Even if the economy has put the worst recession in generations in the rear-view mirror, signposts pointing to a long, slow recovery with little to propel consumption helped drag retail stocks down 3.4 percent last week.
This story first appeared in the September 28, 2009 issue of WWD. Subscribe Today.
August sales of existing homes took an unexpected tumble, and although the Census Bureau said Friday that new home sales for the month rose 0.7 percent from July, the real estate market has yet to take a definitive turn for the better. The average price of a new home was $256,800 last month, down from the average of $292,600 for all of 2008 and $313,600 in 2007.
Earlier in the week, the Federal Reserve said lower housing wealth, along with continuing job losses, sluggish income growth and tight credit conditions, would hold back spending. And Retail Forward projected a 2 percent drop in apparel and accessories sales in the fourth quarter on top of the 9 percent decline a year earlier.
Retail stocks, though, are still near highs for the year as investors hold out hope that tighter inventories and lower cost bases will lead to better profits this holiday. The S&P Retail Index slid 1.5 percent, or 5.48 points, Friday, ending the week at 372.40. The Dow Jones Industrial Average fell 1.6 percent to 9,665.19 for the week.
Among the 172 U.S. and European stocks tracked by WWD, 129 had decreases last week versus 39 with gains, led by The Buckle Inc., and four that were unchanged compared with the previous Friday. Finish Line Inc. registered the second-biggest gain of the week, 11.7 percent, following an upbeat outlook despite its swing to a second-quarter loss.