Retail shares rose 3.2 percent Thursday as investors shrugged off the bankruptcy filing of mall operator General Growth Properties Inc. and mixed signals on the economy.
This story first appeared in the April 17, 2009 issue of WWD. Subscribe Today.
The S&P Retail Index gained 10.22 points to 328.33, outpacing the Dow Jones Industrial Average, which advanced 1.2 percent, or 95.81 points to 8,125.43.
Macy’s Inc. was among the retailers being embraced by investors, rising 8.3 percent to $12.52. The department store just added a new line from Rachel Roy to its list of exclusives. Rachel Rachel Roy will be produced with the help of Jones Apparel Group Inc., which owns a 50 percent stake in all Rachel Roy trademarks, and will bow in 85 Macy’s doors in August. Jones also got the nod of approval from investors and saw it stock jump 11.5 percent to $6.57.
However, Macy’s and J.C. Penney Co. Inc. both saw their credit ratings reduced to junk status by Standard & Poor’s Ratings Services, which assigned subinvestment ratings of “BB,” down from the lowest investment grade, “BBB-minus.”
Neiman Marcus Inc. was dropped to “B” from “B-plus,” and Dillard’s Inc. to “B-minus” from “B-plus.” Nordstrom Inc. remained in investment territory, but was lowered to “BBB-plus” from “A-minus.” All the downgrades were based on expectations of a recovery that will be “slow and dependent on an improvement in the macroenvironment,” S&P said.
Retail stocks weren’t affected by the credit rating adjustments, which came late Thursday. Gainers included Zale Corp., up 17.8 percent to $5.04; AnnTaylor Stores Corp., 14.8 percent to $7; Tiffany & Co., 11.7 percent to $26.50; Sears Holdings Corp., 9.2 percent to $58.29, and Saks Inc., 8.8 percent to $3.10.
Repeating a trend of recent weeks, economic indicators that could be viewed as bad, but not worsening, supported stocks.
Last week’s 610,000 new jobless claims marked an improvement from the previous week, when 663,000 applied for unemployment assistance, according to seasonally adjusted figures from the Labor Department.