Retail stocks shot up 6.4 percent Monday, their second-biggest gain for the year, as the broader market rallied on government plans to unclog the financial system by establishing a public-private partnership that could eventually buy up $1 trillion in real estate debt.
Concerns over what the Treasury Department would do about the questionable debt had vexed markets and bank stocks for months, but the plan only tangentially touches retailers and consumers who are still waiting for economic relief of their own. Still, stability in the banking sector would be good news for the economy overall.
The S&P Retail Index gained 17.4 points to 288.57 as the Dow Jones Industrial Average advanced 6.8 percent, or 497.48 points, to 7,775.86. Retail stocks have now risen 3.3 percent this year, outpacing the Dow’s 11.4 percent decline.
But there are still deals to be had.
“These stocks have clearly been oversold,” said Thomas Filandro, senior retail analyst at Susquehanna Financial Group. “No one wants to touch the sector. A lot of these stocks are very inexpensive.”
The economic stimulus money beginning to spread out from Washington and the need to replenish threadbare or ill-fitting wardrobes will eventually send shoppers back into stores, Filandro said. And a rebound in consumer spending could have an outsize impact on companies that have been cutting back and learning to live on less.
“The sector has been rightsizing inventories, rightsizing cost structure and scaling back dramatically on their capital spending,” Filandro said. “The leverage in the retail model is substantial.”
For now, sales signs are still a common sight on the retail landscape.
Margaret Whitfield, equity analyst at Sterne Agee & Leach Inc., downgraded Urban Outfitters Inc.’s stock to Neutral from Buy, partially over concerns over markdowns at Anthropologie. The stock rose 1.9 percent to $17.72 Monday.
“Sale fixtures have been recently set up in the front of the store, with markdown items priced at $29, $39 or $49 — or off about 50 percent,” the analyst said of Anthropologie. Whitfield also said the Free People business could be impacted by credit troubles among its specialty store clients, which make up 40 percent of wholesale sales.
And Tiffany & Co.’s fourth-quarter profits fell by 75 percent but beat estimates on an adjusted basis, and the firm’s shares shot up 15.5 percent to $23.37.
Other gainers in the specialty sector included American Apparel Inc., up 15.1 percent to $3.56; Chico’s FAS Inc., 12.9 percent to $5.16; AnnTaylor Stores Corp., 12.7 percent to $4.62; The Men’s Wearhouse Inc., 10.6 percent to $15.66, and J. Crew, 10 percent to $13.50.
Broadline retailers were also riding the rally with gains from Dillard’s Inc., ahead 18.2 percent to $5.97; Saks Inc., 16.1 percent to $1.80; Macy’s Inc., 10.8 percent to $8.86; Nordstrom Inc., 10.1 percent to $15.83, and Target Corp., 9 percent to $33.08.
And even though Sears Holdings Corp. had its corporate family credit rating cut to “Ba2” from “Ba1” by Moody’s Investors Service, shares of the firm rose 6.9 percent to $42.88. Moody’s said Sears had a “formidable position in hard lines,” but continuing weakness in the apparel business outside of the Lands’ End brand. The outlook on the rating is stable.
Shares of vendors also got some relief with increases from G-III Apparel Group Ltd., up 16.5 percent to $5.64; Jones Apparel Group Inc., 11 percent to $4.53; The Warnaco Group Inc., 8.9 percent to $22.75; Kenneth Cole Productions Inc., 8.7 percent to $7.25, and Liz Claiborne Inc., 7.1 percent to $2.10.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)