NEW YORK — Apparel and retail issues Monday fell along with other stocks as the equity markets sank to depths that were recently unthinkable — and unseen since the late Nineties.
Starting the week with its third decline in as many sessions, the Dow Jones Industrial Average on Monday dwindled by 234.68 points, or 2.9 percent, to end the day at 7,784.58. Since last Wednesday’s close, the index is off 8.9 percent and is at its lowest level since October 1998.
The financial markets’ crisis of confidence continued to rouse investor unease as lingering accounting scandals were brought to the forefront by the bankruptcy filing from telecommunications giant WorldCom over the weekend.
Without compelling news to lift retail shares in the face of negative bias in the overall market, the sector was forced to take it on the chin, again.
Department stores whose shares took cuts deeper than the market at large included: Kohl’s, down $2.84, or 4.8 percent, to $56.73; May Co., $1.24, or 4.5 percent, to $26.09; Neiman Marcus, $1.15, or 4.4 percent, to $25.25; Dillard’s, 87 cents, or 3.9 percent, to $21.70, and Nordstrom, 64 cents, or 3.6 percent, to $17.31. Federated fared slightly better, falling 76 cents, or 2.3 percent, to $32.24.
Department stores reporting weekly sales, which were generally in line with expectations, saw lesser declines. Among these were J.C. Penney Co., down 33 cents, or 2.1 percent, to $15.67, and Sears, Roebuck & Co. off 80 cents, or 1.8 percent, to $42.75. Discounters also reported weekly sales without surprises. Shares of Wal-Mart Stores were off $1.90, or 4.1 percent, to $44.60, while Target’s stock slid 87 cents, or 2.7 percent, to $31.05.
Specialty stores were slammed again, as well. Posting stock declines were Mothers Work, dropping $4.40, or 13.9 percent, $27.38; Chico’s FAS, $2.57, or 8.4 percent, to $27.97; Abercrombie & Fitch, $1.70, or 7.2 percent, to $21.80; Hot Topic, $1.53, or 7.1 percent, to $20; Talbots, $1.71, or 5.8 percent, to $27.64; Bebe, 85 cents, or 5 percent, to $16.05; Charlotte Russe, 73 cents, or 4.7 percent, to $14.97; Gap, 49 cents, or 4 percent, to $11.66; Urban Outfitters, 95 cents, or 4 percent, to $22.65; Ann Taylor, 78 cents, or 3.5 percent, to $21.80, and Claire’s, 55 cents, or 3.1 percent, to $16.95.Meanwhile, seasickness in its travel business prompted Wilsons The Leather Experts Inc. to severely curtail earnings expectations for the year following the closure of Friday’s market. Shares of Wilsons dove $2.04, or 19.8 percent, to end the day Monday at $8.25.
Currently in its second quarter, the firm now expects profits of 51 to 56 cents a diluted share in fiscal 2002, compared with previous projections of 88 to 93 cents. Sales for the 12 months are slated to be in the $775 million to $785 million range. Wilsons’ core stores, which represent about 85 percent of its revenues, continue to perform as expected. Comparable-store sales are expected to decrease in the firm’s travel stores through mid-September, with lower-than-expected overall increases in comps thereafter.
"As our new management and systems provided us more insight into the softening sales and margin trends, it became apparent that changes in merchandise assortment would be necessary to turn these trends around," said chief executive officer Joel Waller in a statement. "A shortage of luggage inventory in the stores has been largely responsible for the lower-than-expected comparable-store sales performance.
In tandem with the Dow’s decline, the Nasdaq ended down 36.5 points, or 2.8 percent, at 1,282.65. Sliding further was the Standard & Poor’s 500, which closed off 27.91 points, or 3.3 percent, at 819.85.
By far, the best-performing Dow component stock for the day was Procter & Gamble Co., which said it would reinvigorate stock repurchases under its buyback plan for fiscal 2003. Shares of the consumer products company shot up $3.37, or 4.5 percent, to close at $77.83.
P&G told investors in a statement that it remains "confident" about its business and will use free cash flow to repurchase shares on a discretionary basis.
