investors absorbed the latest downgrade on Greek sovereign debt while fretting over a slew of recent economic data that paint a picture of slowing global growth. Major fashion retailers suffered the Greek burden.
The Stoxx Europe 600 index closed down 1.3% at 274.70, dragged lower by heavily-weighted oil majors BP PLC and Total SA--down by 2.3% and 2.4%, respectively, in step with a fall for oil futures. The Standard & Poor's 500 index fell 2.3% Wednesday, its sharpest decline since August, as economic reports fueled worries the recovery in the U.S. is running out of steam. In the same vein, the FashionUnited Top 100 Index fell down to 1325.43, closing 6.33 points below the previous day.
Shares in Burberry were off the mark, despite Credit Suisse raising its target price from 1,120p to 1,310p for the luxury brands. The broker has kept its ‘neutral’ rating, saying that “its rich valuation remains the main impediment for us to turn more positive considering the greater upside we see elsewhere in the sector.” In the meantime, ASOS, the internet fashion retailer, was a heavy faller despite reporting profits ahead of expectations in the year to 31 March as sales continued soaring.
U.S. stock markets also moved lower in early Wall Street trading, adding to heavy losses on Wednesday. Big news in American soil was that Citi wrote in a note to clients: "We hosted very upbeat meetings with management today. Macy's remains in the very early innings with its three key initiatives: 1) My Macy's (3rd/4th inning); 2) omni-channel integration (2nd inning); and 3) Magic Selling Training (top of the 1st inning). The continued execution of these initiatives positions the company well to gain market share and deliver mid-single digit SSS growth over the next several years.
Management also believes that its 14% EBITDA margin target is well within sight, and EBITDA margins could eventually reach 15%, as My Macy's drives topline growth and omnichannel integration improves inventory turnover and gross margin. We reiterate our Buy rating and $44 target price. The stock is also on CIRA's Top Picks Live! list."