Shares of social media company LinkedIn crashed on Friday, pulling down other tech stocks and the Nasdaq market along with it while the retail segment suffered serious declines as investors dumped shares of Elizabeth Arden Inc. and Hanesbrands Inc. following quarterly results that missed expectations.
The Nasdaq closed down 3.3 percent, dropping 146 points to 4,363, and the Dow Jones Industrial average fell 211 points, or 1.3 percent to 16,204. The S&P 500 shed 35 points, or 1.9 percent, to close at 1,879. But the S&P Retailing Industry Group Index took a beating with a 4 percent decline to 1,092.
Some of the notable decliners in the fashion apparel, retail and beauty segment included: Elizabeth Arden’s 25.8 percent decline to $5.95; Hanesbrands’ 15.1 percent drop to $24.96; Aeropostale Inc.’s 11.1 percent decline to to 20 cents; Vera Bradley Inc.’s 9.5 percent drop to $14.25; and Bebe Stores Inc.’s 8.2 percent decrease to 35 cents.
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The gainers included Kohl’s Corp. with a 1.3 percent increase to $42.06 and Nordstrom Inc. with a 1.6 percent gain to $48.18 as well as Estee Lauder Cos. Inc. with a 4.6 percent jump to $90.98.
The Estée Lauder Cos. refused to be bullied into selling after reporting a net sales increase of 3 percent to $3.1 billion for the second quarter, up from $3 billion in the prior-year quarter. The company’s net earnings increased 2 percent to $446.2 million, with diluted net earnings per share up 5 percent to $1.19. Excluding the impacts of foreign currency, Lauder’s net sales increased 8 percent and earnings per share rose 15 percent.
Regarding LinkedIn Corp., the company lost over 43 percent of its value and sold off to $108.38 after it reported its fourth-quarter revenue of $862 million, which was 35 percent higher than the previous year, but gave disappointing guidance. LinkedIn is forecasting full-year revenue of $3.6 billion to $3.65 billion, so instead of growing in the mid-30 percent range, it will now grow in the mid-20 percent range. That slowing growth caused many shareholders to jump ship.
In the legal corners of the market, American Apparel said it emerged from its Chapter 11 status and is now a private company following the approval of its bankruptcy plan by the Delaware court judge. American Apparel’s reorganization plan converted approximately $230 million of bonds into equity in the Company and provided for the infusion into the Company of $40 million of exit capital and a commitment for a $40 million asset-backed loan. This additional money will support the company’s turnaround plan. Under the reorganization plan, the company also converted its corporate form from a Delaware corporation to a Delaware limited liability company and, therefore, is now known as American Apparel LLC.
Bloomberg reported that Honest Co. had hired Goldman Sachs and Morgan Stanley as their bankers to explore becoming a public company. None of the companies contacted would comment. Honest Co. is headed by actress Jessica Alba and was launched in 2012 with 17 products. It now has more than 120 products. The company last raised $100 million in August 2015. It is also facing a $5 million lawsuit that Honest & Co.’s sunscreen didn’t work as advertised.
Looking ahead, Chinese markets will be closed for the entire week next week for the New Year’s celebration. Delta Apparel reports earnings for its fiscal first quarter after the market closes on Monday.