Fresh hints consumers really do have money to spend when they find their way into stores pushed retail stocks up 1.7 percent Monday.
This story first appeared in the May 4, 2010 issue of WWD. Subscribe Today.
The S&P Retail Index rose 8.2 points to end the day at 483.35, making up some of the ground lost in last week’s 3.9 percent decline. The Dow Jones Industrial Average gained a lesser 1.3 percent, or 143.22 points, to 11,151.83, and the S&P 500 passed the 1,200 mark, rising 1.3 percent, or 15.58 points, to 1,202.26.
March disposable personal income increased 0.3 percent from February, the first gain this year. The Commerce Department’s measure of consumers’ ability to spend was flat in February and down 0.2 percent in January.
“In light of near 10 percent unemployment and 17 percent underemployment, the recovery has been remarkable, but the 83 percent of people with full-time jobs are spending again — big time,” said Craig Johnson, president of Customer Growth Partners.
Among the retailers gaining ground were The Talbots Inc., up 6.5 percent to $17.52; Nordstrom Inc., 5.6 percent to $43.63; Saks Inc., 5.6 percent to $10.30; J. Crew Group, 4.7 percent to $48.63, and Ann Taylor Stores Corp., 4.4 percent to $22.65.
Shares of Montreal-based jewelry retailer Birks & Mayors Inc. shot up 94.7 percent to $1.85 after the company reported an 18 percent rise in fourth-quarter comparable-store sales. The company also said it reduced its debt load by $25 million to $28 million last year.
Another jewelry retailer, Zale Corp., saw shares inch up 0.3 percent to $3.27 after it extended a deadline on a roughly $6 million payment to Citibank until May 31, according to a filing with the Securities and Exchange Commission. The jeweler previously said Citibank could terminate its credit card deal due to a shortfall in credit sales unless the payment was made. The companies have entered into exclusive negotiations to replace the agreement while Zale continues to look for strategic alternatives to ease its financial woes.
Shares of General Growth Properties Inc. rose 6.9 percent to $16.78 Monday. A half hour before U.S. markets closed, the company said it would continue to back the recapitalization proposal submitted by Brookfield Asset Management, Pershing Square Capital Management and Fairholme Funds when it seeks Manhattan bankruptcy court approval of bidding proceedings on Wednesday.
The $6.55 billion equity investment and a $2 billion capital backstop from the three entities continue to contain the issuance of warrants — but now on a phased-in basis, according to GGP.
GGP is seeking to have the Brookfield-led bid be given “stalking horse” status. At press time, Reuters reported that Simon Property Group, which has had two of its earlier offers rejected by GGP, has teamed up with The Blackstone Group for a cash and stock offer to takeover GGP. The deal reportedly is for $13.25 a share, with $3.25 in cash and $10 in stock. Simon also reportedly included a second prong to the offer based on a recapitalization scenario as an alternative to help bail GGP out of bankruptcy proceedings.
Court records weren’t available at press time Monday for either documents filed by GGP on the Brookfield proposal nor the Simon-Blackstone bid. Neither officials at Simon nor Blackstone were reachable for comment at press time. Officials at GGP could not confirm the Simon-Blackstone offer.
Markets were closed for holidays in Japan and the U.K., but investors pushed the Hang Seng Index down 1.4 percent to 20,811.36 in Hong Kong and the CAC 40 rose 0.3 percent to 3,828.46 in Paris.
Shares of Hermès International rose 2 percent to 101.65 euros, or $135.12, on the Bourse with more than 135,000 shares trading hands, more than twice the usual number. Former chief executive officer Jean-Louis Dumas, a fifth generation descendent of the firm’s founder, died over the weekend, sparking some speculation that the family might become more willing to sell the business.