterprises to help with the 2007 acquisition of Bailey Banks & Biddle. Lord & Taylor and Gottschalks, among many others, also have credit arrangements with the firm.
@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