Thank goodness 2016 is here.
That most probably is the reaction of industry executives and shareholders as they examine their stock portfolios. Although there were many bright spots in the global equities market, 2015 ended mostly on a down note for fashion apparel, accessories and retail stocks, with more declining for the year than advancing.
From the negative impact of China’s economic woes and subsequent stock market crash in August to fiscal concerns in Greece and an overall slowing of economic growth in emerging markets, global equities had one challenging year. Strength in Europe’s economy and improved corporate profits in Japan gave global investors at least some confidence, which helped offset the negatives.
For the retail and fashion segment, these market tribulations were compounded by a strong dollar and its effect on tourist spending as well as a U.S. consumer environment in which fancy furniture, SUVs and weekly dinners at Olive Garden trumped spending on apparel and accessories. Then there were the weather, cheap oil and uncertainty over when the Federal Reserve would boost interest rates, which collectively created buying and selling opportunities for investors in the consumer discretionary sector.
“From a stock perspective, 2016 can’t come soon enough for most consumer investors,” said Dana Telsey, chief executive officer of Telsey Advisory Group.
“While 2015 was very evenly divided in half by key events that impacted sales performance, weather was the constant, whether unseasonably warm or cold that led to, for many, more promotional — and margin-impacted — results,” she added.
The Dow Jones Industrial Average fell 2.2 percent for the year to close at 17,425 while the S&P 500 — which had been on an upward trajectory — came in with a 0.7 percent decline to 2,044. The Nasdaq, buoyed by robust gains in the tech sector, finished the year up 5.5 percent to 5,007.
In Europe, indices delivered a varied performance. The Frankfurt DAX closed the year up 8.9 percent to 10,743 while the CAC 40 in Paris rose 8 percent to 4,637. The FTSE 100 in London closed the year down 5.5 percent to 6,242.
The S&P Retailing Industry Group Index got a big boost by component stocks in the Internet retail segment, which pushed the index up 23 percent to 1,283 at the close of the year. As a segment, Internet retail is up more than 88 percent, driven by companies such as Amazon Inc. and its year-over-year stock gain of 122 percent.
But the WWD Global Stock Tracker, which is composed of 100 fashion apparel, department store, accessories and beauty stocks, closed 2015 down 0.8 percent to 107.08. Of the 100 component stocks in the tracker, 57 declined while 43 advanced.
Of the decliners in the WWD tracker, 37 had drops in share prices of over 20 percent. Some of the notable decliners include companies that have gone through various struggles in 2015, such as Vince Holding Corp., down 82.3 percent for the year; Iconix Brand Group Inc. with an 79.8 percent drop, and Men’s Wearhouse Inc. with a 67 percent decline. Avon Products Inc. closed the year down 59 percent while the Bon-Ton Stores Inc. shed 72 percent.
Then there were two once-highfliers who saw their stocks fall heavily to Earth: Michael Kors Holdings and Macy’s Inc.
Of the top 12 decliners, nine are U.S. companies.
This compares to the top 12 advancers, which had two U.S. firms — Ulta Beauty and Nike Inc. — with year-end gains of 45 and 30 percent, respectively. The other advancers were a mix of European and Asian powerhouses such as the new Yoox Net-a-porter Group SpA, Copenhagen-based jewelry retailer Pandora A/S and Shiseido Co.
But while industry executives and investors might be glad to see the back of 2015, the bad news is that many of the headwinds that pushed down stock values in the sector last year — such as the strong dollar and a consumer environment in which spending on big-ticket items and experiences steal market share from apparel sales — are likely to continue in 2016.
Other factors on the horizon also could negatively impact stock prices, especially for apparel retailers in the U.S. One is the expansion of Primark in America. Cowen and Co. equity analyst Oliver Chen said, “Primark’s growth poses a significant threat to Wal-Mart, Target, fast-fashion competitors — Forever 21 and H&M, and full-line department stores [such as] Macy’s, and teen retailers (American Eagle Outfitters Inc., Abercrombie & Fitch Co. and Old Navy).”
Chen said the Ireland-based retailer has an efficient “test-read-react strategy” that is a “key driver for Primark’s growth, in our view, as merchandise orders made each morning can be received by the end of the day.” Sourcing also gives Primark an edge.
“Primark currently sources most of its apparel in Turkey and Eastern Europe to reduce lead times to eight weeks, but ultimately plans to establish Central American suppliers to support the U.S. stores,” Chen added.
Then there’s the distraction of the presidential election in the U.S. Telsey said that “historically, on average, retail stocks outperformed the broader market in the year prior to and following elections by around 740 basis points and in excess of 1,500 basis points, respectively. More specifically, retail stocks have historically outperformed the broader market by a greater spread prior to and after a Republican is elected.”
So is it too soon to say, Here’s to 2017?
WWD Global Stock Tracker Top 12 Advancers
Company % Change
1. Kose Corp. +136.9
2. Yoox Net-a-porter Group SpA +69.8
3. Pandora A/S +55.9
4. Anta Sports Products Ltd. +55.6
5. Shanghai Metersbonwe Fashion & Accessories Co. Ltd. +52.0
6. Shisiedo Co. +48.4
7. Ulta Beauty +44.7
8. Adidas +41.0
9. Younger Group Co. +35.0
10. Nike Inc. +30.0
11. Ted Baker plc +27.8
12. Seven I Holding Co. +26.5
WWD Global Stock Tracker Top 12 Decliners
Company % Change
1. Vince Holding Corp. -82.3
2. Iconix Brand Group Inc. -79.8
3. The Bon-Ton Stores Inc. -71.7
4. Fossil Group Inc. -66.9
5. The Men’s Wearhouse Inc. -66.8
6. Avon Products Inc. -58.9
7. Elizabeth Arden Inc. -53.7
8. Chow Tai Fook Jewellery Group -51.9
9. Dillard’s Inc. -47.5
10. Macy’s Inc. -46.7
11. Michael Kors Holdings Ltd. -46.7
12. Prada SpA -45.1
Source: WWD Global Stock Tracker