The International Council of Shopping Centers predicted comparable-store sales would rise modestly this holiday season, helping to push retail stocks up 1.7 percent Monday.
This story first appeared in the September 28, 2009 issue of WWD. Subscribe Today.
The S&P Retail Index perked up 6.39 points to 378.79 percent and most apparel vendors also gained steam. However, both Liz Claiborne Inc. and Jones Apparel Group Inc. missed the rally after Goldman Sachs & Co. analyst Benjamin Rowbotham downgraded the stocks to “Neutral” from “Buy.” Claiborne’s stock fell 1.3 percent to $5.29 as shares of Jones dipped 0.7 percent to $17.47.
The ICSC forecast a 1 percent comps rise for November and December, following the 5.8 percent drop a year earlier. “This year, retailers will experience their first nonrecession holiday season in three years and economic growth is fundamentally on the mend, even though there will be lingering pockets of weakness,” said a report from the ICSC.
Rowbotham said Claiborne’s trends would be “choppy” in the near term, but that the company’s turnaround would succeed.
“Our initial upgrade [in May] had hinged on expectations for a cyclical margin recovery, improved Liz brand trends, and valuation expansion from reduced bankruptcy fears,” said the analyst. “While this last point has been borne out, success on the other two have only been partially realized, leading to underperformance versus the market….We still see Liz as a survivor and believe management will ultimately turn fundamentals around, but trends could remain volatile in the near-term.”
Meanwhile, outdoor lifestyle retailer Gander Mountain Co. said it would get out of the stock game altogether and go private via a one-for-30,000 reverse stock split, which would reduce the number of shareholders to below 300. Shareholders left with less than one share would receive $5.15 for each share they held prior to the reverse split. Shares of the St. Paul, Minn.-based firm rose 33.5 percent to $5.10.