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European markets feel the blues

By FashionUnited

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Wednesday session was heavily weighted by corporate releases

including Michael Kors, Chico´s and Brown Shoe. Macroeconomic news drowned European markets while some big players within the fashion industry such as H&M and SuperGroup saw a good deal of trading.

European stock markets dropped on Wednesday, after the OECD cut its outlook for global growth and warned that exiting monetary-easing programs puts stability in the bond markets at risk. European equities had hit new intra-day lows by midday, with traders looking at a large rise in US Treasury yields and subsequent fears that the US Federal Reserve to explain the oves. The Stoxx Europe 600 index lost 1.4 percent to 303.96 points, blowing the 1.3 percent gain from Tuesday.

Shares of H&M Hennes & Mauritz AB SE:HMB -2.81 percent gave up 2.2 percent, after analysts at Goldman Sachs cut the Swedish fashion retailer to sell from neutral. Goldman Sachs has recently cut its recommendation on the H&M stock to ‘sell’ from ‘neutral.’

Meanwhile, fashion peer SuperGroup gained 4.6 percent to 789 pence (Rs 668.6), with Merrill Lynch raising its target price to 900 pence (Rs 762.7).

Chico’s FAS, Inc. shares declined 6.62 percent to 18.06 dollars (Rs 1,012.7) Wednesday, after the company said its fiscal first-quarter earnings slipped 4.7 percent, missing Wall Street forecast. The womenswear group reported flat same-store sales and narrowing margins.

For the quarter ended May 4, Chico’s reported a profit of 51.1 million dollars (Rs 286.5 crores), or 31 cents (Rs 17.36) a share, compared to the past ear´s same quarter profit of 53.6 million dollars (Rs 300.8 crores), or 32 cents (Rs 17.92) a share. Sales rose 3.1 percent to 670.7 million dollars (Rs 3,763.9 crores). Analysts polled by Thomson Reuters had most recently forecast earnings of 36 cents (Rs 20.16) a share on revenue of 708 million dollars (Rs 3,970 crores).

Also reporting on Wednesday was Brown Shoe Co., which saw a loss in the first quarter from a year ago due to costly restructuring charges. The company said it lost 10.8 million dollars (Rs 60.5 crores), or 26 cents (Rs 14.56) per share, in the three-month period ended May 4. On a yearly basis, this compares with a profit of 1.7 million dollars (Rs 9.5 crores), or 4 cents (Rs 2.24) per share, in the year-ago period.

Excluding restructuring costs, the company earned a profit of 32 cents (Rs 17.92) per share. Revenue tripped 1.6 percent to 588.7 million (Rs 3,307.6 crores) from 598.2 million dollars (Rs 3,354.4 crores), compared to the 22 cents (Rs 12.32) per share on revenue of 608.1 million dollars (Rs 3,409.9 crores) expected by analysts surveyed by FactSet.

"Despite uncooperative weather in February and March, we were able to deliver better-than-expected results for the quarter," said Russ Hammer, chief financial officer of Brown Shoe, in a statement.
FashionUnited