Retail shares fell to a four-month low Thursday, dropping 2.7 percent with weakness across the fashion spectrum weighing on Wall Street, but apparently not on The Yucaipa Cos.’ Ron Burkle, who took a 6 percent stake in American Apparel Inc.

This story first appeared in the June 25, 2010 issue of WWD. Subscribe Today.

The S&P Retail Index lost 11.36 points to close at 405.38 — territory not seen since mid-February. It’s been a dramatic retreat for the index that just under two months ago tiptoed right up to the 500 mark. Among the fashion firms shedding market value were Macy’s Inc., down 6.2 percent to $18.85; AnnTaylor Stores Corp., 5.6 percent to $17.36; American Eagle Outfitters Inc., 4.6 percent to $12.13; Nike Inc., 4 percent to $69.63; Nordstrom Inc., 4 percent to $35.38, and Target Corp., 3.7 percent to $50.73.

Reservations about fashion retailers apparently were lost on Burkle, who reported in a filing with the Securities and Exchange Commission that he’d acquired slightly more than 4.3 million shares of American Apparel for a 6 percent stake.

The filing said he’d bought the stock in “open market transactions since June 10, 2010, because, in his opinion, such shares were undervalued by the market at the time they were acquired.” While he indicated the purchases were for investment purposes, the filing said he “may modify his plans in the future” based on the performance of the firm and its equities.

Burkle has a long history of investing in fashion and retail issues, with positions in firm including Scoop, Sean John and Stephen Webster. Through Yucaipa, he holds a large piece of Barneys New York Inc.’s bank debt.

On Thursday, American Apparel’s shares fared better than most, slipping just 0.6 percent to $1.77 after it amended its credit agreement with Lion Capital (Americas) Inc. The amendment replaces the total debt to consolidated earnings before interest, taxes depreciation and amortization covenant with a minimum consolidated EBITDA covenant. It also boosts the interest rate on the credit agreement to 17 percent from 15 percent.

The Dow Jones Industrial Average fell 1.4 percent, or 145.64 points, to 10,152.80 as banking stocks slipped and investors looked to Washington to gauge the impact of pending financial reform.

Investor skittishness overcame a better-than-anticipated reading on weekly jobless claims from the Labor Department. First-time applications for unemployment insurance decreased 19,000 to 457,000 last week from the prior week. Economists expected a slightly smaller drop to 460,000.

On Wednesday, the Federal Reserve issued a more guarded outlook for the U.S. economy and said “financial conditions have become less supportive of economic growth on balance” given Europe’s debt troubles.

The U.S. was also following European markets down Thursday.

The CAC 40 dropped 2.4 percent to 3,555.36 in Paris as the FTSE 100 fell 1.5 percent to 5,100.23 in London and the DAX dropped 1.4 percent to 6,115.48 in Frankfurt.

Asian investors pushed the Hang Seng Index down 0.6 percent to 20,733.49 in Hong Kong as the SSE Composite Index fell 0.1 percent to 2,566.75 in Shanghai and the Nikkei 225 inched up 0.1 percent to 9,928.34 in Tokyo.

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