• Home
  • V1
  • Design
  • Fitch foresees "intense promotional activity" in 2013

Fitch foresees "intense promotional activity" in 2013

By FashionUnited

loading...

Scroll down to read more

Thursday left international markets closing mixed and

juggling the balance between bland macroeconomic data and encouraging corporate releases. Ann Inc., Limited Brands, Macy´s, American Apparel and Urban Outfitters topped the corporate news.

The Dow Jones Industrial Average declined 42.47 points, or 0.3 percent, to 13944.05, further retreating from multiyear highs hit Feb. 1. The S&P 500 also closed lower than the day before, dropping 2.73 points, or 0.2 percent, to 1509.39. In the same vein, the Nasdaq Composite Index declined 3.34 points, or 0.1 percent, to 3165.13.

More encouraging were the data brought by the apparel stocks, which presented positive sales in the last quarter. However, the FashionUnited Top 100 Index Todays Index traded low, closing at 1,396.86.

Ann, the owner of the Ann Taylor clothing brand, slid 7.9 percent after the retailer cut its fiscal-year 2012 guidance. Meanwhile, Limited Brands fell 3.3 percent after the apparel retailer reported January same-store sales that rose above expectations, but kept its fiscal fourth-quarter earnings estimate unchanged. Among the laggards, The Cato Corp., which shred 1.57 dollars to 25.99 dollars. The retailer said that a key revenue figure fell 12 percent in January. It blames the drop on delays in shoppers’ income tax refunds, reported ‘The Washington Post’.

Commenting the retail data, rating firm Fitch highlighted that “Comparable (comp) store sales trends for fourth quarter were largely in line with Fitch's expectation for holiday sales growth of 3 percent. Improved sales trends in late December and strong post-holiday sales in January 2013 helped offset the weakness many retailers saw in November 2012 due to the impact from Superstorm Sandy and concerns around fiscal policy. As companies report fourth quarter earnings, we expect gross margins will be flat to down, reflecting significant promotions to drive consumer traffic. We expect intense promotional activity will be a key driver for increasing consumer traffic given a continued weak recovery in consumer spending and an ongoing focus on value going into 2013.”

With regards to the coming months, the rating firm said in a note published Thursday: “While apparel-related retailers will benefit from lower cotton prices and improved inventory control, we expect these retailers will have taken a significant portion of these savings and reinvested into sharper pricing and online channel to drive traffic. Among Fitch rated/monitored apparel retailers Gap, Limited Brands, and Burlington Coat Factory are expected to continue the positive momentum in 2013, on top of their reported comps growth at 5.0 percent, 6.0 percent, and 1.2 percent, respectively in 2012.”
FashionUnited