Byline: Catherine M. Curan

NEW YORK — Retail stocks continued to slide Wednesday based on concerns that heavy promotional sales through the Christmas season will dent fourth-quarter earnings.
However, the declines were less severe than on Tuesday, particularly in the context of overall trading. The Dow Jones Industrial Average closed down 22 points Wednesday after gaining 28 points Tuesday.
Decliners on Wednesday included Ann Taylor, down 2 1/4 to 31 7/8; Dayton Hudson, 1 1/2 to 67 3/8; Sears Roebuck & Co., 5/8 to 45 1/8; Dillard Department Stores, 3/8 to 26; The Limited Inc., 3/8 to 17 3/4; J.C. Penney Co., 1/8 to 42 5/8; Woolworth Corp., 3/8 to 14 5/8; May Department Stores, 1/4 to 33, and Kmart Corp., 1/4 to 12 5/8.
Bucking the trend, Federated Department Stores rose 1/8 to 18 3/4, Wal-Mart Stores inched ahead 1/4 to 21 1/2, and Gap Inc. added 3/8 to 29 1/2. Nordstrom was flat at 40 1/4.
Edward Johnson, at Johnson Redbook Service, said he expects retail stocks to remain under pressure for the rest of the week, adding, “We don’t know when recovery will begin.”
He said women’s specialty stores and off-pricers are being hard hit “by the perception that values are better at department stores and discount chains.”
Thomas Tashjian, retail analyst at First Manhattan, said that in addition to a difficult fourth quarter, “it will be rough sledding for next year.”
“For the post-war baby boomer,” he added, “there is a higher interest in home goods and family services as a reflection of status than fashion attire.”
Tashjian said he believes some companies will adjust and add more nonapparel merchandise, but he did not paint a bright picture for these stocks. Jeffrey Edelman, at C.J. Lawrence, said he expects to see some recovery for apparel stocks next year, noting that high interest rates should crimp big ticket purchases.
“We’ve seen some dent in durable goods purchasing, and housing starts are weakening,” Edelman said.
Edelman slashed his fourth-quarter earnings estimate for a number of retailers because of the disappointing picture for December sales. He shaved 5 cents a share off his estimate for Ann Taylor, reducing it to 35 cents for the fourth quarter, against 14 cents last year. The consensus range had been 35 to 40 cents. Lookingthe year to date, Johnson noted that share prices for the 25 retail stocks he covers was down 21 percent since the end of last year to Dec. 27. “The steepest decline was in December,” he said, noting that the group was off 2 to 3 percent for the year through June and off 15 percent for the year through November.
“Winners are few and far between,” Johnson said. Those in his group include Ann Taylor, up 38 percent for the year to date, and U.S. Shoe Corp., up 27 percent.
— Fairchild News Service

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