Retail shares slipped 0.7 percent Wednesday, the sector’s third decline in as many days, but a fresh reading on the consumer from Deloitte Research showed shoppers’ economic fundamentals are strengthening.
This story first appeared in the December 10, 2009 issue of WWD. Subscribe Today.
The S&P Retail Index fell 2.89 points to 401.19 as the Dow Jones Industrial Average, down for most of the day, inched up 0.5 percent, or 51.08 points, to 10,377.05.
Internationally, the Nikkei 225 fell 1.3 percent in Tokyo after new government data showed the nation’s gross domestic product grew by 0.3 percent in the July-to-September quarter, much slower than the 1.2 percent previously projected.
The Hang Seng Index slid 1.4 percent in Hong Kong as the CAC 40 declined 0.7 percent in Paris and the FTSE 100 dipped 0.4 percent in London.
Among the top stock decliners on the U.S. retail scene was The Men’s Wearhouse Inc., which fell 7.2 percent to $20.26 after the firm projected a fourth-quarter loss and sales decline.
Shares of Movado Group Inc. dropped 12.9 percent to $9.45 after the company reported a $20.9 million first-quarter loss.
Despite continued weakness at retail, the Deloitte Consumer Spending Index rose last month, indicating consumers’ cash flow is improving and spending could pick up down the line.
The index — which tracks tax burden, initial unemployment claims, real wages and real home prices — rose to 4.6 percent from 4.3 percent a month earlier.
“Real earnings remain on the rise due to falling prices, while the housing market continues to show signs of stabilizing,” said Carl Steidtmann, chief economist at Deloitte Research. “A decline in initial unemployment claims has historically been a reliable signal of economic recovery, and in recent months, initial claims have continued downward. These factors may give retailers and suppliers reason for optimism going forward.”
Deloitte said the average tax burden is at its lowest level in more than 40 years due to the federal stimulus program approved in February.