The agreement for two private equity firms to acquire J. Crew Group Inc. helped retail stocks overcome concern about European debt and tensions in Korea last week, lifting the S&P Retail Index 2.4 percent for the week and pushing the year-to-date gain to over 20 percent.
Despite a 0.4 percent dip on an abbreviated day of trading Friday, the S&P Retail Index ended the week at 495.13 after flirting Wednesday with its 52-week high of 499.41, reached on April 26. The Dow Jones Industrial Average and the S&P 500 both lost ground Friday and finished the week down 1 percent and 0.9 percent, respectively, at 11,092 and 1,189.40.
The retail index’s gain for 2010 stood at 20.4 percent at week’s end.
The announcement Tuesday that J. Crew had agreed to be acquired and taken private by TPG and Leonard Green for about $3 billion helped boost the stock 19.9 percent for the week to $43.75, 25 cents above the $43.50 proposed in the takeover deal. The disparity means that many investors are figuring that the deal will be sweetened either by the designated buyers or others before it’s consummated.
Related Galleries
Merger and acquisition interest has been ubiquitous in the specialty apparel arena for months, and the J. Crew agreement only added to it. Specialty retailers registering gains of more than 5 percent for the week included Guess Inc., up 14.4 percent to $50.95 after a strong third-quarter earnings report; Citi Trends Inc., up 9.9 percent to $23.51 following a report of improved sales results heading into the fourth quarter; Hot Topic, up 7 percent to $6.09; Chico’s FAS Inc., up 6.6 percent to $12.08. and Rue 21 Inc., up 6.4 percent to $29.96.
The mix of winners and losers was roughly the same as in the prior week. Of 172 issues tracked by WWD, 122 were up, versus 117 the prior week, while 45 were down and five were unchanged.
Anxiety about Chinese credit markets and hostilities between North and South Korea hurt Asian markets, with Tokyo’s Nikkei 225 up 0.2 percent while other regional indices fell. In Europe, troubled by the debt crisis in Ireland much as it was earlier by similar fears about Greece, the DAX in Frankfurt eked out a 0.1 percent gain while the FTSE 100 in London and the CAC 40 in Paris were down 1.1 percent and 3.4 percent, respectively.
This week, markets will react to reports on November sales from major retailers on Thursday and The Conference Board’s monthly reading on consumer confidence on Tuesday.