Retail stocks fell 3.6 percent on Monday as analysts predicted comparable-stores sales for October would fall short of even September’s dismal performance.
The Standard & Poor’s Retail Index slid 10.88 points to 289.72. The markets overall sagged only modestly in the run-up to the presidential election today and the Dow Jones Industrial Average dipped just 0.1 percent, or 5.18 points, to 9,319.83.
“The consumer credit crunch and record low confidence [are] likely to make October results the worst since September 2001,” Brian Tunick, specialty store equity analyst at J.P. Morgan Chase & Co., said. “Similar to last month, we expect even the value retailers and off-price retailers to be below plan. Off-mall traffic [was] worse than mall traffic.”
Most stores will report October same-stores sales on Thursday.
Retailers are looking for ways to bring expenses into line with sales trends, which could mean layoffs, said Tunick, adding that AnnTaylor Stores Corp., Chico’s FAS Inc., The Talbots Inc. and Pacific Sunwear of California Inc. were the most likely candidates for home office head count reductions.
In their economic distress, shoppers are heading toward the best deal they can find, according to a report from the Standard & Poor’s retail equity research group headed by Marie Driscoll.
“Moderate-price department stores are losing sales to off-price retailers offering competitive assortments of brand name apparel, accessories and home goods,” the report said. “Better department stores also continue to struggle, as aspirational luxury shoppers remain on the sidelines. Consumers are anticipating heavy discounting this holiday season and are likely postponing purchases of luxury goods.”
Looking further ahead and further back, Todd Slater, equity analyst at Lazard Capital Markets, said it could be the worst October showing since the Great Depression, and November could be even worse.
Slater projected October comps would fall 8.5 percent at specialty stores and 13.8 percent at department stores, while discounters and off-pricers collectively manage a 1.1 percent rise.
“But as bad as October is, we believe November will be worse, thanks to the calendar — Thanksgiving falls five days later — and last year’s comparisons [when comps rose 4.4 percent],” Slater said.
Broadline retailers losing ground in the stock market Monday included Nordstrom Inc., down 9.2 percent to $16.38; J.C. Penney Co. Inc., 5.6 percent to $22.58; Macy’s Inc., 5.2 percent to $11.65; Kohl’s Corp., 4.9 percent to $33.42; Target Corp., 2 percent to $39.32, and Saks Inc., 1.8 percent to $5.89. Standard & Poor’s reiterated its sell recommendation on shares of Sears Holdings Corp., which ended down 5.3 percent to $54.71.
Among the specialty apparel stores showing declines were Abercrombie & Fitch Co., off 6.7 percent to $27; Bebe Stores Inc., 6.1 percent to $8.32; Talbots, 6.1 percent to $9.21; Caché Inc., 5.6 percent to $3.39; J. Crew Group Inc., 5 percent to $19.32; Chico’s, 4.4 percent to $3.25; Pacific Sunwear, 2.6 percent to $3.33, and Ann Taylor, 1 percent to $12.39.
Apparel vendors also had a tough go of it, with declines posted by Liz Claiborne Inc., down 7.6 percent to $7.53; Kenneth Cole Productions Inc., 6.4 percent to $12.43; Warnaco Inc., 6.1 percent to $27.99; Phillips-Van Heusen Corp., 5.8 percent to $23.10, and True Religion Apparel Inc., 5.2 percent to $15.88.
The picture was somewhat brighter in international markets.
European markets moved higher on Monday, with London’s FTSE 100 advancing 1.5 percent to 4,443.28 and the CAC 40 in Paris adding 1.2 percent to end at 3,527.97. PPR declined 4.5 percent during the day, but most European issues locked in gains in a range of 2 to 3 percent. In Milan, IT Holding SpA was up 7.6 percent to 0.28 euros, or 36 cents at current exchange. Hennes & Mauritz enjoyed a 5.1 percent hike to 290 kronor, or $36.53. In Frankfurt, Escada AG jumped 8.6 percent to 0.34 euros, or 43 cents.
Hong Kong’s Hang Sang Index rallied 2.7 percent to 14,344.37, allowing it to recoup ground lost on Friday.
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