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
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion