NEW YORK — Another bumpy week of trading on Wall Street left stocks mixed by Friday. In retail, mergers and acquisitions rumblings stirred the sector.
As a result, the WWD Composite Stock Index finished the week up 0.9 percent to 1,098.98 from 1,089.15, while the S&P 500 shed 0.06 percent to 1,251.54 from 1,252.30.
Inflation worries continued to wear down investors, who had fled the retail sector before returning later in the week to snatch up bargains and take some profits during a two-day rally that bolstered the Dow Jones Industrial Average by over 300 points. An improved U.S. trade deficit was one of the economic factors that inspired some investors to buy.
On the retail and fashion front, rumblings last week in WWD that a possible deal was brewing between J.C. Penney and Polo Ralph Lauren sent shares of Polo up 4.2 percent Friday to $57 from the prior day’s close. For the week, the stock jumped 3.2 percent.
On Thursday, sources indicated that a “dream” prospect of an exclusive line by Polo for the moderate department store retailer could be a boon to the bottom lines of both public companies, and could happen sometime in 2007. The deal could involve a wide range of products in men’s, women’s, children’s and home, and could be structured similarly to Polo’s exclusive agreement with Kohl’s under the Chaps label.
On Friday, investors were reminded that Penney’s chairman and chief executive officer, Myron E. “Mike” Ullman 3rd, was on Polo’s board and worked with president Roger Farah at Macy’s in the early Nineties. Ullman is also well acquainted with the luxury world, having previously worked at LVMH Moët Hennessy Louis Vuitton.
Investors are also keeping a close eye on Warnaco Group Inc., which was one of the top gainers in the WWD Composite Stock Index for the week. Shares of the supplier finished the week up 8.1 percent following a report in these pages that Phillips-Van Heusen may have Warnaco in its sights as an acquisition target, according to financial sources outside the company.
“Acquisitions are a key part of our growth. We are going to end this fiscal year with over $400 million in cash, so we are looking for appropriate growth vehicles,” said PVH ceo Emanuel Chirico following the company’s annual meeting Tuesday in New York.
Sources said there are no indications a deal is in the works, but financial sources have been discussing how the two firms would be an “ideal combination.”