NEW YORK — The major indices closed last Friday mostly unchanged after plunging earlier in the week over worries about the impact of rising interest rates and energy costs on corporate profits, and of sagging consumer confidence.
In the retail and apparel sectors, stocks mirrored the overall market. The WWD Composite Stock Index closed the week down 0.4 percent to 1,111.34 from 1,115.70 in the prior week, which compares with the broader S&P 500’s 0.2 percent drop to 1,287.23 from 1,289.43.
On the vendor side, investors were keeping a close eye on Liz Claiborne Inc., which posted a decline in fourth-quarter profits partly due to stock-option expenses and lower wholesale sales. For the quarter ended Dec. 31, net income fell 5.3 percent to $78.3 million as sales were essentially flat at $1.2 billion. Wholesale sales fell 7.4 percent to $647 million, mostly due to declines in the firm’s domestic Liz Claiborne, Ellen Tracy, Sigrid Olsen and licensed DKNY Jeans men’s businesses. Earnings per share came in ahead of Wall Street estimates. For the current year, the company lowered its earnings guidance.
Goldman Sachs analyst Margaret Mager said the lower profit expectation reflects “a more conservative view of the spring selling season,” among other issues. Mager noted, “Given low expectations, Liz shares rallied 3 percent on a belief that the outlook wasn’t worse.”
The analyst said a low price-to-earnings ratio and strong cash flow at the company “support the stock near term, but issues remain.”
“Channel consolidation, lackluster factory outlets, low specialty retail margins, added costs for a fragrance launch and other initiatives and pending departure of chief executive officer [Paul] Charron will likely hold back the stock in 2006,” she said.