Retail stocks failed to extend their winning streak to a fifth day Monday and fell 2.7 percent, giving back some of the gains from last week’s rally.
This story first appeared in the March 17, 2009 issue of WWD. Subscribe Today.
The S&P Retail Index spent part of the day in positive territory, but gave up afternoon gains to end down 7.09 points to 255.60. The Dow Jones Industrial Average dipped 0.1 percent, or 7.01 points, to 7,216.97.
Retail shares jumped 14.8 percent last week, joining in a broader market rally backed by news that Citigroup, Bank of America and J.P. Morgan Chase & Co. each turned a profit in January and February. Concerns over banks and the credit markets continue, though. And the financial headlines turned negative again as insurer American International Group Inc. was battered for planning about $450 million in bonuses, even though taxpayers now own 80 percent of the firm after it received government bailout funds.
For some, the run-up, however
welcomed, seemed a bit too good to be true.
“Last week we set up the possibility for further losses in stock prices before we finally get to a bottom that might be meaningful for investors,” said Paul Nolte, director of investments at Hinsdale Associates in an analysis before the market opened Monday. “We just don’t believe that ‘the’ bottom arrived. We would like to see higher prices, but remain concerned that the rush to call ‘the bottom’ may well be premature. As a result, we may pull back further on equity holdings expecting lower prices in the weeks ahead.”
Most segments of retailing were hit in Monday’s declines, including department stores, discounters, off-pricers and specialty stores.
Activist investor William Ackman’s proxy fight to put five new faces, including his own, on Target Corp.’s board did not boost the company’s stock, which slid 3.8 percent to $28.83. And the news that Tommy Millner was named president and chief executive officer of outdoor retailer Cabela’s Inc. failed to inspire investors, who traded shares of the firm down 10.7 percent to $7.75.
Also among those losing ground were Stein Mart Inc., down 10.3 percent to $1.30; Bebe Stores Inc., 6 percent to $4.90; Charlotte Russe Holding Inc., 6 percent to $6.17; J. Crew Group, 5.9 percent to $10.71; The Talbots Inc., 5.9 percent to $2.88; Chico’s FAS Inc., 5.7 percent to $4.84; Macy’s Inc., 5 percent to $7.91; Sears Holdings Corp., 4.6 percent to $38.18, and The Bon-Ton Stores Inc., 4.5 percent to $1.28.