NEW YORK — The WWD Composite Stock Index fell 1.7 percent to 1,083.22 from 1,102.13 a week ago after a number of component companies reported bad news during an otherwise quiet week.
The S&P 500 finished the week essentially flat, ticking down less than a 10th of a percent to 1,134.32 from 1,134.98 last week.
Taking the greatest toll on the index was heavily weighted Wal-Mart Stores Inc., as its shares plunged 5.6 percent to $52.51 from $55.62 a week ago. The sell-off occurred after a San Francisco federal judge cleared the way for the largest gender discrimination lawsuit against a U.S. company in history, potentially encompassing 1.6 million current and former female Wal-Mart employees.
Revlon also contributed to the sector’s retreat, as its shares plunged 6.7 percent to $3.18 from $3.41 a week ago. Investors lightened their positions after the beauty company cut its full-year earnings and sales guidance. Sluggish sales of color cosmetics such as blush and lipstick were to blame, Revlon said.
Adjusted net profits before interest, taxes, depreciation and amortization are now forecast at $190 million instead of $200 million. Sales are expected to grow only 3 percent, far below its previous outlook of 8 to 9 percent.
Finish Line Inc. also didn’t help matters when its stock closed the week down 5.5 percent to $30.60 from $32.39. The drop came despite the company’s robust first-quarter results, which were driven by strong sales in athletic footwear, particularly in the performance category.
For the three months ended May 29, the Indianapolis-based company reported a 64 percent increase in net income to $10.6 million, or 43 cents a diluted share, from $6.5 million, or 26 cents, in the year-ago period. Sales climbed 24 percent to $258 million from $207.8 million.Comparable-store sales also swelled, growing 14 percent.
Excluding expenses related to the attempt to purchase select Footaction stores, Finish Line’s net income would have increased 70 percent with diluted earnings growing 2 cents to 4 cents a share.
The performance-footwear category is the key driver to the company’s business, and sales have been positively affected by higher average selling price, which grew 5 percent for the quarter, said chief executive officer Alan Cohen in a statement.“Nike Inc. has been an important partner is this growth, and based on our shared long-term vision for athletic specialty in each other’s brands, Nike will continue to be our leading performance driver throughout the remainder fiscal year,” Cohen said.
While the first-quarter performance gives the company high hopes, Cohen said the most important time has yet to come. It is the back-to-school sales that will really determine Finish Line’s performance.
As for Nike, the company’s stock kicked the larger trend last week, advancing 5.2 percent to $75.31 from $71.62. Investors applauded its fourth-quarter and full-year results. Indeed, strong global sales, gross margin expansion and a weak dollar allowed the company to double its full-year earnings.
Another winner last week was Jones Apparel Group, which saw its stock rise 1.6 percent to $39.22 from $38.59, due, in part, to the company entering into a $1 billion five-year revolving bank credit facility. Coupled with its extant facility, Jones now has $1.5 billion in committed bank credit, allowing it any number of avenues to pursue growth.
Also up on the week was Christopher & Banks Corp., which added 1.2 percent to $17.53 from $17.33 a week ago. The increase came despite a first-quarter earnings decline and a downgrade from Jeffries & Co. to “hold” from “buy.”
Looking ahead, the dreaded interest rate hike should finally come to pass this week. The Federal Reserve Board is scheduled to meet June 30, and the market is bracing for the first increase in short-term interest rates in four years. The consensus guess is that Greenspan & Co. will add a quarter percentage point to 1.25 percent.
— With contributions from Jeanine Poggi and Carrie Melago
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