NEW YORK — After taking a beating on the prospects of higher gas prices this summer of $2.15 a gallon, retail and vendor shares retreated last week.
As a result, the WWD Composite Stock Index fell 1.2 percent to 1,161.03. The S&P 500 dropped 1.8 percent, week-over-week, to 1,200.08.
Aside from fuel costs, the biggest attention grabber on Wall Street last week was a bullish report from UBS analyst Gary Balter, who tagged shares of Kmart Holdings Inc. with a $160 price target.
On Friday, Kmart’s stock jumped as investors digested the upbeat report. Shares of Kmart rose more than 14 percent in the after-trading session. By the end of the day, the stock closed up 13.3 percent to $127. Sears, Roebuck & Co. also soared on the news, closing Friday’s trading session up 7.9 percent to $57.56.
Balter upgraded shares of both retailers, who are looking to get shareholder approval on their proposed $11 billion merger later this month, to “Buy 2.”
In the report, Balter said the “cash flow opportunities [are] too good to ignore” and added that his $160 price target is “based on the ability of the company after the merger with Sears to generate significant cash flow through asset sales, cross-selling of proprietary brands, and cost savings, particularly at Sears.”
Still, Balter said the deal has risks. “Unlike pre-merger Kmart, the asset support does not offer as much protection and the commodity nature of Sears’ key products make one key element of the Eddie [Lampert] story, price increases, less available. Yet, the potential for cost-cutting and vendor support is compelling.”
Lampert, the hedge fund wizard who bailed Kmart out of bankruptcy, is credited with turning around specialty auto parts retailer AutoZone. As a result, Balter said “Eddie stories work best early,” and AutoZone “continues to show cost savings after five years.”
Meanwhile, shares of Quiksilver Inc. hit a new 52-week high in New York Stock Exchange trading Friday following the release of strong first-quarter numbers after Thursday’s market close. Spurred by revenue increases in all geographic markets and the addition of DC Shoes, the firm said net income in the three months ended Jan. 31 rose 54.9 percent to $14.2 million, or 23 cents a share, from $9.2 million, or 16 cents, in the first quarter of the prior year. Revenues rose more than one-third to $342.9 million from $256.1 million in the year-ago quarter. European revenues rose 24.9 percent to $132.6 million and were up 16 percent in euros. The firm, based in Huntington Beach, Calif., currently expects full-year earnings of between $1.62 and $1.65 a share on sales of between $1.48 billion and $1.5 billion. Quiksilver’s shares closed the day up 6.5 percent to $34.99 after hitting the new 52-week high of $35.61 in intraday trading.WWD COMPOSITE STOCK INDEX VS. S&P 500
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)