Bad day for upscale department storesThursday, 11 October 2012
The FashionUnited Top 100 Index, which gather the largest 100
fashion and apparel quoted companies by market cap, closed down on Wednesday, losing 7.1 points to close at 1,414.96. Burberry and American department stores were big news in a mixed session.
Despite not being among market movers, British fashion knight, Burberry, closed up by 0.1 percent in the eve of releasing its fiscal second quarter trading update. It is a quite expected landmark, as Burberry got the industry talking in September with its profit warning.
Seymour Pierce is forecasting like-for-like (LFL) retail sales will be down 2 percent year-on-year, with total sales on a constant currency basis up 5 percent, reported ‘Forecast’ on Wednesday. "Key focus will be for news on whether the retail slowdown has worsened or stabilised, how the stock position is and, more importantly, the management’s expectations for the wholesale business for the spring/summer 2013 collection (H1 [first half] wholesale guidance was for mid-single digit growth: SPL [Seymour Pierce] H2 assumption +3.9 percent underlying)," the broker said.
"We are also looking for an update on what action management has taken beyond freezing headcount, travel, cutting marketing spend and deferring IT projects in its ‘pay-as-you-go’ approach. In addition, we are still waiting for an update on Fragrance after management terminated its licence earlier this year," Seymour Pierce's Kate Calvert added.
In New York, department stores were trading mixed at midday. Shares of some top department store retail companies are mixed at 1 p.m. Kohl's Corp. fell 26 dollars or 5 percent, to 50.34 dollars, while peer Macy's Inc. also slipped, by 1.1 percent, to 39.19 dollars. Also decreases for Nordstrom fell (-1.3 percent to 55.38 dollars), J.C. Penney Co. (dropped 22 dollars to 24.17), and Saks shred 7 percent to 10.51 dollars. On the contrary, those catering for smaller pockets, such as Sears Holdings Corp. and TJX Companies, rose, 3 percent and 5 percent respectively.
Elsewhere, Pacific Brands was among the big losers of the session, shedding of 1.68 percent.
Meanwhile, Fifth & Pacific – formerly known as Liz Claiborne- also became big news as it has announced its preliminary results for the third quarter of fiscal 2012. Per the company, adjusted EBITDA is expected to come in the band of 17-20 million dollars. Despite the Juicy Coture brand has turned into a disappointing stock (predicted to down its direct-to-consumer sales by 1 percent), its sister brands Kate Spade and Lucky's direct-to-consumer (including e-commerce net sales) comparable sales are anticipated to increase by 21 percent and 4 percent, respectively.
Moody's Investors Service said for Bloomberg that the guidance cut is bad for Fifth & Pacific's credit, but said it is not making any immediate changes to its ratings. Moody's currently has a "B2" rating on Fifth & Pacific. That rating is ‘junk’ status, five notches below investment grade.