Retail shares dipped 1.6 percent Monday as investors fretted over the state of the economy and the timing of the recovery.
The S&P Retail Index fell 5.07 points to 315, as the Dow Jones Industrial Average had its largest one-day drop since April, giving up 2.4 percent, or 200.72 points, to close at 8,339.01.
Retail investors are placing their bets during a time of great upheaval in the industry. Abercrombie & Fitch Co. decided to shutter its 29-door Ruehl division last week, but J.P. Morgan equity analyst Brian Tunick said more changes could be in store for the firm, which has suffered severe comparable-store sales declines.
“There’s a big change in thinking [that is] happening at [Abercrombie] as persistence of some of the worst comps in retail is pushing the company to challenge the status quo,” Tunick said after meeting with management last week.
“We would have never expected to hear the words ‘oversaturated’ and ‘money-losing stores’ from this company, and with 210 leases expiring over the next two years — 20 percent of the store base — [the firm] could be closing stores or negotiating for better lease terms,” said Tunick in a research note. “We expect most potential closures in its A&F concept, which we think could shrink by close to 100 stores — from 354 today.” Shares of Abercrombie fell 1.3 percent Monday to $25.67.
Also, the jewelry sector continues to get clobbered in the current environment. Big-name firms such as Whitehall, Crescent and Friedman’s have already gone into the retail graveyard. On Monday, jewelry wholesaler Henry Dunay Designs Inc. filed for Chapter 11 bankruptcy court protection in Manhattan. In the petition, the firm said it had between $1 million and $10 million in assets, as well as $1 million to $10 million in liabilities. The firm sells its designs at high-end department stores.