Retail stocks managed to ignore the negative outlook on consumer spending and extend their rally Tuesday, rising 2.3 percent for the fifth positive trading session in a string that began Dec. 30.
The Standard & Poor’s Retail Index rose 6.87 points to close at 301.62, which is 45.4 percent above its all-time low of 207.49 on Nov. 21. The Dow Jones Industrial Average gained 0.7 percent, or 62.21 points, to 9,015.1.
It is unclear if investors will maintain their appetite for the sector as the impact of the holiday season comes into sharper focus when major chains report December same-store sales on Thursday.
Some stocks might have risen too far, too fast after plunging last fall.
Shares of Christopher & Banks Corp. dropped 10 percent to $4.84 Tuesday after Crystal Kallik, a D.A. Davidson & Co. equity analyst, said the stock had “significant downside risk” after rising 85 percent last month.
“Our channel checks over the past month have indicated that traffic and sales trends have weakened while markdowns and promotions continue to accelerate,” Kallik said. “The current valuation is too lofty given the company’s weak execution.”
Kallik downgraded the stock to “underperform” from “neutral” and said Christopher & Banks likely would struggle as the misses’ customer defers purchases. The company will report third-quarter earnings after the market closes today.
Stocks are swinging back and forth partly because investors are struggling with a new retail landscape, one in which financing is hard to come by and consumers are changing their patterns.
Results of a survey by WSL Strategic Retail found that many shoppers are trading down in the recession.
“During the escalating downturn of the last six months, a third of shoppers — 36 percent — tell us they’ve changed where they buy something to save either time or money,” according to a WSL report. “Mass merchandisers appear to be the big winners, with 32 percent trading into a Wal-Mart or Target, but 15 percent of shoppers also traded out of this channel.”
Shares of Wal-Mart Stores Inc. dipped 0.9 percent to $56.02 on Tuesday, and Target Corp.’s stock increased 5.5 percent to $38.11.
Liquidity remains a major concern for investors seeking to buy into companies that have shored up their financing.
The Talbots Inc.’s shares jumped 33.3 percent to $3.12 after reports Monday that the retailer reworked credit agreements, transforming uncommitted working capital lines to committed lines. Talbots now counts $200 million of its $215 million working capital borrowing capacity as committed facilities.
Vendors also have faced stricter lenders when refinancing.
Last month, Jones Apparel Group negotiated a $600 million amended credit facility, which gave it some additional financial flexibility.
Debt watchdog Standard & Poor’s on Tuesday lowered its ratings on $750 million of Jones’ unsecured debt to “B-plus” from “BB-minus” because the credit facility is “dilutive” to the recovery prospects of the notes. Shares of Jones advanced 5.4 percent to $6.29.
Among the others gaining on Tuesday were: Eddie Bauer Holdings Inc., up 47.1 percent to $1; Caché Inc., 11 percent to $2.12; The Bon-Ton Stores Inc., 10.8 percent to $1.54; Nordstrom Inc., 4.7 percent to $15.91; Charming Shoppes Inc., 4.6 percent to $2.28; J.C. Penney Co. Inc., 4.6 percent to $22.50; Aéropostale Inc., 4.5 percent to $19.33; Charlotte Russe Holding Inc., 6.5 percent to $6.59; Kohl’s Corp., 4.4 percent to $39.21; Chico’s FAS Inc., 4.2 percent to $4.02; Saks Inc., 4.1 percent to $4.58, and Destination Maternity Corp., 4.1 percent to $8.31.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty