Stocks are getting off to a mixed start after some disappointing economic data out of China. The Shanghai deposit ended the day down 2.7 percent, but had dropped by as much as 7 percent at one point. The main concern is that China will miss its economic growth target of 7 percent for the full year.
Europe brushed off those concerns and moved higher. Investors are now turning their focus to the U.S., where the Federal Reserve will meet in the middle of the week to decide whether to raise interest rates. Out of the gate the S&P 500 shed 0.3 percent to 1,192 while the Dow Jones Industrial Average opened down 56 points, or 0.3 percent, to 16,377. The S&P 500 Retailing Industry Group Index lost 0.1 percent at the open to 1,955.
Retail stocks at the open showed declines between 0.1 percent to 2 percent, but there were some gainers such as Chico’s FAS Inc. – which jumped 8.1 percent on rumblings that the company is looking for a suitor again.
Sequential Brands said it closed on the Joe’s Brand acquisition and is increasing its forward-looking 12-month royalty revenue projection to $98 million to $100 million. Sequential said the new core license agreement will have most of its financial impact in fiscal 2016. Sequential acquired Joe’s Brands for $67 million and Global Brands Group paid $13 million for certain operating assets.
Eric Beder, equity analyst at Wunderlich Securities Inc., said the deal, “while not highly accretive or crucial …provides them with entry into the premium denim space and deepens a key relationship with Nordstrom.”
“The Joe’s deal demonstrates management’s ability to continue to drive value even as it remains focused on the Martha Stewart transaction, which management expects to close at year-end,” Beder said, adding that while it is still not incorporated into his projections, he continues to “believe Martha will add 15 cents to 20 cents in [earnings per share] to Sequential.”
As a result, Beder has a “buy” rating on the stock with a $18 price target. At the bell, the stock was up 0.3 percent to $15.56.
Chinese online retailer Alibaba is tumbling almost 3 percent to $62.52 after a negative article in Barron’s magazine suggested the stock could fall another 50 percent. The company issued a point by point rebuttal of the story. Essentially the story said that China’s weakened economy and increasing online shopping competition, plus more market scrutiny over the company, would bring it down.