FASHION STOCKS CONTINUE REBOUND
Byline: Evan Clark / With contributions from Vicki M. Young / Jennifer Weitzman, New York / Joanna Ramey, Washington
NEW YORK — Stocks continued to rebound from their recent doldrums Wednesday and, with consumers getting back in their shopping groove, apparel and retail shares roared back even more vigorously.
Not all of Wednesday’s news was rosy, however. As Washington considered an economic stimulus package, Nordstrom Inc. and Kenneth Cole Productions each indicated they would resort to layoffs to offset still lagging sales.
The Dow Jones Industrial Average jumped 173.19 points, or 1.9 percent, to finish at 9,123.78. More impressive was the Nasdaq Composite’s 88.48 point, or 5.9 percent, leap to 1,580.81.
Shares of apparel makers and retailers generally outpaced the indices with strength reinvigorating all sectors. Among department stores, Federated closed up $1.41, to $30.79; while Nordstrom ascended 34 cents, to $15.32; Kohl’s, $3.01, to $53.45; and Dillard’s, 83 cents, to $14.02.
Specialty-store gainers included: Christopher & Banks, up $4.33, to $35.08; Hot Topic, up $2.91, to $29.95; and Intimate Brands, up $1.29, to $10.34. Among manufacturers, Kenneth Cole rose $1.69, to $13.50, despite a sober update on its business; Polo Ralph Lauren was up $2.30, to $21.30; and Tommy Hilfiger picked up 93 cents, to close at $9.40.
In Washington, lawmakers and administration officials continued to huddle Wednesday over what kind of economic stimulus package Congress should pass to stave off a recession. In testimony before the Senate Finance Committee, Treasury Secretary Paul O’Neill said President Bush is seeking $60 billion to $70 billion in assistance, but left open for discussion what form help should take.
O’Neill expects the economy to shrink in the third quarter, but said another downturn in the fourth quarter could be avoided if consumer confidence is restored. “The top of our list is to look at the consumer side,” said O’Neill, whose outlook for consumer spending was generally optimistic. “In an economic sense, we are seeing a trend of Americans, even with a heavy heart, regaining [their] footing.”
Lawmakers are looking at options including another tax rebate, accelerating business depreciation on renovations and equipment, assisting unemployed workers with health insurance payments, extending unemployment benefits and tax credits for small businesses. O’Neill noted that President Bush has talked about giving money directly to the states to use on job-creation projects like public works. Negotiators in both parties seem to agree that any benefits in the stimulus package should be short term.
Layoffs announced Wednesday, by retailers with ailing sales, underscored the need for some sort of stimulus. Since the beginning of September, Nordstrom Inc. has laid off 1,600 employees nationwide, or 3.6 percent of its total workforce of 45,000. About 1,350 of the reductions came from its stores, while the balance were in the firm’s corporate offices.
A company spokeswoman said the layoffs were a reaction to slumping sales and noted: “The amount of salespeople we have on the floor is in proportion to the amount of business we’re doing.”
Similarly, Kenneth Cole Productions’s chief financial officer Stanley Mayer told WWD that the firm would, as part of a cost-cutting program, reduce positions that “represent 10 percent of the corporate staff in New York and New Jersey.” He declined to elaborate further on the details.
September sales for the company were “well below plan” because of the recent tragic events, with comps down 32 percent for the last three weeks of the month. Prior to Sept. 11, comps were declining at a rate of 9 percent. Kenneth Cole reduced third-quarter earnings-per-share estimates to 27 to 30 cents, compared with previous EPS guidance of 40 to 42 cents.
Still, according to several executives at the Robertson Stephens Consumer Conference at The Pierre Hotel on Wednesday, some consumers are heading back into the stores.
A spokesman for Tiffany & Co. said: “We have seen improvement in most markets, except for Hawaii.” In the last week, however, the company has seen a pickup in sales and in store traffic. Tiffany said comparable-store sales were down 19 percent in the August-September period, including a 36 percent drop since Sept. 11, but were then down just 19 percent in the final week of September.
James Quinn, vice chairman, said the company was not changing its long-term goal of annual sales growth of between 12 and 15 percent, along with annual earnings growth of between 15 and 20 percent. The company plans to achieve those targets through new watch designs in mid-2002 and the expansion of the Lucida collection. Those between ages 45 and 65 are spending a large amount on luxury goods, Quinn said. “That should bode well for Tiffany [over] the next 12 to 15 years,” he said.