Economic Update — Retail Winners, Retail Losers
- Mar 11, 2009
As the recession grinds on, the retail world seems to be dividing more clearly than ever into winners and losers. Or maybe that should be a three-part division: über-winner Wal-Mart, relative winners and serious losers. As reported previously by CPN, Circuit City closed its doors forever last weekend, and thus became an example of a major loser. But does that make its rival and one-time electronics upstart Best Buy a winner? Wall Street, at least for the moment, thinks so. Best Buy shares, enjoying various upgrades by rating agencies, far outpaced the general upward movement of share prices on Tuesday by gaining 13.51 percent. The company’s stock performance since the beginning of 2009 is still down about 12 percent, though not too many other companies can claim upward movement of their stocks during the year, so that might count as a relative winner. Another distinct loser in the retail realm is Iridesse, a small group of stores specializing in pearls owned by Tiffany & Co., which announced Tuesday that it’s pulling the plug on the chain. With only 16 stores, the closings won’t leave a lot of large vacant spaces in a lot of malls, but rather some small upscale holes in upscale places, such as the Pier Shops at Caesar’s in Atlantic City, Tyson’s Galleria in McLean, Va., the Town Center at Boca Raton, and Westfield Century City in Los Angeles. Tiffany’s made its foray into pearl shops in 2004, when the retail world was an altogether different place. The market for pearl-oriented bling just isn’t what it used to be, it seems, and not even First Lady Michelle Obama’s choice of a double-string pearl necklace for her official portrait is going to change that. Did the stock market find its bottom early this week, or was it the latest bounce of a dead-cat variety for the indices? Time will tell, but for the moment the upsurge on Tuesday was the largest for the Dow Jones Industrial Average since November, with the index up 379.44 points, or 5.8 percent. The S&P 500 gained even more in terms of percentage, up 6.37 percent, and the Nasdaq did best of all, up 7.07 percent. Which could well mean that Wednesday will see the investing herd turn around and sell. Five times so far this year the Dow has gained more than 200 points in single session, and each time it lost it all the very next day. Apparently driving the upward sentiment on Tuesday was Citigroup, which had the word “profit” associated with it, something that hasn’t happened in a while. According to the much-pilloried CEO Vikram Pandit in a letter to employees, the bank made money in January and February, and was on track to make $8.3 billion for 1Q09. So there’s a glimmer of hope that the 36 percent stake the American people own in the company might someday amount to something.