SPIEGEL GROUP DEFIES RETAIL STOCK DECLINES
Byline: Evan Clark
NEW YORK — Retail stocks continued to fall Tuesday, though shares of the Spiegel Group bounced back from a new low on Monday.
Overall it was pretty bleak. The Standard & Poor’s retail index dropped 14.08 points, or 1.5 percent, to end the day at 925.18, dropping almost twice as far, on a percentage basis, as the S&P 500 which was down 9.93 points, or 0.9 percent, to 1,136.61. The Dow Jones Industrial Average slid 48.99 points, or 0.5 percent, to 10,313.71.
Spiegel’s stock ran counter to the trend and rose 39 cents, or 24.4 percent, to $1.99, one day after mining a new 52-week low of $1.17 in intraday trading, on the Nasdaq. Shares of the Downers Grove, Ill.-based catalog retailer hit their high of $10.72 last July 23, remained close to that high until Sept. 11 and have slid downhill ever since.
Ladenburg, Thalmann & Co. equity analyst Eric Beder attributed the share’s overall weakness to underperformance at the firm’s Eddie Bauer and credit card divisions.
As reported, Spiegel had a fourth-quarter net loss of $378.1 million, or 14 cents a diluted share, compared to net income of $65.4 million, or 17 cents, in the year-ago period. Sales for the period ended Dec. 29 withered 14.6 percent, to $920.9 million.
Spiegel also said it would sell its credit card unit in order to concentrate on restoring its core business. It reported an after-tax net loss of $85.7 million, or 65 cents, from discontinued operations, reflecting its plan to dispose of the private label and bank card operations.
“The credit card division has decayed to levels that probably, if this company did not have a deep pockets owner in the Otto [Versand GmbH] group, would cause you to question the fiscal viability of Spiegel,” said Beder. “Fifteen percent of credit card receivables are delinquent and that’s quite amazing.”
Meanwhile, the overall market appeared to be coming to grips with the cyclical nature of retail stocks and continued to digest several downgrades by Merrill Lynch on Monday.
Beder noted investors “are getting the feeling that upside for the first quarter is going to be limited, especially in some of the larger-cap names.”
Retailers with large market capitalization that saw their shares drop Tuesday included Federated Department Stores (down $1.26 to $38.05), J.C. Penney (80 cents to $19.19), Kohl’s Corp. ($1.32 to $69.10), Limited Inc. (92 cents to $16), Target Corp. ($1.05 to $41.80) and Wal-Mart Stores (63 cents to $58.93).
Specialty stores that saw decreases for the day included Ann Taylor Stores (down $2.26 to $40), Chico’s FAS ($2.46 to $30.55), Urban Outfitters ($1.46 to $21.42) and Pacific Sunwear (56 cents to $24.04).