NEW YORK — Stocks rallied on Friday as oil prices fell and the Federal Reserve said manufacturing production increased.
As a result, the WWD Composite Stock Index rose 2.2 percent, to 1,132.64 from 1,108.80 in the prior week, while the broader S&P 500 gained 2 percent, to 1,307.25 from 1,281.58.
Within the retail sector, Wall Street was buzzing about Jones Apparel Group putting its Nine West business on the auction block, according to financial sources.
Merrill Lynch analyst Virginia Genereux said in a research note that the sale of Nine West was “a possibility we have highlighted in recent notes.”
“The bad news is that selling Nine West is materially dilutive [to Jones’ earnings per share] in almost any likely use-of-proceeds scenario,” Genereux said. “While Nine West has underperformed, it is Jones’ most profitable business and nearly 40 percent of company-wide operating profit.”
The analyst added that Jones would have to get a “10 percent-plus yield on the Nine West proceeds [assuming a $1.8 billion valuation and $180 million in pretax earnings] for a sale of the business to be accretive.”
But Genereux said the good news is a “dare to dream” scenario “in which Jones basically swaps Nine West for Saks Fifth Avenue.”
Financial sources said Nine West does about $1 billion in annual wholesale sales, and about another $900 million or so in retail sales. A sale of the entire unit could fetch at least $2 billion for Jones, some Wall Street analysts predicted early last week.
In addition to footwear, the Nine West brand is a big player in the accessories business, offering handbags to small leather goods. The company also has a small apparel component. The Nine West stable of brands includes Nine West, Enzo Angiolini, Bandolino, Easy Spirit and Pappagallo.