U.S. retailers endured a bumpier road than expected in 2014, but challenges in the stores hardly kept Wall Street’s bulls at bay.

This story first appeared in the December 31, 2014 issue of WWD. Subscribe Today.

That’s primarily because falling unemployment (down to 5.8 percent in November), rising gross domestic product (up to an annualized rate of 5 percent in the third quarter) and the Federal Reserve’s policy of low interest rates kept investors turning to a variety of equities — retailers’ included — and, with only rare exceptions, reaping rewards for doing so.

Still, retail traffic disappointed stores during the second half of the year, when most expected a marked upswing based on an improving U.S. economy, and the ripple effect hit stores’ suppliers, many of which observed the absence of customers from stores of their own. Lower gas prices late in the year were an unexpected gift to consumers and helped blunt the effect of a highly promotional retail market.

The challenges at retail might have limited the ability of securities to appreciate, but they hardly prevented it. With an average of a record high close per week throughout the year, the Dow Jones Industrial Average rose 8.5 percent to 17,983.07 as of Tuesday, below the double-digit gain of the S&P 500, which rose 12.6 percent to 2,080.35, and the slightly less robust gain of the S&P’s retailing subset, the S&P 500 Retailing Industry Group, which was up 9.8 percent to 1,031.98.

The WWD Global Stock Tracker, inaugurated in July but loaded with data from late 2013, outpaced the Dow slightly, rising 9 percent to 108.29.

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European markets had a so-so year as nations came back from the sovereign debt crisis of 2013 and played a game of tug-of-war between stimulus and austerity, with signs that the continent’s challenges, as recently seen in Greece, are far from resolved. London’s FTSE 100 was down 3 percent and Paris’ CAC 400 off 1.2 percent, while Europe’s largest economy, Germany, saw the DAX in Frankfurt rise 2.7 percent and Milan’s FTSE MIB increase 0.2 percent.

Even with a correction late in the year, Shanghai’s SSE Composite notched a nearly 50 percent gain, and despite friction with the government in Beijing, Hong Kong’s Hang Seng Index was up 0.8 percent. And recent actions by Japan to ease the tax burden on its companies and consumers helped the Nikkei 225 end the year with a 7.1 percent increase.

Among U.S. equities, hot categories translated into stock gains. The strength of performance apparel and the ath-leisure category helped Under Armour Inc. to the fourth best performance for the year among tracker stocks as shares rose 57.2 percent, and Hanesbrands Inc., active on the acquisition front, had the third best performance, with shares up 61.6 percent. Improved performance late in the year helped Denmark’s Pandora A/S top the tracker pack for 2014 as shares rose 71.6 percent, and Perry Ellis International Inc.’s 65.7 percent increase can be attributed to its determination to exit stagnant businesses, along with speculation about the possibility of a sale. G-III Apparel Group Ltd., growing organically as well as through the acquisition of other businesses and licenses, landed among the top gainers for the second year in a row.

One of the strongest performances in U.S. retail came from L Brands Inc., as its focus on intimate apparel insulated it from some of the pressures facing non-intimate apparel and sent its stock up 40.9 percent. Other standout retailers included Nordstrom Inc., leveraging its combinations of full- and off-price and off-line and online to a 27.3 percent increase; Dillard’s Inc., up 28.6 percent, and off-pricer Ross Stores Inc., up 26.3 percent.

 

 

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