Every clothing store stock is down over the past month, led by a 73.2% decline at J.Jill Inc., notes retail expert Mitch Nolen.
J.Jill JILL, -6.76% stock plummeted 53.5% on Thursday after first-quarter profits and sales fell and the company gave weak guidance.
Among the challenges J.Jill highlighted was weather, with a cold, wet start to spring hurting a number of companies in the sector.
Every. Single. Clothing store's stock fell last month, nearly all by double-digit percentages. The worst performers include J. Jill, down 73% in just one month, and Francesca's, down 92% from a year ago. $jill $fran $gps $lb pic.twitter.com/2TIyMhXjfp
— Mitch Nolen Retail (@mitchnolen)
Abercrombie & Fitch Inc. ANF, -1.68% , down 43.2% for the past month, took its biggest single-day tumble last Wednesday after reporting weak first-quarter same-store sales. However, analysts are bullish about the future of the apparel and accessories retailer, which also announced that it would shutter three flagship stores.
“In our view, this selective pruning of the fleet is a necessary measure which, over the medium term, will help improve profitability and allow Abercrombie & Fitch to focus its investments on stores and channels which truly deliver,” wrote Neil Saunders, managing director at GlobalData Retail.
And Ascena Retail Group Inc. ASNA, -7.45% , down 19.2% for the past month, announced that it would shutter all 650 Dressbarn locations. Other brands in the Ascena portfolio Ann Taylor and Loft.
Nolen also points out that clothing manufacturers have declined over the past month as well. Capri Holdings Ltd. CPRI, +4.77% , the parent company for brands like Versace and Michael Kors (down 26%); Ralph Lauren Inc. RL, +1.95% (down 19%); and VF Corp. VFC, +1.31% , parent to Vans and The North Face (down 8.3% for the last month), would fall into this category.
“With 1Q earnings season now winding down, it’s increasingly evident that 2019 has gotten off to a challenging start for retailers – as evidenced by the fact that the average stock in the group is now -18% since the first of our companies reported 1Q results, and only two companies we cover are up during the time frame: Adidas AG at +12% and Under Armour Inc. at +4%,” wrote Wells Fargo in a Monday note.
Wells Fargo says there are three reasons for the stock pressure: tariff risk; an accounting change is shifting the way lease debt is reported, which is increasing retail-company debt; and guidance is getting cut by a “surprising” number of companies.
And weather, which is frequently used as an excuse for bad results, actually was a headwind.
“The persistently cool spring weather proved difficult for retailers, as there was no temperature catalyst to incite shoppers to refresh their closets for the new season,” Wells Fargo said. “Unfortunately, given the current weather forecast, early summer is shaping up to have a similar dynamic.”