Retail stocks enjoyed their fifth consecutive week of advances, gaining ground during the last three sessions of a holiday-abbreviated week as two retail firms prepared to take the plunge into the public markets.
This story first appeared in the April 25, 2011 issue of WWD. Subscribe Today.
The S&P Retail Index ended the week on Thursday with a 0.3 percent pickup to 534.88, 1.2 percent above its resting place on April 15 and 5.3 percent above its endpoint in 2010. The index hit a new 52-week high of 536.97 on Wednesday, less than 2 points shy of the all-time high since its 2002 recalibration.
While still showing signs of bullishness despite accelerating headwinds brought on by higher costs for raw materials and transportation, its performance last week and so far this year has lagged behind those of the major U.S. indices.
The Dow Jones Industrial Average opens the new week at 12,505.99, 1.3 percent ahead of the prior week’s open and up 8 percent for the year.
Helped by encouraging signs emanating from the technology sector, the Nasdaq Composite rose 2 percent to 2,820.16 while the broader S&P 500 kept pace with the Dow, growing 1.3 percent to 1,337.38. Both are up 6.3 percent for the year.
Of the 170 North American and European stocks tracked daily by WWD, 119 were up last week versus 47 with declines and four that were unchanged.
The biggest gainer in the WWD sample was American Apparel Inc., which saw its shares rise 30.2 percent to $1.24 after beginning the week in the throes of a liquidity crisis that threatened its existence as a going concern. A possible breach of its financial covenants was avoided when the Los Angeles-based vertical retailer of trendy basics received $15.2 million from a group of investors led by Michael Serruya.
Although word of an imminent deal lifted its shares the entire week, confirmation of the arrangement with Serruya and the other investors didn’t arrive until after the close of the markets on Thursday, before the start of Wall Street’s three-day weekend.
Also showing strong upward momentum last week were Cache Inc., up 17.3 percent to $5.57, and Hanesbrands Inc., up 13 percent to $31.54 after the firm’s first-quarter earnings rose 31.8 percent, surpassing analysts’ estimates, and full-year guidance was raised.
While retail experts, particularly those focused on specialty retailers, have been focused on potential mergers and acquisitions in recent months, initial public offerings moved to center stage last week. Both Francesca’s Collections and Bluestem Brands, owner of the Fingerhut properties, filed paperwork with the Securities and Exchange Commission paving the way for IPOs.
With the exception of the Shanghai Composite Index, major European and Asian markets logged increases for the week, led by a 1.6 percent expansion at Frankfurt’s DAX and a 1.2 percent increase at the CAC 40 in Paris.