Retail stocks kicked off what should be a busy week with a 1.3 percent decline Monday as investors prepared for first-quarter profit reports.

This story first appeared in the May 12, 2009 issue of WWD. Subscribe Today.

The S&P Retail Index dipped 4.36 points to 327.87 as the Dow Jones Industrial Average fell 1.8 percent, or 155.88 points, to 8,418.77. International markets were also off, with the Hang Seng losing 1.7 percent in Hong Kong and the CAC 40 off 1.9 percent in Paris. Shares of PPR fell 7.1 percent to 59.26 euros, or $80.83, and LVMH Moët Hennessy Louis Vuitton decreased 2.3 percent to 59 euros, or $80.47.

Two U.S. retailers that are to report quarterly results this week bucked the stock trend: Kohl’s Corp. rose 2.1 percent to $44.84 and Wal-Mart Stores Inc. inched up 1 percent to $50.63.

Also readying their quarterly report cards, but losing ground in the markets, were J.C. Penney Co. Inc., down 5.2 percent to $28.91; Abercrombie & Fitch Co., 4.2 percent to $25.43; Nordstrom Inc., 2.9 percent to $22.42, and Macy’s Inc., 1.1 percent to $12.69.

Retail analysts at UBS Securities said a recent survey of 1,000 consumers found shoppers are still hunkering down.

“Bills and debt are high among consumers’ minds when spending, but gas prices are down considerably [year-over-year], which may be opening the door for more opportunistic purchases,” said the analysts.

The travails of consumers and retailers are hurting the suppliers.

Moody’s Investors Service changed its outlook on about $1.5 billion of the Estée Lauder Cos. Inc.’s debt to “negative” from “stable” as the recession clamps down on the sale of discretionary goods. The debt watchdog affirmed the beauty firm’s debt rating at “A2.”

“[Lauder’s] ability to restore its credit metrics and profitability to historic levels is dependent on its successful execution of a number of key restructuring initiatives, improvement in the U.S. retail operating environment and a stabilization of global economic activity,” said Janice Hofferber, a Moody’s vice president and senior credit officer.

Shares of Lauder dipped 0.2 percent to close at $33.85.