Retail shares slid 0.8 percent Tuesday as investors failed to maintain Monday’s momentum and Washington and Wall Street continued to debate the intricacies of their love-hate relationship.
This story first appeared in the March 25, 2009 issue of WWD. Subscribe Today.
The lion’s share of Monday’s large advances were retained as the S&P Retail Index dipped 2.33 points to 286.24 points and the Dow Jones Industrial Average fell 1.5 percent, or 115.65 points, to 7,660.21.
Retail shares shot up 6.4 percent on Monday after the government unveiled a long-awaited plan to pool up to $1 trillion of toxic real estate debt in a public-private partnership. Although Wall Street applauded the move to free banks of their questionable debt, the specter of more onerous regulations raised concerns, especially since Washington has already taken significant stakes in some of the country’s largest banks.
Treasury Secretary Timothy Geithner said more changes would be necessary to repair the breakdown in the financial system, a failure highlighted by the American International Group bailout and politically sensitive retention bonuses to the insurer’s executives.
“Our system permitted a scale of risk-taking that has caused grave damage to the fortunes of all Americans,” said Geithner in written testimony to the House Financial Services Committee. “We must ensure that our country never faces this situation again. To achieve that goal, the administration and Congress have to work together to enact comprehensive regulatory reform and eliminate gaps in supervision.”
Oversight is also a burning issue in corporate boardrooms throughout the industry, with looming proxy fights to alter the boards of Target Corp. and Charlotte Russe Holding Corp.
On Tuesday, Charlotte Russe’s chairman Jennifer Salopek, on behalf of the retailer’s independent directors, advised shareholders to vote for the company’s nominees and reject the alternative slate proposed by KarpReilly Capital Partners, which tried unsuccessfully to take over the company last year. Shares of Charlotte Russe fell 7.5 percent to $7.01.