Retail stocks slid 1.9 percent Monday, joining in the general market sell-off that accompanied the Obama administration’s plan to remake the U.S. auto industry beginning with the ouster of General Motors chairman and chief executive officer Rick Wagoner.
This story first appeared in the March 31, 2009 issue of WWD. Subscribe Today.
The S&P Retail Index fell 5.76 points to 291.12 as the Dow Jones Industrial Average slid 3.3 percent, or 254.16 points, to 7,522.02.
On Monday, Moody’s Investors Service cut its credit rating on $510 million of The Bon-Ton Stores Inc.’s debt, lowering the retailer’s corporate family rating to “Caa2” from “B3,” a drop of two steps on Moody’s rating scale. Debt in the “Caa” category is judged to be of “poor standing,” according to the rating agency.
“The two-notch downgrade reflects not only Bon-Ton’s weaker operating performance, but also Moody’s concern with the company’s liquidity profile over the intermediate term and with its capital structure, which we consider to be increasingly unsustainable given the current level of performance,” the ratings agency said. Shares of Bon-Ton slid 9.4 percent to $1.63.
Kohl’s Corp. said chairman Larry Montgomery’s total pay rose 16.8 percent to $3.2 million last year, including a salary of $1.2 million, options valued at $1.9 million, $28,009 for automobile expenses and $104,785 for use of the company’s aircraft, according to a filing with the Securities and Exchange Commission. Kevin Mansell, who succeeded Montgomery as ceo in August, saw his compensation jump 54.1 percent to $3.5 million. His take included a salary of $1.1 million, stock awards and options valued at $2.3 million, as well as $27,521 for automobile expenses and $45,703 for use of the firm’s aircraft. Kohl’s stock fell 3.5 percent to $41.63 Monday.
Luxury stocks have also been hit hard.
Tiffany & Co. director Peter May’s Trian Fund Management divested 2.3 million shares of the firm last week, a position worth about $50.9 million. The fund unloaded the stock in the two days after Tiffany’s March 23 announcement that its fourth-quarter profits fell by 75.6 percent, according to documents filed with the SEC. Trian remains the largest holder of Tiffany stock, with 8.4 million shares, or 6.8 percent of the 123.8 million shares outstanding as of Jan. 31. Tiffany’s stock fell 5.4 percent to $21.21 Monday.