Standard & Poor’s debt analyst Lori Harris in a release noted: "The level of share repurchases declined in fiscal 2002 compared with the previous three-year average of $1.85 billion per year because the primarily debt-financed $4.95 billion acquisition of the Clairol hair care business in November 2001 reduced the company’s financial flexibility." Harris said the ramp up would not interrupt payment of dividends, alter P&G’s capital spending goals nor increase debt.Bankrupt Kmart on Monday reported a $137 million loss on sales of $2.33 billion for the four weeks ended June 26. Same-store sales, excluding the 283 previously announced closures, dropped 8.7 percent against a year ago. Shares of the firm inched up 2 cents, or 3 percent, to close at 69 cents.
Kmart, which has a $2 billion debtor-in-possession financing facility, used $370 million for letters of credit as of June 26. Including a 5 percent holdback equaling $100,000 in reserves, the struggling retailer has $1.53 billion left in availability under the credit line.
Chapter 11 expenses during the month include $11 million in professional fees, $8 million in stay bonuses from the Key Employee Retention Program and $3 million in other reorganization expenses. The expenditures were offset by $10 million in reorganization income for the settlement of ten of the 283 store leases closed in June.
Broadline retailers reporting weekly sales pushed on with few surprises.
After last week, Wal-Mart said it was still set to post a comparable-store sales jump of 5 to 7 percent in both its flagship division and the entire company for July. Sears also stayed on course, and said it continues to see a same-store sales drop in the mid-single digits for the month. Apparel has continued to be soft, while hardline sales were the top sellers for the week. J.C. Penney noted same-store sales for the month are now on track to decline by 2 percent, at the positive end of initial estimates of a 2 to 4 percent decline.
Meanwhile, reporters in Argonne, Ill., on Monday peppered President Bush with questions about WorldCom, the equity markets and recent calls for the resignation of Treasury Secretary Paul O’Neill.
Bush insisted corporate earnings and price/earnings ratios should prompt the public to buy.
"Value," he said. "They’re going to realize there’s values in the market."
Defending O’Neill, Bush said he is doing a "fine job. If they are going to hold him accountable for a market going down, they ought to give him credit when the market goes up.
@fearofgod and @maxfieldla have teamed up on a pop-up installation. The store, located in the gallery space across from Maxfield’s Melrose Ave location, is the site of the brand’s House of God pop-up in which Fear of God founder @jerrylorenzo has created a church-inspired installation. A dozen vintage church pews sit in front of an LED screen playing 90s gospel singers in an effort to re-create an environment akin to a Southern Baptist Church, Lorenzo explained. Read more about the pop-up on WWD.com #wwdfashion (📷: Jennifer Johnson)
Known for his sleek, sophisticated American glamour, Norman Norell is the subject of an upcoming exhibition at @fitnyc. “Norell: Dean of American Fashion,” which runs from February 9 through April 14, will feature approximately 100 ensembles and accessories. His best work is exemplified by the designer’s glittering “mermaid” gowns frosted with thousands of hand-sewn sequins – like the one pictured. (📷: William Helburn) #wwdfashion
For pre-fall 2018, @balmain didn’t let go of the glitz. A crystal embroidered baseball jacket priced at around $40,000 hangs in the “couture” section of the brand’s first men’s pre-collection. Sporting the words “Balmain Army” across the back, the item took around two months to make. “When it was completed, it was like Christmas, it was like, ‘It’s done, it’s exactly what I wanted,’” said Balmain’s creative director @olivier_rousteing during a tour of the collection in a Paris showroom on Monday. #wwdfashion
Eighty degree temperatures and outdoor installations at the annual Art Basel Miami Beach called for bright, elevated beachwear. See more street style pictures on WWD.com. #theyarewearing #ABMB (📷: @lifeinreverie)
Following September’s emotional tribute to her brother Gianni, Donatella Versace wanted to bring the spring show’s deep sense of intimacy to her @versace_official pre-fall collection. Donatella found inspiration in Versace Palazzo in Milan and from Gianni’s opulent apartment. Archival patterns and new motifs were splashed on silk shirtdresses and fitted jersey frocks. See the rest of the photos on WWD.com. #wwdfashion
Demna Gvasalia continues to shake up the Paris fashion calendar — and experiment with new runway timetables for his @vetements_official brand. WWD has learned that Vetements plans to stage its next coed show for the fall 2018 season on January 19 during Men’s Fashion Week in the French capital. Details about the timing and venue have not been confirmed — stay tuned on WWD.com to catch the latest. #wwdnews (📷: @giovanni_giannoni_photo)
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)