NEW YORK — Although a drop in the barrel price of oil below $40 lifted stocks Friday, there was barely enough strength in the rally to buoy stock prices for the week.
As a result, the WWD Composite Stock Index squeezed by with a 0.8 percent gain, rising to 106.53 at Friday’s close from 105.64 the prior week. The S&P 500 wrapped up the week down 0.2 percent to 1,093.56 from 1,095.66.
Meanwhile, the likelihood of higher interest rates and the reality of higher gas prices are contributing to an increasingly negative view of apparel stocks.
Merrill Lynch analyst Virginia Genereux on Thursday released a research note, entitled “Brand Apparel: Stepping Back,” in which she lowered her opinions of Tommy Hilfiger, Liz Claiborne and Jones Apparel Group to “neutral” from “buy.”
In addition to the interest rate-gas price combination, she noted that “retail sales weakened slightly in April and our contacts indicate that May sales are so far only fair.” Genereux maintained her “buy” rating on Polo Ralph Lauren, a firm whose earnings growth “is poised to accelerate to a midteens rate for the next few years.”
The Merrill Lynch analyst allowed that, “while there is something of a resurgent apparel fashion cycle, this may not accrue to the benefit of the big traditional apparel vendors the way it has in the past. Department stores’ recent success with smaller, more exclusive brands in the women’s better zone — brands such as Calvin Klein and H Tommy Hilfiger — means that they are likely to allocate additional shelf space to these smaller brands next year, at the expense of larger, more established lines.”
Shares of Liz Claiborne ended the week down 2.8 percent at $33.26 while Tommy Hilfiger closed Friday at $15, which is up 1.8 percent for the week.
Jones Apparel closed Friday at $36.70, up 0.1 percent from the prior week, while Polo Ralph Lauren wrapped up at $33.10, up 3.4 percent.
— Arnold J. Karr and Arthur Zaczkiewicz
WWD Composite Stock Index vs. S&P 500