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Business

Retail continues wild ride as two big names experience different fortunes

By
Jill Goldsmith
Published Oct. 3, 2019, 5:34 p.m. ET

Retailers have been toppling like dominoes, hit by a mix of sector woes and company-specific ills, but bright pockets are still out there.

On Thursday, two well-known brands, high-end Ted Baker and discounter H&M, posted vastly different quarterly results, sending the stocks spiraling in opposite directions.

High-end Brit-based fashion brand Ted Baker dove into the red and warned of continued deterioration amid price competition and consumers’ shift to online shopping. But Swedish juggernaut H&M saw its shares jump to their highest level in nearly two years as a popular summer collection buoyed third-quarter numbers.

The results came several days after a massive casualty – a Chapter 11 filing by trendy Forever 21, which had close to 800 stores worldwide.

The chain’s “fast-fashion” product is much closer to H&M than tony Ted Baker, but Forever 21 was crippled by overly aggressive expansion, including the opening of more than 200 locations in foreign markets from 2005 to 2015.

In the US, Forever 21 moved into retail spaces previously occupied by retailers like Saks, Sears and Borders, ending up with too much space to sustain what it calls “ultra-low prices.”

It also had lots of stores in malls, which are famously struggling. Other mall retailers that announced plans to liquidate in 2019 include Payless, Gymboree, Charlotte Russe and Charming Charlie.

On the swanky end, storied Barney’s filed for bankruptcy in August.

In Thursday’s action, Ted Baker said it swung to a loss of 23 million pounds ($28.3 million) in the first half from a profit the year before. It said second-half sales have started out slow due to an unusually warm September. Its stock, listed in London, plunged 35 percent, the firm’s board slashed the dividend and analysts lowered full-year estimates.

“Forecasts and outlook have been impacted by a very tough market backdrop where discounting is prevalent, and consumer uncertainty has led to unpredictable trading patterns,” analysts at Liberum Capital told MarketWatch.

H&M saw its shares jump 7.5 percent in Stockholm to their highest level in nearly two years. Warm weather in September actually drove sales in many markets, according to CEO Karl-Johan Persson.