The least optimistic in the financial markets consider a turnaround in apparel a long shot even by year’s end, although some are hoping that fourth-quarter profits among apparel retailers and wholesalers will provide a pleasant surprise that lifts stocks early in the year. Failing that, some consider "easy same-store sales comparisons in the back end of the year" to be the best hope for a fashion stock rebound.
Last year, for the first time since before World War II, the equity markets weathered their third consecutive year of declines as economic anemia and political uncertainty battled for headlines with tales of corporate malfeasance. What many considered the worst holiday season in three decades depleted fashion stocks further.
In 2002, the 30 stocks that make up the Dow Jones Industrial Average fell by 16.8 percent while shares in the broader Standard & Poor’s 500 index retreated 23.4 percent. Although its composition was altered in June, the S&P retail index slid a slightly steeper 23.7 percent, according to calculations provided by Goldman, Sachs & Co. Archrival department store groups Federated and May Co. limped across the finish line with negative comparable-store sales results and declines of 29.7 and 35.9 percent, respectively, in their stock prices.
Still, some managed a good year. Among them were apparel vendors including Liz Claiborne Inc. (up 20.1 percent for the year) and Jones Apparel Group Inc. (up 6.8 percent) and certain retailers that had struggled operationally, such as Saks Inc. (up 25.7 percent) and Gap Inc. (up 12.1 percent). Two lifestyle brands, Quiksilver and Fossil, had the biggest gains of the companies covered — 55 and 45.3 percent, respectively.
Looking out over the equity markets’ prospects in 2003, David Wyss, chief economist at S&P, noted, "There are just so many question marks out there."
The decline in the markets that started in 2000, the economist said, came in three tiers: technology’s tailspin in 2000; manufacturing’s mauling in 2001, and last year’s most dramatic declines in market capitalization spurred by corporate scandals, a stagnant economy and fears of a war with Iraq.